Strategic Choices and Competitive Advantage: ASDA and M&S Report

This report provides a comprehensive comparative analysis of the strategic choices made by ASDA and Marks & Spencer (M&S), two major players in the retail industry. The analysis begins with an introduction that highlights the importance of strategic choices in achieving competitive advantage, followed by a comparison of the strategic choices of both companies and their implications. The report utilizes various analytical tools and models, including Porter's Five Forces, SWOT analysis, and the BCG Matrix, to evaluate the strengths, weaknesses, opportunities, and threats faced by each company. It examines the bargaining power of customers and suppliers, the threat of substitutes and new entrants, and industry rivalry. The report also assesses how the strategic choices support the companies in meeting their vision, mission, and objectives, concluding with a summary of the key findings and implications for strategic management in the retail sector. The report emphasizes how these strategic choices impact the company's ability to maintain a competitive edge in the market. The report also highlights the importance of customer segmentation in the retail industry.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Comparison of the strategic choices of each company and its implication on competitive
advantage.....................................................................................................................................1
SWOT Analysis of M&S.............................................................................................................3
Swot analysis of ASDA...............................................................................................................4
BCG Matrix for ASDA................................................................................................................5
How the strategic choices supports the companies in meeting their vision, mission and
objectives.....................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In order to attain competitive advantage, it is essential for companies to develop better
strategies. With the help of this, they are able to build positive brand identity in the mind of
customers and enhance their sales margin as well (Freeman, 2010). In this regard, the present
study is taken into consideration where two firms related to the retail industry are being analysed.
For the same, two companies i.e. ASDA supermarket and Marks & Spencer (M&S) are taken
into consideration. By using different tools, models and other form of analysis, strategic choices
of both the organizations are compared.
Further, this research presents a clear comparison between the strategic choices of both
the firms as well as implications of these choices for their respective competitive advantage.
Portfolio analysis can be defined as a systematic way through which company can analyse its
products and services and make up their association business portfolio (Larsen, Tonge and
Lewis, 2007). This is the best way through which management can evaluate each of the
organization's businesses individually and allocate resources for each.
Comparison of the strategic choices of each company and its implication on competitive
advantage
ASDA is an American owned British supermarket which offers a variety of products such
as financial services, groceries, women clothing, mobile phone etc. On contrast, Marks and
Spencer is also a British multinational retailer which specializes in selling luxury food as well as
clothing and home products (Dess and Gregory 2005).
Nowadays, each and every organization that serves their business operations into global
market faces several issues. These issues can be analysed by the way of developing their
strategic portfolio with the help of using different tools and models. In this regard, some major
issues faced by both the companies in this competitive advantage can be analysed by using
Porter’s five force model and SWOT analysis technique (Poon, 2008). By this, company relates
them effectively with external environment and tries to overcome with the present and existing
issues faced by them. This model helps them in better attainment of their goals and objectives
and enhances their respective competitive advantage.
Porter’s five force model of Marks and Spencer’s and ASDA
1

Threat of substitute: M&S is the largest retailer of UK and in general, there are no
substitutes of food and clothes due to which threat of substitute for this company is low.
However, there are some of the direct rivals in the food market as well as apparel industry such
as Waitrose, John Lewis etc. On the other hand, ASDA is a famous retail industry which also
plays as a competitor of M&S. However, ASDA usually introduces cheaper alternatives due to
which high threat of substitutes (Porter, 2008). This clearly compares the level of threat among
both the retailers.
Threat of new entrants: Retail industry requires huge investment to set up any retail
organization within any country. It includes different sections related to the clothing, food and
products, home accessories etc. Due to this, threat of new entrant for M&S is low as per the
requirement of enormous capital investment. It is the only source through which successful chain
of stores can be easily established. In today’s dynamic and competitive industry, new entrant
2
Threat of
substitue
Threat of new
entrants
Bargaining
power of
Customers
Bargaining
power of buyers
Industry Rivarly

needs to offer something radically new which is highly difficult to do in food and apparel
industry (Mason and Sanders, 2009). Within this same concept, ASDA is also having low threat
of new entrants due to its existing market presence and positive trust of customers.
Bargaining power of customers: Customers are the key player of any business as it helps
them in enhancing their competitive advantage as well as sales margin. In this regard, they can
take several decisions on the basis of their choices that from where; they should buy goods
(Bose, 2008). There are various other options available in the market on the basis of which
bargain power of customer is high as people income are uncertain and they will shop around
more. Further, it can be stated that bargaining power of customers is high. On the other hand,
ASDA gives quality services to their consumers on a low price and provides good customer
support services as well. Here, buyer can use their shopping power in order to shop from ASDA
and satisfy their needs as well.
Bargaining power of suppliers: In order to survive in today’s competitive environment,
it is highly essential for business firms these days to have a fruitful relationship with their
suppliers. In this regard, supplier power of ASDA is high as they provide different goods to the
company and make it possible to satisfy their customer’s needs (Jeffs, 2008). They can provide
goods to retailers or they can directly switch to rivals in case if better prices are given to them.
On the other hand, bargaining power of supplier is low for M&S as they are not
dependent on suppliers as compare to other stores and sell their own branded product. Here,
many suppliers are from developing countries.
Industry rivalry: Competition is increasing day by day within retail industry. M&S is
particularly vulnerable into competition as it sells not only food but also apparel and household
products (Germano and Stephenson, 2012). Due to this, they are facing huge competition from
supermarket such as ASDA and other clothing retailers such as Topshop, Zara fashion etc. On
the other hand, ASDA is facing huge competition with Tesco, Morrison’s etc. as all of them are
working to differentiate with each other.
SWOT Analysis of M&S
Strengths- Marks and Spencer has big brand image in all over the world as it provides
approximately all services at one place. It also includes lots of variety in food and clothes with
different brands (Craig, 2008). With the help of this, they can attract more number of customers.
M&S has put their focus on customer’s satisfaction and provide different services and products
3

