Comprehensive Strategic Analysis of ASDA: Enhancing Market Edge

This case study provides a detailed analysis of ASDA's business strategy, examining its competitive position within the UK retail market. It employs several strategic frameworks, including PESTLE analysis to assess the impact of macro-environmental factors such as political and economic conditions, SWOT analysis to evaluate ASDA's internal strengths and weaknesses, VRIO framework to analyze strategic capabilities, and McKinsey's 7S model to evaluate internal alignment. Furthermore, the report applies Porter's Five Forces model to understand the competitive dynamics of the retail industry and uses the Ansoff matrix to suggest growth strategies. The analysis culminates in a strategic management plan for ASDA, offering recommendations to enhance its competitive edge and market position, focusing on supply chain management, technological advancements, and sustainable practices.

Business strategy- ASDA

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Activity 1.........................................................................................................................................3
1.1 Discussing an environmental analysis conducted on ASDA using PESTLE.......................3
1.2 An organizational audit on ASDA using SWOT analysis ...................................................6
Activity 2.........................................................................................................................................7
2.1 An analysis of strategic capabilities of ASDA using VRIO framework...............................7
2.2- Mckinsey’s 7S model as a strategic management tool........................................................9
ACTIVITY 3 .................................................................................................................................12
3.1- Applying Porter's five forces model to examine competitive forces of retail industry
where ASDA operates...............................................................................................................12
3.2- Using Ansoff matrix to devise suitable tactics to improve competitive edge and market
position based on results...........................................................................................................14
ACTIVITY 4..................................................................................................................................16
4.1 Interpreting strategic planning for ASDA applying porter's generic strategies .................16
4.2 strategic management plan for ASDA ...............................................................................18
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
An action performed by the company and decision taken to achieve business goals and
target in order to secure competitive position is called business strategy. The present report will
give detailed information business strategy used by ASDA, UK the retail store providing
facilities like fresh groceries, clothing and homeware. The case study will highlight SWOT and
PESTLE analysis of ASDA and the impact of macro environment. The strategies can evaluate
the strength and weakness and what more improvement are to be needed. Furthermore, the report
analysis strategic capabilities and key components by using the VRIO framework. Along with
that, the case study provides evaluation of the internal environment by using McKinsey's 7S
framework. Additionally, report will produce an industry analysis using Ansoff matrix and
porter's five forces model. Ansoff matrix is strategy used by company in order to find out growth
and development of business. At last, the report will provide strategic management plan and also
outlines the recommendations on it.
Activity 1
1.1 Discussing an environmental analysis conducted on ASDA using PESTLE
A. PESTLE analysis
It is a business tool which is used by company to gain knowledge about various key
factors of an environment. Nowadays, it becomes necessary for every company to keep track on
each business decision. According to experts, everything happen around globe leaves an effect
company. This method is used by company to determine the future requirement of business and
in improving measures for strategic and effective management. The present company utilize this
method as business analysis tools for making suitable decision for their present and future
requirement. It is said that this method is more than just understanding the strategy of market. It
is mandatory to conduct a situational analysis before taking any strategic decisions in the
business.

Source: (pestle analysis, 2021)
C. Analysing the impact and influence of the macro environment on ASDA
Political factors- There are many political factors that impact on ASDA like any other
company. Factors like legislation, consumer rights, tariffs and taxes. Different Factors in which
rules, policies and regulation of local government determine the growth of business, fall under
this category. There are few factors that can impact on ASDA like war. Due to Brexit, many
companies has faced challenges and it has created a lot of uncertainty. The cited company
benefits from a relatively stable political atmosphere in the UK (Perera, 2017). The firm should
think of supply chain of future in response to Brexit. According to experts, it is noted that this
deal between the EU and UK has been a hope for both parties and many other firm. It is seen that
there is a negative side of political decision as political instability has been caused the lobby shift
from one manager to another. Because of political leadership modification decision-making
process has been affected.
Economic factor- Economic stability and performance of the company is totally
dependent on the economies' situation. However, due to government consumption and inflation
rate, the firm is also positively and negatively affected by these factors. Because of less
unemployment rate which was 3.9%, the clients for the company kept on increasing on the daily
basis. Many people lost their jobs thus, it reduces their purchasing power and shopping activities.

