Impact of Aldi and Lidl on ASDA: Decision-Making Strategies Report

This report examines ASDA's strategic responses to the competitive pressures exerted by Aldi and Lidl in the UK supermarket sector. The report begins with an overview of ASDA, its market position, and the context of increasing competition. It then analyzes the decision-making approaches used by ASDA, including SWOT and PESTEL analyses, logical, ethical approaches, and the use of mind games. The analysis critically appraises these approaches, identifying their strengths and weaknesses and suggesting improvements. Furthermore, the report explores alternative decision-making approaches, such as scenario planning and quantitative methods. The conclusion recommends the scenario approach as the most effective for addressing complex business problems, justifying this choice and summarizing key learnings from the analysis. The report provides insights into ASDA's competitive strategies and the challenges it faces in a dynamic retail environment.

DECISION MAKING AND PROBLEM
SOLVING
TOPIC - INCREASING COMPETITION
FOR ASDA BECAUSE OF ENTRY OF
ALDI AND LIDL IN UK
SUPERMARKET
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TABLE OF CONTENTS
TASK 1.................................................................................................................................................3
INTRODUCTION ...............................................................................................................................3
1.1 Company overview ...................................................................................................................3
1.2 Purpose of the Report:...............................................................................................................3
1.3 Description and justification......................................................................................................3
1.4 Description and justification of approaches used .....................................................................4
TASK 2 ................................................................................................................................................4
ANALYSIS AND DISCUSSION ........................................................................................................4
2.1 Critical appraisal of approaches used........................................................................................4
2.2 Improvement of the approaches ................................................................................................5
2.3 Other available approaches .......................................................................................................6
TASK 3 ................................................................................................................................................7
CONCLUSION AND RECOMMENDATION....................................................................................7
3.1 Justification of the most appropriate approaches ......................................................................7
3.2 Application of most appropriate approach ................................................................................7
3.3 Summary of key learnings ........................................................................................................8
REFERENCES...................................................................................................................................10
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TASK 1
INTRODUCTION
1.1 Company overview
ASDA stores limited is the supermarket retailer which headquarters is located in West
Yorkshire. In 1970 ASDA has expanded it business by opening a large superstore out-of-town
locations and it also builds stores with district centres in smaller towns (Zsambok and Klein, 2014).
Due to warm weather Asda had been facing poor clothing sale, which led to a difficult start to the
autumn. While Asda move to cut prices which also affect the top line, as it try to maintain a gap
between its competitor price and get closer to discounter Aldi and Lidli.
 Company earned post tax profit worth £780 million in the financial year 2015 and it was
higher than its competitor firms (ASDA.2016).
 Moreover, company is facing threats and business challenges due to entry of new
competitor firms like Aldi and Lidl. Strategic orientation is defined as method foe
formulating strategies for business (Hartman, DesJardins and MacDonald, 2014).
 Company uses SWOT and PESTEL analysis as a decision making tool for making action
plans for the enterprise.
1.2 Purpose of the Report:
 The major objective of the report is to conduct an analysis for the approaches that can be
used for taking decisions of business (Power Sharda and Burstein, 2015).
 Company uses methods of SWOT and PESTEL analysis as a decision making tool.
 In addition to this use of Porter's five forces can be taken for making action plans for
enterprise.
1.3 Description and justification
ASDA is facing diverse range of issues due to increasing competition in retail chain industry. Aldi
and Lidl are giving tough competition to the enterprise and due to it overall operational activities of
the business are getting affected. Performance of the enterprise reduced in terms of overall financial
revenue and profitability (Barlett,2016). SWOT analysis has been conducted by the organization
and it was identified that rival firms are creating threats for ASDA.
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(SOURCE- Solomon, M.R., 2014)
Revenues and profitability of ASDA company is getting affected due to it and good quality
products offered by Rival firms including Aldi and Lidl is taking market share of the company.
