Business Strategy Analysis: Asda's Competitive Landscape

This report provides a comprehensive analysis of Asda's business strategy. It begins with an introduction to business strategy and an overview of Asda. The main body analyzes the macro-environment using PESTEL, evaluating political, economic, social, technological, environmental, and legal factors. It then delves into Asda's internal environment, applying the McKinsey 7S framework to assess structure, strategy, systems, skills, staff, style, and shared values. The report also utilizes VRIO analysis to assess Asda's resources. Furthermore, it applies Porter's 5 Forces model to evaluate the competitive forces within the market sector, and concludes by producing a strategic management plan with tangible priorities and objectives. The report aims to provide a detailed understanding of Asda's strategic position and the factors influencing its success.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analysis the impact and influence of the macro environment on selected organisation......1
M1. Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................3
P2. Analyse the internal environment and capabilities of a given organisation using
appropriate framework................................................................................................................3
M2. Evaluate internal environment and analyse the strengths and weakness of selected
company......................................................................................................................................6
P3. Applying porters 5 forces model evaluate the competition forces of a given market sector
for chosen organisation...............................................................................................................6
M3. Evaluate strategies to improve competitive edge and market position...............................9
P4. Apply a range of theories, concepts and models, interpret and devise strategic planning....9
M4. Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................11
D1. Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions.............11
CONCLUSION..............................................................................................................................13
References:.....................................................................................................................................14

INTRODUCTION
Business strategy basically means the actions and plans opted by senior management to
achieve organisational goal on time. Business strategies are made so that organisations get to
know whether they are going in a right direction or not for reaching their objectives by
measuring overall performance with strategies made by company (Agustia, Muhammad and
Permatasari, 2020). Asda is an British supermarket chain which is headquartered in Leeds, UK.
It is founded by Noel Stockdale and J.W. Hindell in the year 1949. Current Chief Executive
Officer of Asda is Roger Burnley. This report covers the impact and influence of macro
environment on Asda, Internal environment and capabilities of mentioned company, evaluation
of porters 5 Forces and application of some theories or models in chosen organisation.
MAIN BODY
TASK 1
P1. Analysis the impact and influence of the macro environment on selected organisation.
Mission, Vision and objectives of Asda are determined below-
Vision- To gain popularity among customers as much as possible by gaining their trust
by providing them less amounted products with good quality.
Mission- To become best retailing company of UK. by including customer satisfaction
and customer benefits.
Objectives- To provide only those product to customers which is affordable to customers
and which is in good quality.
Business strategies are those actions which includes major decisions of company which
help them to achieve their goal smoothly and efficiently(Alam and et. al., 2019). It is future
oriented also because strategies are made for future actions so that less time will waste upon
deciding what should be done and by whom within an organisation.
Macro environment are those external environment (PESTEL) of business which impacts
a company from outside factors which is uncontrollable. PESTEL analysis of Asda are explained
below-
Political factors- Political factors include tax policy, trade restrictions, political stability
and many others. In context of Asda, the political stability of London is strong. There is no
specific barriers or restrictions on trade in UK. Their is a rule which consist no interference is
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made by political parties in any private company in situated area. Corporate tax in UK is 19%
which is considered low as compared to other countries. Hence, political factor of UK is
favourable for Asda.
Economical factor- this factor includes inflation rate, exchange rates, unemployment
condition, GDP of country and many others (Aldea, Iacob and Quartel, 2018). In context of
UK, they are developed country with high GDP. Inflation rate is low which is 0.7% which is
lower than other countries but it is raised within United Kingdom from last few months.
Unemployment rate is 5.1% which is appropriate. Therefore overall condition of UK economy is
good. Hence, Asda have many benefits in UK economy.
Social factor- This are those factors which tells the standard of living of a particular
country. This factor includes education level, buying behaviour of customers, wealth and religion
and many others. In context of UK their social factors are considered as strong because their
literacy rate is 99% and most of the people have strong perception of buying qualitative goods
whether they have to pay little bit more for a product. The only disadvantage of social factor in
UK is that there are many conflicts and strikes related to religion and culture. So, it is
recommended for Asda to refuse manufacturing of some special products which specify or point
out a particular religion. On the other hand buying habit of UK people is very strong. Hence, this
is positive point for Asda.
Technological factor- Technological factors consist of mode of technology used by a
firm for production (Bentley-Goode, Omer and Twedt, 2019). In terms of UK they are developed
country with most advanced technology adaptation. They use new and updated machines and
equipments for production. Hence, in this context Asda is having favourable technological
environment in UK. Therefore company are able to use most updated machines for their
operational works which helps them to save their time.