After pandemic Covid-19 the unemployment rate is increasing and there is a decreasing trend of
sales in ASDA.
Social factor- There are many important social changes for ASDA they are a healthy
lifestyle, ageing population, physical fitness. With the help of social factors company can
introduce new services and products in the market. By evaluating the services and products the
company can improve its segmentation strategies which is positive impact. Nowadays, increase
in demand for vegan food, vegetarian and organic food items has become opportunities for retail
company which deal with groceries. As there is an increasing demand of ethnic food the supply
chain has been developed in many other countries where ASDA operates its business. It is noted
that majority of the population is young in the UK, and they fall under the segmentation category
of ASDA. Moreover, it has been noted that there is a shift in the taste and trend in the society
with the increase in the market competition of the company. It has affected the revenue of the
firm and now they devised an effective plan to compete in the market.
Technological factor- Due to rapid change in technology and innovation many
businesses has affected. ASDA also use the latest technology in order to satisfy their customers.
The firm used the fastest and latest technology in its retail business and distribution which has
benefited the firm in decreasing the wait time. All the big companies dealing in same business
are constantly working on how best to make use of new technology in order to attract customers.
The firm needs to be ready to implement any rapid changes in the technology. Due to this, the
firm needs to keep funds always ready to deal with the changing technology in order to compete
in the market and remain stable.
Environmental factor- These factors include waste disposal laws, energy consumption
and atmosphere protection and biodiversity protection laws. It is noted that factors like pollution,
green economy and carbon footprint are important part for ASDA. Nowadays people are more
aware about the impact company have on the environment, therefore due to such pressure or one
can say burden all companies need to operate in an eco-friendly manner. For example- Due to
legislation made by government to protect the atmosphere, the company has started making eco-
friendly products. Thus, they have focused on investing into sustainability and CSR, which
effects and influence on the finance of the firm.
Legal factor- It includes employment law, labour law and consumer law which is made
by the government. All the documentation part of the firm such as audit, bookkeeping etc. comes

under the legal structure. It creates negative impact also as sometimes too much government
intervention legal structure may harm the operations of business. Due to government rules on
minimum wages in the UK, firm cannot pay any employee less than required wages.
Step taken by ASDA to overcome PESTLE factors
In order to overcome with the PESTLE factors ASDA Focused on supply chain
management, labour supply and pricing strategies in response to Brexit so that they can deal with
the challenges during sending and receiving goods. Also, the company has concentrated on
developing new technologies in order to gain competitive advantages. By investing more on its
websites and mobile app so that customers can purchase easily. The firm is also stopped using
plastic and focused on carbon footprint to protect environment.
1.2 An organizational audit on ASDA using SWOT analysis
A. SWOT analysis
This is a method used by company to analyse financial position and performance of
business. For successful business, every company must evaluate its weakness and strength before
making any strategic decisions, business should ensure a complete and proper detailed list of
threat and opportunities so that they can take action accordingly.
C. Analysing the impact and influence of the macro environment on ASDA
Strength- It is the most popular retail company in UK and provide the customers to save
money and make a better living using their huge range of products and services. ASDA provide