Profitability and revenues of business has been affected as consumers are shifting towards rival
firms. Retail industry offer huge growth and success opportunities and due to it many new
enterprises are trying to start their business in this industry.
From the pie chart above it can be assessed that the market share of Tesco is highest that is
29%. Further Asda possess second highest market share that is 17%. It is giving tough competition
to the other competitors that are making entry within the market.
1.4 Description and justification of approaches used
ASDA uses different kind of approaches for running operational activities of the enterprise
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TESCO
Sainsbury's
The co-operative
ALDI
Iceland
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Illustration 1: Supermarket
market share in UK

and meeting the challenges occurring in external business environment.
 Logical approach is used by enterprise for making strategies and taking decisions for
business. Reasons and justifications needed to be given for every action plan formulated
(Gal, Stewart and Hanne, 2013). Involvement of staff members is taken for getting better
recommendations suggestions for carrying out business functions.
 In addition to this ethical approach is also used by enterprise and consumers are rendered
appropriate information about diverse range of commodities offered by the enterprise.
 Mind games are played and brain storming sessions are organized for making effective
strategies for business. In addition to this brainstorming sessions are also organized where
employees sit together for finding better solutions for problems that are faced by the
enterprise.
 Use of Decision support system is also taken for making effective strategies and action plans
for the company. It is an IT tool that supports for making strategic decisions for the
enterprise. Advanced technology provides effective medium for resolving issues and
problems that are faced in the enterprise. ASDA company can make use of DSS system for
making effective strategies for the enterprise.
TASK 2
ANALYSIS AND DISCUSSION
2.1 Critical appraisal of approaches used
ASDA uses different types of approaches for managing the functions of business in effectual
mode. It supports in making effective strategies for enterprise and gaining competitive advantage
over rival firms. Different techniques used by enterprise are as follows -
(SOURCE- García-Peñalvo and Conde, 2014)
Logical approach :- ASDA uses a logical approach for making strategies and policies for business.
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Illustration 2: Decision making process

Justification for every action plan is found out and appropriate reasons are given for selecting a
course of action. Company makes used of decision matrix for evaluating all the options that can be
considered for taking decisions (Triantaphyllou, 2013). In this method a table is created under
which all the available options and choices are mentioned and various factors that affect the
decision are also mentioned. Moreover, use of T-CHART is also taken in which negative and
positive aspect of every decision is evaluated.
(SOURCE- Barlett, 2016 )
Ethical approach :- company uses different types of methods under ethical approach and a
systematic and effective method is used for accomplishing this objective. Fair and transparent
procedure is used for doing advertisements and promotions of business (Yu, 2013). Authentic and
reliable information is provided to consumers about attributes and features of product offered by
ASDA. Utilitarian method is used while taking decisions of business and strategies are formulated
by focussing on all the stakeholders of the enterprise (Schmoldt and Pesonen, 2013).
It is considered that no harm to any individual should be caused on ethical grounds. While
making advertisements and designing promotional strategies it is vital that clients should be given
authentic information. Ant misleading knowledge and data provided to buyers comes in the
category of unethical behaviour and brand image and reputation of organization gets affected due to
it (Yager and Kacprzyk, 2012). Environmental ethics are also taken into considerations and
decisions are taken in effectual way so that no harm should be caused to air, water and lands due to
diverse business activities. In utilitarian method while taking decisions impact of all the decisions
on different stakeholders such as consumers, employees and environment is considered. It supports
in gaining loyalty of consumers and it also aids in ensuring that consumer will prefer for
repurchasing products of organization rather than shifting to competitor firms such as Aldi and
Lida.
