Challenges and Considerations for Asda in Trading Across Borders and Creating a Positive Social Impact

This essay discusses the challenges that Asda faces in trading across borders and the considerations it needs to keep in mind when creating a positive social impact. It explores topics such as regulations, competition, compliance costs, setting standards, barriers to entry, marketing, timing of entry, flexibility, mergers and acquisitions, and political environment. It also highlights the importance of understanding uniqueness, establishing a social mission, balancing revenue generation, availability of resources, and setting measurable goals.

Title Page

ASDA Stores Ltd.
Introduction
Asda Stores Ltd. is a British supermarket retail chain, founded in 1949 by Peter and Fred Asquith
and Sir Noel Stockdale. It is headquartered in Leeds, Yorkshire in the United Kingdom. The
company was formed as the result of a merger between the Asquith Family and the Associated
Dairies Company (Yorkshire). It was acquired by American super chain Walmart in 1999 for an
estimated value of almost £7 billion (“ASDA - Our History”, n.d.). The company is currently the
second largest retail chain store in the UK just falling behind Tesco.
Asda, besides its core service of super markets, offers various other services as well. The
company provides various mobile and financial services along with a number of other services
such as logistics services, daily living items and petrol filling stations. The company currently
employs more than 165,000 people across more than 600 locations and serves a total of more
than 18 million customers every week (“ASDA – Company Facts”, n.d.). The prime principle of
Asda is the control of price to entice the customers to visit their stores. It offers features such as
Every Day Low Pricing which is a product of its basic tagline for promotion – ‘Save Money.
Live Better’.
In 2009, Asda was “sold” by Walmart to its subsidiary Corinth Services Ltd. The sale meant that
the prime control was in the hand of the Corinth Group but which itself is a subsidiary of
Walmart. The parent company remained the same and the only purpose of this was an internal
restructuring of the entire organization (MacDonald, 2009). The company has also tried merging
with Sainsbury’s, another UK retail chain store but the merger was declined by the UK
government. The reason behind this was that it would give Asda more than 30% of the total
grocery market share in UK and would lead to a high price rise.
The purpose of this essay is to highlight the various challenges that the company needs to
consider when trading across borders and the considerations that it needs to keep in mind when
trying to create a positive social impact. Also, an effort has been made to discuss the various
aspects that the company needs to consider when enhancing their business. These topics have
been divided into different parts so as to make it concise and give a clear understanding of the
required tasks.

Part 1
(b) The various challenges that the company needs to consider when trading across borders
are discussed below:
 Increasing regulations: The biggest challenge that Asda has to face when trading across
borders is the increase in the regulations which the company has to fulfill in order to gain
entry and trade in a foreign market. The company needs to ensure that it is satisfying the
ever increasing number of rules that have to be followed to successfully become a part of
the foreign markets. Every country has a different set of stipulations that it applies to
businesses. And the knowledge of theses stipulations should be gained before attempting
to become a part of the market. Also, apart from the already existing rules, there are
regulatory changes being made every day (Schirr, 2017). The owners at Asda need to be
fully knowledgeable with regard to these changes so that all terms and conditions of
foreign markets can be fulfilled.
 Competition: The threat from the existing competition in the foreign markets is the
biggest threat to Asda. Various retail chains such as Tesco and Sainsbury have an
international presence that gives a direct competition to new entrants in a foreign market.
Asda needs to be prepared to deal with these challenges that are a routine part of the
competition that retail chains face. It needs to determine the steps that can be taken to
ensure that the competition is a healthy one and does not become detrimental to its
existence.
 High Costs of Compliance: Setting up a business in a foreign country comes with a high
cost of compliance for any business. All countries have a set of rules and regulations that
need to be followed to get a business set up in a foreign domicile or trading to and from
another country (“Trading across Borders”, n.d.). The logistical expenses of import and
export, the time taken, the insurance costs of goods, the costs of documentary compliance
are only some of the expenses which Asda has to take care of when it wants to trade
across the international borders. The company needs to invest in training and education
for its officers so that the compliance for trading becomes easy to understand and
execute. This, in itself, is another major challenge for trade.