facilities like To You parcel services and distribution network with excellent marketing
campaigns. Positive impact- The company has clear aims to reduce environmental impact of
their business operations.
Weaknesses- The major weakness of ASDA is that it has few global presences as
compared to its competitors such as TESCO (Christodoulou and Cullinane, 2019). Impact- It is
noted that the firm has faced competition from local vendors as the company's ability to sell
prices have basically restricted their entrance in few areas. The company has faced problems
related to fake advertising which has got the wrong image for the firm. The location of the
company stores are not planned in strategic way, as there are different areas, which are not
covered by the company.
Opportunities- The organization can expand its business operations into many new
countries and areas like photo department and jewellery. With the help of smaller company
acquisition ASDA can expand its business, also starting its online marketing will be beneficial
for the business. Thus, the goal of recycled package and reduction in wastage of food can be
achieved for business development. Impact- By doing so, the firm can increase its productivity
and performance in the competitive world.
Threats- Price war with other competitors is a major threat to the firm. A consistent price
fluctuation would impact the business and rapid change in technology and government policies is
also a huge threat to the business operations. Impact- After pandemic, sales and operations has
been affected. TESCO, Amazon and Sainsbury are the competitors of the company as they are
expanding in various parts of the country in order to attract customers.
Step taken by ASDA to overcome SWOT factors
In order to attract more customers, ASDA is expanding its business in various locations
and emerging markets. By developing its supply chain management the company is also
improving on distribution channels and improving marketing campaigns. By taking surveys and
improving network, the firm is providing facilities to customers. ASDA is maintaining constant
connect with their clients through social networking websites where they share feedback and
make necessary changes. Also, the firm has reduced the use of plastic and reduce the impact of
environmental factors on society. The firm is developing its marketing strategy after doing
market research such as pricing strategy, product strategy and distribution channels.

Activity 2
2.1 An analysis of strategic capabilities of ASDA using VRIO framework
A. Strategic capabilities
In order to achieve profit, financial position and competitive advantages the firm operate
its day-to-day business as well as grow its capabilities and resources. In ASDA, the managers
need to understand how their company is different from others so that they can achieve success
and goals, Thus, this concept is known as view based on resource strategy. The firm can fill the
gap between impact and strategy by focusing on capabilities. It is essential for managers and
leaders of the company to create and sustain a sense of direction.
B. Identifying the key components of strategic capabilities
There are two components of strategic capabilities named as competences and resources.
Competences are the strategic ways the assets are used by the company effectively whereas
Resources are the assets that company have used or can call upon (Ginter, Duncan and Swayne,
2021) The organization needs to select and choose the most relevant vision to attain proper
utilization of resources. These strategic capabilities can not be fixed in nature in order to obtain
long term success or business goals. To meet business and customer needs of changing
environment the company needs to renew and recreate its business strategy effectively. This will
further help to achieve business performance and provides competitive advantages.
C. Analysing strategic capabilities of ASDA by using the VRIO framework
VRIO framework has been adopted by the company to evaluate the relative importance
of required resources to the company. It is a resource that the company utilize while making
decisions in order to focus on strategic management. Managers and leaders at the company use
VRIO in order to build competitive advantages to achieve sustainability by understanding in
better way. This sustainable competitive advantages can help the firm supplements to appreciate
above mentioned average profits in the company.
Value- According the experts, there are many critical resources that are more valuable to
the company such as human resources, operations management, financial related resources and
expertise in marketing.
Rarity- This capabilities of company are performing uniquely in order to meet customer
satisfaction and to achieve goals. ASDA supplements needs to ask about the resources that are
valuable to the company are rare or costly to attain. If the resources are not rare or unique than

both present competitors and new entrance will easily able to get the access and can enter the
competitive market.
Costly to imitate- Due to increase in threats of disruption many company face challenges.
On the basis of data, it is seen that the core differentiation of the company is difficult to imitate.
The company needs to note imitation can happen in two ways such as competitors coming up
with same products and duplication of the products. It can ultimately disrupt the company's
structure which need to be noted while taking business related decisions. The firm needs to focus
on superior performance to maintain its position.
Organisational competence and strategic capabilities in order to make most of the
resources effective- The company needs to focus on competence to exploit the maximum out of
those business related resources. It measures how much the firm has able to control the rare,
valuable and difficulty to imitate resource in the market. Here, the exploitation level is totally
dependent on execution strategy and team of the company. Therefore, it is a better way to assess
the human resources quality in the firm. In this way, strategic capabilities tend to arise over time
period as a company takes strict actions that improve its resources.
Strategic
capabilities
valuable Rare/unique organized imitable result
Brand image yes yes yes yes Competitive
advantages
Pricing and
differentiation
strategy
yes yes yes yes Temporary
advantages
Innovation yes yes yes yes Competitive
advantages
Customer
demand and
service
yes yes yes yes Competitive
advantages