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Illustration 3: Decision making

(SOURCE- Yu, 2013)
Mind games :- Management of ASDA uses mind games for bringing innovations and creativity in
the decisions taken for business. Making use of mind games makes it easier for solving diverse
range of problems that are faced by the enterprise (Pettigrew, 2014). ASDA firm is facing tough
competition from rival firm and it is vital that effective decisions should be taken for meeting the
challenges that comes for business. Mind games supports in negotiating on a rational basis and
success and failure of each agreement can be reached (Craft, 2013). Mind games also supports in
increasing awareness and it supports in taking effective and strategic decisions for the organization.
2.2 Improvement of the approaches
ASDA company uses different kind of approaches for taking effective decisions for business. It
supports in making strategic approaches for enterprise and gaining competitive advantage. ASDA
holds a big market share in retail industry and it is a tough and challenging task to maintain position
of the enterprise in market. Retail industry offers huge business opportunities and due to that many
business firms tries to gain advantage (Loe, Ferrell and Mansfield, 2013). There are some
limitations of approaches used by company and some significant improvements can be made by
taking initiatives as follows :-
Logical approach :-
 In this approach company uses T-CHART and decision matrix for taking appropriate
decisions for enterprise.
 In the decision matrix it is required that various options available for taking decisions should
be mentioned.
 It is a tough task to analyses and find various available choices. Due to this there are some
limitations associated with this method and company can take assistance from external
survey agency for collecting data and information required for taking decisions (Thiel and
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I
llustration 4: Growth rate of Aldi and Lidl

Mumford, 2011).
 Moreover, T-CHART is also used in which negative and positive aspect of every decision is
considered.
 It is time consuming task and due to which it requires that planning should be done and time
should be allocated for each activity mentioned in the T-CHART.
Ethical approach :-
 Company uses ethical approach and provide reliable and authentic informations to clients in
its promotional and advertisements. I
 t is vital that consumers should be informed about attributes and features of commodities
offered by the enterprise.
 Business letters can be sent to clients for providing them details about various products that
are offered in retail store of ASDA.
Mind games :-
 When staff members of the organization involves in playing mind games than it consumers
time and normal activities of the organization gets affected due to it.
 It is difficult to design mind games which results in gaining outcome for a specific problem
(Popovič and Jaklič, 2012).
 Sessions can be organized in which employees can be invited to play mind games.
 In addition to this open discussion sessions can also be organized in which all the staff
members can be invited to solve critical problems occurring in business.
2.3 Other available approaches
ASDA company can make use of Scenario approach for taking decisions for solving a
critical business problem. Underlying concepts and theories of this approach are as described :-
Scenario approach :-
 Long term and short term decisions for business can be taken by making use of scenario
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approach. This approach has been derived from System thinking and it defines that many
factors are involved in deriving solutions for a critical business problem (Vaiman, Scullion
and Collings, 2012).
 ASDA company is facing challenges due to entry of Aldi and Lidl that are rival firms for the
enterprise.
 Under this approach group of people sit together for finding solution for a business problem.
Simulation games are designed in which political, environmental, technical and
environmental factors are considered while taking effective decisions for business.
Quantitative approach :-
 This method provides systematic and rational approach for taking decisions of business.
 Under this approach linear programming technique can be used for finding an effective
solution for business.
 It is a mathematical tool for solving complex and critical problems solved by the enterprise.
 By linear programming method allocation of resources can be done in optimum manner.
 This method supports in gaining higher profits and outcomes with making vary little
investments. Problems related to business can be solved in efficient mode and scheduling of
different activities of enterprise can be done in effective mode by making use of qualitative
approach.
TASK 3
CONCLUSION AND RECOMMENDATION
3.1 Justification of the most appropriate approaches
Scenario approach is most effective and appropriate approach for solving critical and
complex problems of business. It provides a systematic method for solving complex issues faced by
a business. In this approach it is required that an organized method should be used for taking
decisions for the business (García-Peñalvo and Conde, 2014). Initially problems are discussed on
which solutions needs to be found out and analyst works for resolving the Issues faced by the
organization. After that timeline is set in which problems can be solved. Different stakeholders that
will be affected by these decisions of business are identified. Basic trends and various driving forces
that gives influence on the issues are identifies and assessed. Scenario is clearly defined and
identified and proper assessment of whole scenario is done for finding a better solution for the
problem.