 Lack of Harmony in Setting Standards: There is a lack of harmony in the world
markets in the setting up of standards of trade. Every country has set up their own
regulations which need to be followed if any outside business wants to trade in its
markets. Asda has to face similar challenges of understanding of different rules and
regulations with respect to every country that it wants to trade into. The only solution for
this is that there should be an international body responsible for setting up of rules and
guidelines for trade so that every business has it relatively easier when it wants to export
or import its goods.
 Barriers to Entry: Retailers wanting to trade across international barriers are constantly
facing challenges in one way or another. One such challenge is the barrier to entry into a
new market. Asda has to face threat from existing monopolies in foreign markets. There
are various retail chain stores that already have their feet firmly planted in the ground and
are not willing to share their dominance with foreign entrants. One example of this is the
trials and tribulations which have been faced by Walmart and Asda both in entering the
South Korean market (Corstjens and Lal, 2012).
 Increased Time to Market Goods: Marketing of products is the biggest challenge that
has been faced by businesses of every kind since time immemorial. For Asda, selling of
goods across international borders is still relatively easy as compared to marketing of said
goods. After sale has been made, it is essential to make the consumers in the foreign
markets aware of the goods that the foreign new entrant is selling in the market. For this,
marketing is essential. Asda has to invest a considerable amount in advertising and
promotion of its goods that are being sold in foreign markets. One of the techniques
which it can employ for this is to employ famous faces in the international territory so
that the customers can relate to them. This also gives Asda an appearance of being
successful enough to employ that it can pay large sum of money to actors, politicians,
influencers and the like.
 Pressure to Bring Something New to the Market: Every company which wants to
trade across borders has the constant burden to bring something unique to the market.
Why would the foreign consumers want to buy something from Asda which they can buy
from their local familiar retail chains? Asda faces the major challenge of creating
something new and unique if it wants to sell its goods to foreign markets. There is a

constant pressure to innovate (Hammett, 2018). This pressure bring not only a mental
challenge but a financial burden as well. The company may have to spend a large amount
of time and money in research carried out for the purpose of bringing something different
to the market.
 Criticality of the Timing of Entry: Even if all rules and regulations are fulfilled, and
new products developed for sale in international markets, there is always the possibility
that the venture would fail. This is because the timing of entering a new market is critical.
Every seller, including Asda, should carry out market research in order to determine the
correct timing of entry onto a foreign market so that the chances of failure are as low as
can be possible. Asda should take into account the periods during which the sale of its
products are higher in foreign markets and then should develop plans accordingly.
 Remaining Flexible: Flexibility of a business is its ability to easily adapt to changes and
accept the challenges that might come in its way when it wants to trade internationally.
For Asda to successfully trade across borders, there needs to be a flexibility in its
approach to business so that import and export can be done with trouble (Williams,
2015). There should be a flexible system that works in cooperation with the management
at Asda so that the process of trading is less cumbersome. Also, these systems of
international trade should be reassessed at all times so that any desired change can be
easily introduced into the business.
 Considering the Possibility of Mergers and Acquisitions: One of the biggest challenge
that Asda or any company which wants to trade internationally has to face is the threat of
mergers and acquisitions. Asda was acquired by Walmart group in 1999 and later sold to
Corinth Services Ltd. which is another subsidiary of Walmart. This has proved that no
company is free from the threat of being acquired or being sold. When trading across
international borders, care should be taken that the company does not fall prey to the any
existing dominant market force. And if mergers are actually sought by Asda itself, then a
careful consideration of all facts should be made (“Challenges Persist in Walmart's
International Operation”, 2017).
 Threat from the Political Environment: The political environment of the country to
which Asda wants to trade to and from is another important challenge that needs to be
considered. The political scenario of a country and its relationship with the home country

of Asda (that is UK) determines its stance on international trade. The ruling government
of a country should have a positive outlook towards the trade situation of a country and
only then is it possible for Asda to easily delve into trading across borders (Sutherland,
2005).
(c) Why and what considerations should Asda consider when trying to create a positive
social impact?
The considerations that should be considered by Asda such that it can make a positive social
impact are discussed in brief below:
 Understand the Factors that Make Asda Unique: Every business is unique and so are
the activities it carries out for the purpose of promoting a social impact. Asda should not
blindly follow the social activities which are being carried out by its competitors in the
market. Instead, it should focus on creating something new so that it has a position in the
society which no one else can take away. Also, it is vital that the business first
understands what makes it different and then promotes that difference as well. This will
help to bring potential customers to the business – especially those that might want to
create their own unique social impact for the benefit of the society.
 Establishing a Social Mission: In order to create a social impact, Asda should focus on
creating a social mission. It should not just develop on performing one single social
activity, but should focus its efforts on establishing a social mission (Rosenblatt, 2013).
One act alone makes the business look phony and not actually credible but a mission for
the society makes it easy for Asda to earn goodwill for a longer period. Without a
mission, the social strategy will never be successful and instead land the business with
wasted resources and no confidence from the consumers.
 Creating Social Impact is as important as Generating Revenue: It is important for
Asda to remember that even if social impact is essential in today’s world, no business can
be expected to stop generating revenue in the period that social work is being carried out
by the business. Investors of the business would continue to expect a return out of the
business despite the social impact the Asda is successfully creating (Denby, 2015). Also,
bringing forth investors to help fund a social venture for the business is as hard as getting