2.2- Mckinsey’s 7S model as a strategic management tool
In corporate world, different types of essential and beneficial models are applied in
regard to companies. Here, in case of ASDA, Mckinsey’s 7s concept is utilized, which may
clearly define the internal environment of chosen supermarket, its capabilities and weaknesses
appropriately. This model refers to one of those strategic tools that allow management to
examine their organizational design and capabilities.
Strategy-
According to this element, ASDA is quite effective in regard to strategy and plan
development as it may have supportive management among which each stakeholder or supporter
is capable to develop the best plan which enable firm to gain competitive edges that are available
in the retail industry (Gechkova and Kaleeva, 2020). By developing effective tactics,
organization may give tough competition to its rivals, which play important role in progress of
brand more than its rivals. It may increase its sales, generate revenue and enhance performance
level.
Structure-
Illustration 1: McKinsey 7-S Framework
(Source: McKinsey 7S Model, 2021)

ASDA organizational structure may represent the way its venture division and
departments are managed and organized in effective manner, which enable firm to deal with key
challenges that may put negative impact on its business. Supermarket may utilize hierarchical
organization structure, where each department may work in productive way, which is quite
essential for company to do so (McKinsey 7S Model, 2021). With the help of appropriate
organizational structure, firm may grow rapidly and productively, and also take pleasure of
increasing operational efficiency more than last few years or months.
Systems-
In order to gain competitive advantages, ASDA and its management may conduct
effective and beneficial practices and follow processes such as supply chain management that
may help to increase speed of product delivery on time. It can be said that systems that are
utilized in the company considered as area of venture that identify how it is done and it might be
main concentration for manager during any form of change such as organizational and
management. It may use the best process of supplying items from warehouse to retail ASDA
stores by using the best sources.
Shared values-
This element is the core of overall model, which consider as key norms and valuable
standard that may direct candidates' behaviour in ASDA and firm action as well. For example,
the mission and vision of supermarket may drive the attention of employees toward achieving
these. It may influence their behaviour and practices in positive and productive manner, which is
beneficial for themselves as well as company in term of increasing productivity and operational
effectivenesses.
Skills-
Its fact that the success of any company rely upon their employees and skills that they
have. In case of ASDA, organization deal with many challenges and issues in effective manner
as it may have skilled and talented teams of employees. Each employee plays important role in
growth of supermarket as they may utilize their key competencies to make firm more productive
than last era, which is quite essential and beneficial too for it.
Style-
Leaders in the organization by using situational and transformational leadership styles
make individual candidate capable to achieve common aims and also enable to make

supermarket productive in term of enhancing capability to enhance customers satisfaction level.
Their behaviour and attribute may contribute to boost candidates morale, which is important for
them to do so.
Staff-
This concept is concerned with what form and how many candidates may a firm need and
how each candidate might be hired and selected as well as motivated at workplace. In order to
build diverse workforce at work area such as ASDA outlets, human resource management may
hire employees via using online and offline recruitment approaches. Furthermore, they may
effort to motivate candidates in term of providing incentives and other type of performance
appraisal that may drive their attention toward making achievable commitments.
ACTIVITY 3
3.1- Applying Porter's five forces model to examine competitive forces of retail industry where
ASDA operates.
In the world of business, there are different types of models and strategic frameworks
accessible and utilized in the context of many companies whether it is small or large (Mugo,
2020). These concepts are used and applied, in order to determine the competitive effectiveness
of an industry and forces that it encompasses. Here, in case of ASDA, Porter;s five forces model
is apply, which includes variety of forces that may put impact on sector in which chosen
company may run its venture and also the supermarket.