Environmental factor- It consist of those factors which tells particular environment of
country such as weather, population, pollution control and many other components. Most of the
time this factor is considered as unfavourable for any firm in UK because whether and climate is
unstable and the rate of occurrence of storm or any other natural disaster is very high in UK. Air
pollution of the country is too high that 8.3% people die just because of asthma, heart diseases,
lung disease and etc. which is caused by air pollutants. Hence, environmental factor is not good
for Asda in London.
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Legal factor- It consist of how legal laws of a country affects the business (Carp and et.
al., 2019). In context of UK their laws are made perfectly for country development like labour
law which consist that minimum wage and minimum age is fixed under which a worker should
work. Hence, this factor is beneficial for company to work under rules and regulations.
M1. Critically analyse the macro environment to determine and inform strategic management
decisions
From the above information it is critically evaluated that macro-environment effects the
business workings. In context to Asda, social factors and environmental factors impacts
negatively on business and other factors like political, technological, legal and economical
factors impact positively on business.
P2. Analyse the internal environment and capabilities of a given organisation using appropriate
framework
Internal environment consist of factors from inside a company which impacts upon daily
operations (Ciampi and et. al., 2020). Internal environment includes relationship between
management and subordinates, organisational structure, skills and strategies to reach goals and
many others. McKinsey 7S framework is used to monitor and control internal activities of an
organisation. McKinsey 7S framework of Asda is explained below-
Structure- It is the way in which company is organised. It helps in telling the order or
direction in which company's activities are going on. In context of Asda, this company follows
formal hierarchical functional structure because the company has many departments like sales
department, production department, service department and many others. This structure helps the
company to organise their operations in proper and formal way. And each department is
appointed by a department head which takes care of working of their own department. This
structure helps in dividing task on the basis of skills which is helpful in achieving organisational
goal on time.
Strategy- It is a plan which is made to achieve main objective of company and it is also
made to survive in market by competing with competitors (Ferreira, Mueller and Papa, 2018).
Long term strategy consist with mission, vision and objective of company. In context of Asda,
their strategy is to gain popularity among in UK among all retailing customers by providing them
good quality of products with good services in an affordable prices. They mainly made strategies
to attain more customers by satisfying them with their products and services. They uses home
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deliveries for their customers with little charge. They set low prices as compared to their
competitors to attain their competitors customers. Hence, all this strategies help them to succeed
in their business.
Systems- This are the procedures and processes of company which helps to analysis daily
functioning of company (Kong and et. al., 2020). It also helps to know that how and on which
basis decisions are made by managers. In context of Asda, they open their retailing stores early
in morning at 7:00 am, their workers handle the segment which is assigned them to handle. Each
store is assigned a supervisor, in case of any issue workers directly contact with supervisor.
Minor decisions related to that particular store is taken by supervisor which is appointed and
other main decisions and issues all are handled by managers.
Skills- Skills are talents which is required in workforce of an organisation to do a
particular job or task. Employees without required skills are useless for the company. In context
to Asda, they only required skilled employees and their main skills which they need in every
employee is that their employees must have good communication skill, employees must be quick
learner so in case of change in system and technology will not affect their workings, person must
be self managed, and the main skill is workforce should be polite behavioural toward their
customers and able to resolve queries of their customers. To maintain and develop these skills
Asda provide regular training to their employees. All this skills which Asda need from their
employees are helpful in achieving their main purpose of retailing.
Staff- The type and number of employees required within an organisation is called their
staff (Kong and et. al., 2020). Staff are the people who manage daily operations of an
organisation. In context of Asda, they employed more than 1,40,000 people across the world.
This staff is responsible to handle issues and challenges on daily basis. Asda divide their staff in
further segments like staff related to IT work, management, service providing staff and many
others.
Style- Style is the way which tells how a company is managed by managers, how the
employees interact within office, and many others. Basically this factors tells the working style
of managers in a company. In context to Asda, managers appoint heads in each department who
report to mangers. They conduct meeting on regular basis so not a single matter is to be ignored.
In this meeting managers ask every heads to attend meeting and represent their departments
works.
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Shared Values- These are the core values and general work ethics of an organisation
(Makadok, Burton and Barney, 2018). In context of Asda, they maintain their culture by focusing
on mental health of workers in organisation as it is an retailing company, work pressure is
always there, company focuses to keep their workers mentally healthy. For this they allow their
workers to participate in National Campaign like- Time to Talk, Every Mind Matters and etc.
which help them to tell how they are important to their organisation. Shared values help the Asda
to keep their manpower more strong and ethical so that they work more efficiently which is
helpful to achieve organisational goal on time.