investors for regular business activities of Asda. They do not consider social work as
crucial in in an independent form. They only consider it to be important as long as it is
generating some revenue out of it. This is, perhaps, one of the most important
consideration that Asda to keep in mind while wanting to make a social impact.
 Availability of Adequate Resources: In order to create a social impact, it is of extreme
importance that the business has sufficient resources with itself which can be used for this
purpose. Asda, while developing a social impact plan, should consider developing
suitable objectives first so that the goals to be achieved can be measured. If the goals can
be measured then the resources required to achieve those goals can also be measured.
Next, Asda should find out the places from where they can combine the required
resources such that the cost of these is minimum but the impact factor is high. These
resources should be such that they do not harm the environment in a negative manner.
This will lead to the entire purpose of the social impact activity be defeated.
 Setting Measurable and Transparent Goals: Asda should pave way for creating a
social impact by being more transparent in its business activities and by setting up goals
that will be measurable and achievable. Usually, businesses create goals that are too big
to be achieved in the given time and then end up either over compensating for their
promises or by falling flat on their faces in front of their customers. This can be avoided
by setting limited goals and then taking action to achieve those limited goals over time.
Also, the lack of proper metrics have been pointed as the root cause of the lack of
transparency in case of creation of a social impact. Asda should take care of all these
points and thus, develop a social impact tool (Doerr, 2019).
 Use of Social Media to Highlight Social Activities: It is often said that charitable and
social efforts should remain private and not make their way to your social media
platforms. This, however, is not true in case of businesses wanting to make a social
impact. Asda should make proper use of its social media in order to highlight its social
efforts so that the potential customers can be made aware of the businesses efforts to
create a social impact. This is turn will have two fold benefits. It will bring new
customers who are conscious about doing their bit for the society. It will also bring forth
new investors into the business who themselves are looking for social ventures to invest
into to increase their goodwill (Arya, 2017).

 Education to the Employees: All activities to be performed by the workers require some
sort of education and training. The activity of trying to create a social impact by Asda is
no different. It is of utmost importance that the workers be giving regular training and
education as to what constitutes social impact and how. Further, they should be allowed
to have a practical role in this process and not just to create illusions in their minds as
well of the customers. The employee training programs for social impact should be
carried out by professional who are experts in their fields.
 Good Corporate Governance: Asda should carry out corporate governance practices
which do not harm the business environment in any way. The impact of social activity of
the business should be such that it contributes to the ethical climate of the work place as
well as the society. If Asda engages in frauds of any kind, is bankrupt, or indulging in
criminal activities, and breaking regulatory and ethical rules of the society, it will lead to
the trust of the consumers being broken and therefore, removing the good faith that the
people have in the company (Markgraf, n.d.).
 Encouraging Volunteers from the Work Place: Asda should encourage volunteers
from the work place to be a part of the team created for creating a social impact on the
society. This team should include both workers as well as the managerial staff. All the
employees should be taught the necessities of how to be a part of the team responsible for
creating a change in the society. The volunteers should also be encouraged with
incentives in the work place and outside of it so that they are motivated to be a part of
Asda and so, they will want to create a social impact on their own. Regular motivational
speeches should be given to the workers so as to boost their morale and give
encouragement to them to be an active part of the social movement of Asda.
 Creating Sustainability: Even if the main aim of Asda is to create profit, it is essential
for it to create sustainability as well. In today’s world, only those business ventures are
being considered worth who produce and sell sustainable items. This is because the world
is becoming responsible for the impact that it is having on the environment (Newlands,
2017). Asda can make use of packaging and other such items which are environment
friendly and are biodegradable. Also, they can make way for a paperless system of
business so that less wastages of paper are made. Further, sustainable measures include
asking employees to pool their vehicles for coming to work, implementing eco-friendly