Quantitative methods are developed for solving different types of issues faced. This method
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provides detailed and effective solution for solving a business problem and it supports in solving
different issues faced by business (Hershfield, Cohen and Thompson, 2012). Management of
ASDA can adopt this approach for solving there current issues and resolving diverse range of
problems faced by business. It is most effective approach that provides effective decision making
tool for resolving complex and critical issues of business. There are various approaches that are
used in ASDA for taking decisions for business and making effective action plans. Logical and
ethical approaches are two such system which provides effective medium for taking decisions for
enterprise. DSS is an effective system which provides medium for making effective action plans for
running business activities. Use of T chart can also be taken for properly taking decisions for the
enterprise. It is a logical approach and provides medium for taking decisions at faster rate. In
addition to that use of quantitative approach provides an effective medium for making use of facts,
figures, data and information for taking strategic decisions for the company. Linear programming
tools can be used for making strategies and action plans for the company. It is the best approach that
can be used by Management of ASDA for taking decisions for the enterprise.
3.2 Application of most appropriate approach
Scenario approach is most effective technique for resolving the business problem faced by
ASDA organization.
 It is vital that organized approach should be used for implementing the methodologies
suggested under this approach.
 All the individuals that are involved in solving problems for business assemble for
brainstorming sessions (Barlett, 2016).
 Members discuss about various driving forces that are accountable for bringing the problem.
There are various external business factors that gives impact on functioning of enterprise.
 A framework is prepared under which all the driving forces are mentioned. Mini scenarios
are created that leads towards solving the issues.
 Delphi techniques can be used for developing a systematic method for future development
and problem solving. It is a effective tool that is used for doing scenario planning and it
supports in designing an expert opinion consensus (Yu, 2013). Delphi techniques provides
procedures for doing forecasting and it also supports in doing optimum utilization of
business.
 Delphi technique is a structured format in which group is formed of individuals and face to
face meetings are organized in which questionnaire are given to all the members. All the
participants focuses on key issues and it assists in finding effectual solution for the problem
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faced.
 Every member should work on a specific scenario so that problem can be solved in lesser
time (Craft, 2013).
 At the end quantitative tools are developed that aids in taking effective decisions for
resolving issues solved by the enterprise.
 It is crucial that all the members sitting for solving the issue should give their best possible
efforts. Recommendations given be every group member should be recorded properly so
that different options can be analysed that can be used for solving a business problem.
 Business judgements can be taken in an effective way by making use of scenario approach
and it supports in taking valuable suggestions from different people that are involved in
action planning.
 An effective and strategic action plan can be made in ASDA so that required strategies
should be made in the enterprise. Initially face to face meetings will be organized and use of
Delphi technique will be taken so that better decisions can be taken by making involvement
of staff members. Moreover, use of quantitative approach will also be taken for taking
decisions for the enterprise. Linear programming tools can be used by making use of data,
facts and figures so that better decisions can be taken for enterprise.
3.3 Summary of key learnings
Summing up the present study it can be concluded that decision making is a complex and
tough procedure. It is required that systematic procedures and processes should be adopted for
solving various issues that are faced by an organization. ASDA is a leading retail chain that offers
superior quality products to its clients. Company is facing tough challenges due to rival firms Aldi
and Lidl . Management of the firm uses logical and ethical approach and in addition to this mind
games are also played for taking decisions for business (Loe, Ferrell and Mansfield, 2013). All the
methods are very effective and there are some limitations also that are associated with them. Some
crucial initiatives can be taken for resolving the issues that are faced by ASDA. Company can adopt
scenario approach for solving the complex problem solved by the corporation. It is an efficient
method and provides systematic procedures for resolving issues faced by the enterprise.
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