VRIO Analysis
VRIO is a strategic framework which helps to know how useful and unique resources a
organisation have (Mhlanga, 2019). This strategic framework helps to compete in market by
matching their resources nature with their competitors resources nature. The VRIO analysis of
Asda are listed below-
Resources Valuable Rare Imitate Organised
Brand image Yes No No No
Distribution
channel
Yes Yes No No
Technology Yes Yes Yes No
Manpower Yes Yes Yes Yes
On the basis of above table the VRIO analysis of Asda are explained below-
Valuable-
 Brand image- Perception of a particular brand in customers mind is called brand image.
Asda has a valuable brand image because customers have trust that Asda products are
always good in quality so they buy products because of its brand image only.
 Distribution Channel- It is a chain or route by which products are reached to final
customers (Nadanyiova and Das, 2020). Asda's distribution channel is valuable because
its one of the best service is to provide goods to their customers on time.
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 Technology- Machines and equipment used by a company is technology of that company.
Technology of Asda is valuable because they adopt new and advanced technology which
helps them in their daily functioning work and helps to achieve daily task quickly. Manpower- Workforce or employees of an organisation is considered as manpower of
that company. Manpower is valuable in Asda as all internal functions are handled by their
manpower only and manpower's efforts is the reason for Asda success.
Rare
 Distribution Channel- Distribution channel of Asda is rare because every company have
different types of way to distribute their products.
 Technology- Asda always tries to a different product or service from their competitors by
using rare technology and in which they become successful. Manpower- It is rare because nature and features of each employee is different from
others.
Imitate
 Technology- This resource is copied by other firms as when they notice that Asda uses
new technology for growth they tried to use similar technology for their own growth. Manpower- It is copied when another company hire Asda's employees in more wages.
Organised
 Manpower- From this factor, it is being identified that the human resources of company
need to organised in terms of retaining them for longer period of time which is beneficial
for the growth and productivity of Asda.
M2. Evaluate internal environment and analyse the strengths and weakness of selected company
From the above McKinsey's 7S model it is clear that structure, shared value, system,
staff, strategy, style and skills are all factors by which Asda is surviving in market (Nayak,
Bhattacharyya and Krishnamoorthy, 2019). Whereas VRIO model helps Asda to know how they
defeat their competitors from resources which they have. Their manpower is the only resource
which is valuable, rare and organised.
P3. Applying porters 5 forces model evaluate the competition forces of a given market sector for
chosen organisation
Porters 5 forces model helps to know more about competitors and their strategies in
market. This model is very useful when a company's aim is to stand at the top among all its
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competitors(Ortega and et. al., 2019). Analysis of porters 5 forces model of Asda are explained
below-
Threat of new entry- This factor consist of the impact upon business when new
companies enter in the market. In context of Asda this threat is high because its an retail
company and many other retailing companies like Tesco, Morrisons and etc. entered the market
with a boom and captured more customers from Asda by providing less prices and good services
to customers. Because of this threat only many customers of company switches to other retailing
stores. Hence, this is recommended to Asda to make regular cut in their prices and allow
discounts and offers on regular time period so new entrance of any company will not effect their
business.
Bargaining power of customers- It consist of number of customers and customer loyalty
and their behaviour and perception for the company or a specific brand (Quenum and et. al.,
2019). In context of Asda, they already have many customers because they provide good quality
and their customers are loyal too. Recently Wal Mart has purchased this company with helps to
make various strategies of gaining more customers with full efforts. Wal Mart already have
many customers, so now their customers will also show interest in purchasing products of Asda.
Hence, the risk of losing their customers and other factors in this segment is low.
Bargaining power of suppliers- This factor consist of total number of suppliers and their
loyalty towards company. In context of Asda, they are dealing with more than 500 suppliers
across the world and they are loyal too because Asda provide many benefits like Suppliers of this
company buy any product of Asda with a great discount and suppliers are given good and
appropriate amount of money for their raw material. Hence, Asda is safe from this fear that their
suppliers are switching to other brand.
Threat of substitute- Substitute products are those products which are used in place of
each other(Sánchez-Herrera and Donate, 2019). They have similar kind of characteristics. In
context of Asda, this threat affects the company because its an retailing company and its
competitors products are offering similar kind of products as Asda. Hence, there are many
substitute of respective company in market. Retailing sector are commonly considered as
homogeneous because their all products are similar as they sell groceries and groceries are same
in any store. Hence, it is recommended to Asda that they might change their service for making
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their business more popular among their substitutes. Good services attract customers to buy
commodities from their supermarket instead of their substitutes.
Competitive rivalry- This factor consist of number of competitors and their strategies in
the market. Less number of competition in market helps the company grow faster but when the
competitors increases it becomes difficult to grow and expend business as expected. In context of
Asda, they have many tough competitors like Tesco who offers substitute goods with lower
prices which effects the company. This is risky factor for representative company. To overcome
with this risk company must analysis their competitors strategy carefully and make changes in
their own strategies according to that.