equipments in the stores, creating energy efficient policies, and taking part in recycling
programs.
 Collaborations: Asda can create a social impact by collaborating with various types of
interested parties. The businesses which help create recyclable and biodegradable
packaging are successful candidates for partnerships with Asda. Further, there are various
other such similar parties which can be turned into partnerships and collaborations can be
made which will benefit both.
Part 2
Theoretical tools are the systems, applications, methodologies, etc. that a business uses to
achieve its targets. For the purpose of enhancing the business, Asda needs to consider the
following:
 Strategic Planning: Strategic planning is the process of developing strategic plans and
then carrying out actions in such a manner that helps to achieve those plans. It is the
process of making decisions regarding the use of the most essential resources of a
business. Asda has considered developing five year strategic plans so that it can cope
with the challenges of the changing retail scenario. The company has hired various
professional which can help them in developing plans which will help it to reach its
goals. Strategic planning for Asda can further involve setting up team objectives,
developing plans for training and education to the employees, setting sales targets, etc. in
order to achieve an enhanced quality of business operations (“Asda developing new five-
year strategic plan”, 2013).
 Benchmarking: It is the tools which helps to identify the highest standards of excellence
for a business and helps to give a measure of the scale of the performance to be achieved.
Then the actual performance is measured and the improvements to be done are
considered (Elmuti and Kathawala, 1997). Asda should set goals of performance which
are achievable and then performance should be measured so that the necessary action can
be taken. This will help the company to enhance its business. Asda can try looking at the
‘best practices’ in the retail and grocery industry and then try to improve its performance
so that the desired goals can be achieved.

 Balance Scorecard: It is a strategic performance measurement tool which is used by
companies in order to develop guidelines for enhancing its business. The purpose of a
balance scorecard is to develop tools to translate the mission and the vision of an
organization into achievable goals. For Asda, the balance scorecard is a management tool
as well as a management system that is used for the achievement of organizational goals.
It involves setting up the goals of Asda into four different segments – the learning and
growth segment, the business process segment, the financial targets to be achieved by
Asda and the customer segment. The balance scorecard helps to achieve broader
perspectives as desired by Asda – it is not just focused on financial or planning segments
– as most businesses are. It takes into the learning objectives as well.
 Supply Chain Management: Supply chain management is essential for any business
wanting to achieve its goals of making a long term place for itself in the market. Asda has
previously launched its innovative ‘Sustain and Save Exchange Program’ for all its
supply chain partners. The reason for this is to give its suppliers access to an online
forum with guidelines for improving its supply chain practices (Timperley, 2016). This
acts as a creative tool for the business and helps it to enhance its day-to-day operations.
The company can further develop this program and other such ideas in order to improve
its activities.
 Outsourcing: It is the practice of hiring outside professional parties to perform services
and for the production and distribution of different products. Asda can hire professionals
to manage their daily business activities and also to help guide them as to where and how
their current business can be enhanced. Asda has previously also outsourced its employee
management activities and in this process has saved a major part of their cost (“ASDA
saves 200,000 by outsourcing its expense management to GlobalExpense”, 2007). The
company has also outsourced its plans to develop a mobile friendly app so that it can
support a digital platform. This will help improve the customer shopping experience at
Asda (Flinders, 2018).
Conclusion

The essay has been written on the UK retail and grocery chain Asda. The purpose of this is to
highlight the efforts of the company in management of its challenges and the efforts it makes to
help give back to the society. Also, the various tools which can be used by the company to
enhance its current businesses have been explained in brief.
The introduction part of the paper gives a brief history of our chosen company Asda. It helps the
reader of the paper to get a brief idea about the formation of the company and its acquisition by
American company Walmart. The next section has two parts to it. The first part helps the reader
to understand the various challenges that Asda has to face when it wants to trade in international
borders. Some of the challenges which have been explained here should be able to explain the
plight of the business where trading across borders is concerned. These challenges include – the
increasing regulations for international trade, remaining flexible in its operations, the threat of
competition, the high costs of trading internationally, the condition of the political environment
and the possibility of mergers and acquisitions to name a few. The second part deals with the
considerations that Asda has to keep in mind in order to create a positive impact on the society.
Some of these are these are creating sustainability, training and education to the workers,
entering into collaborations, using social media to highlight the social activities of the business,
and setting social goals that are transparent and measurable.
The last part of the paper has been used to explain the theoretical tools which Asda needs to
consider to achieve its goals. These tools include supply chain management, outsourcing of
activities and services, using balance scorecard, benchmarking of ‘best practices’, and strategic
planning for achieving goals. With this paper, sincere efforts have been made to throw some
light on the business practices of Asda Stores Ltd.

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