Ansoff matrix
This is the model which is used to analysis a good strategy for business to grow and
expand in other countries (Tong and Wei , 2019). This model helps the company to decide which
strategy they must opt for future benefit. Ansoff model in context of Asda are explained below-
Market penetration- this strategy helps to increase in sales of already existing product in
already working market. This strategy helps the company to remain constant. In context of Asda,
they launch their new store opening in UK itself with similar products as other Asda stores have.
Therefore, this is the strongest strategy which is already opted by Asda for their growth among
customers. The main reason behind this strategy is gain more customers by providing them
stable service which they required from business.
Product development- This strategy consist of introducing new product in already
existing market (Tsangas and et. al., 2019). In context of Asda, they take customers feedback
very seriously and tries their best efforts to make changes as per the customer need. Most of the
feedbacks are related to new products which should be added in their list of grocery regularly
and Asda accepts all those demand of customers and start putting new products in their grocery
lists. And recently they are working for selling petrols and start money exchange services in UK
itself which is an good example that Asda is now focusing on using this strategy of product
development.
Market development- This strategy consist of selling existing product in new market
area. This strategy is mostly opted with the main aim of expanding business internationally. In
context of Asda, they deals in 24 countries with their already existing products. They are
developing and expanding their business in new markets but they are unpopular in other
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countries because their earning are basically from UK stores only and a very little part of profit is
consist from other countries stores. Hence, it is recommended that they must analyse other
countries factors like political , social and perception of their customers before expanding their
business in new market.
Diversification- It is considered as most riskiest strategy because it consist of launching
new product in new market (Um and et. al., 2018). In context of Asda, their all new products are
launched in UK itself. They didn't try to launch their new product in another country. Hence, it is
clear that Asda is not using this strategy.
M3. Evaluate strategies to improve competitive edge and market position
From porters 5 model it is clear that Asda is safe from 2 threats that is bargaining power
of customers and bargaining power of suppliers. They are lacking behind in other three factors
like threat of new entrance, substitute threat and competition rivalry. To overcome this threats it
is recommended that they must focus to provide better services and they must make their
strategies after analysing their competitors strategies. From Ansoff matrix, it is clear that most
popular strategy of mentioned company is product development and market development. On the
other hand their least opted strategy is diversification.
P4. Apply a range of theories, concepts and models, interpret and devise strategic planning
Porters generic strategies are used to determine which strategy is used to a business for
maximum benefit of organisation (Agustia, Muhammad and Permatasari, 2020). Porters generic
strategies of Asda are explained below-
Cost leadership- Being a leader in terms of cost is called cost leadership. Asda prices are
little lower than its competitors which makes it more attractive by its customers. Their main aim
is to provide qualitative product with affordable prices which they are doing well. The main
reason of growth and expansion behind Asda is this strategy only. Company uses EDLP which
stands for everyday low price. Hence, cost leadership is the strategy which is already opted by
Asda.
Differentiation- This strategy tells that the product or services must be different or
unique from competitors to make more profit (Wadström, 2019). Asda is a retailing sector so its
products are homogeneous therefore it must change its services for some uniqueness. Hence,
recently they are not using some differentiation product or service to grow. It is recommended
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that to grow faster and lead the market they must focus on introducing new kind of services
which attracts more customers.
Cost Focus- In this strategy company reduces cost in one or few targeted segments. Asda
lower prices for women products on special occasional day like women's day, allow discounts on
kids products on weekends. Hence, this strategy is used by Asda but not for a longer period of
time.
Differentiation Focus- This strategy tells that company must made unique product or
service in a targeted segment of market(Bentley-Goode, Omer and Twedt, 2019). Asda are
lacking behind to opt this strategy as they are not providing any different product or services to
any of their selected segment. All products are similar as their competitors product. Hence, they
are not using this strategy.
Bowman's strategic clock
This strategy recommends that which strategy is used to determined how a product
should be positioned in market to give tough competition to its competitors. Factors of this
model in context of Asda are explained below-
Position 1- Low price and low value added
This is not a good competitive strategy in context of any business. In this strategy
customer perceived very low value, despite a low price. The only way to remain competitive in
this position is to make sure that no other company undercuts the prices which was set by a
company. In context of Asda, they offer 10% less amount as compared to its competitors.
Position 2 – Low price
In this strategy company minimize the cost. Profit margin on each product is very low
(Carp and et. al., 2019). But in case of high volume of output, there is still good margin of profit
which is earned by company. In context of Asda they charge least prices from their customers
but they have many customers. So, if many customers buy continuously then this results in
earning appropriate profit.
Position 3- Hybrid
This position states that product with low price and few changes in product is an effective
strategy to beat competitors. It is recommended that Asda must make some product
differentiation with new lower prices to compete with its competitors.
Position 4 – Differentiation
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