as per the taste of UK customers. This organization uses latest technology in their stores and also
provides free Wi-Fi services to their customers.
Weakness- In 2007, Mark and Spencer’s sales profit goes down and the main reason
behind this is that they only provide clothes for elders not for the teenagers and youngsters.
Product price of this retail store is high rather than other stores which might lead to shift the
focus of all their customers. However, company recently uses all the latest technologies as in
before 2007, they did manual work (Thomas, 2007). By this, they are able to overcome with the
weaknesses, increase its working cost and reduce the profit.
Opportunities- Marks and Spencer can open its online retail stores for the better customer
services. By applying this, they can increase their services and raise the brand image. It can also
provide 24 hour home delivery services. By this, they can attract more number of customers.
Company recently has opened 80 new retail stores in the UK, so with these stores, they can raise
their profit (Kale, 2014).
Threats- Other stores like Halo food, Wal-Mart etc. are providing big discount on their
products. Due to this, sales of Mark and Spencer goes down. Government of the UK regularly
changes their policy which is based on retail stores. It puts a negative impact on the brand image
of company. These are some of the most common threats which might lead to decrease the
market share of company.
Swot analysis of ASDA
Strength- The main strength of ASDA is their distribution and selling networks. This
company mainly uses three level of distribution by which they can provide fast services to their
customers. By applying this channel, organization reduces their labour cost and increases the
service level. Company’s supply chain is available in all over the world due to which their
growth and profit rate is high as compare to other retail stores.
Weakness- ASDA is dealing in many items like food, clothes drink etc. so they cannot
put their focus on all the items. This is one of the major factors which may lead to affect their
sales and it can go down. Further, shipping cost is expensive in the UK due to which prices of
the products are so high. This causes impact on the normal income people as they cannot afford
this.
Opportunities- ASDA recently launches their website which helps them in attracting
more number of customers. Here, they can book their order online and by applying this strategy,
4

they have increased their position in the digital market (Crain and Abraham, 2008). Further, it
increases the level of demand also and income of company goes high.
Threats- Changes in government policy regarding price rates puts a bad impact on the
company’s brand image. Competitors of ASDA are few like Sainsbury, Tesco etc., but they all
have their powerful brand image in the market so it is difficult for the organization to beat them.
After all these, there are also some unexpected problems like recession, world war etc. which put
their impact on demand and supply (Kaplan, 2005).
From the above analysis, it is being clearly founded that with the help of applying some
of the best models and tools, organizations can easily maintain competitive advantage. With the
help of using these tools, organizations can easily identify their weaknesses and try to overcome
the same.
In order to attain higher competitive advantage, it is highly essential for organizations to
pursue one of the three strategies i.e. low cost, differentiation as well as hybrid model (Thomas,
2007). For the same, BCG matrix is one of the best options which helps in presenting portfolio
analysis of company such as:
BCG Matrix for ASDA
5

Strategic choice can be clearly represented as a product portfolio which helps company in
attaining their objectives (Kaplan, 2005). Putting all their products in this matrix helps the
company in enhancing the level of competitive advantage and maintaining market share as well.
Stars: All the products of ASDA have high growth and high market share. Some of the most
common products of company are food and non-food items.
Cash Cows: Company keeps all those products that are low in growth as well as low in market
share.
Dogs: Products that have low in growth as well as low in market share.
Question marks: It includes high growth products and low market share.
Within any retail industry, customer segmentation plays an important role. It is becoming
the most essential part of business strategic choice (Poon, 2008). In this regard, it can be
determined that ASDA attracts huge base of customers by providing them high quality services
on discount rates. ASDA and Marks and spencer can eliminate its entire existing problems by the
way of employing the best strategies.
How the strategic choices supports the companies in meeting their vision, mission and objectives
From the above discussion, it has been founded that with the help of going through the
appropriate portfolio analysis, company can easily identify its strengths and weaknesses. It helps
them in identifying those areas which require huge improvement. By this, they are able to attract
huge base of customers and maintain their sales as well. Further, it is being determined that
strategic choices support companies in meeting their objectives (Crain and Abraham, 2008). It is
an effective process in which Marks & Spencer and ASDA put their main efforts on strategic
decision. With the help of these strategies, organizations plan their mission as well as vision and
then, their implementation. In various ways, these strategies help the company such as:
Manager’s responsibility toward strategic decision making: Manager is the person who
knows all the internal and external environment of company. So, they easily suggest the right
strategy which is perfect for the company or not. Before making any strategy, they observe the
strengths and weaknesses of organization and accordingly make future plan. This clearly
indicates the vision of all the employees and they can easily know about what they have to do for
completing the mission of firm (Kaplan, 2005).
Structure of the strategies: Better strategic choices help in attaining higher profit margin
in this organization and explain that what will be the perfect structure for them because with the
6

help of right structure, they can easily guide their team members and achieve objectives. In
structure, all the monitoring and implementation things will be explained. These strategies cover
the long term goals of organization and also influence the employees for better work.
In addition to this, strategic choices lead to provide better development of strategies in which
ASDS and Marks & Spencer can easily divide their strategy into four parts such as:
 Authenticity (A): In this, they can make two strategy for the organization, here second
one is for the backup plan. Sometimes, company uses both strategies for achieving
different activities.
 Believability (b): In this, company believes their employees so that they can help the
entire team for achieving their target (Germano and Stephenson, 2012).
 Communicability(C): This structure shows the communication level like who gives the
instruction to whom. With the help of this strategy, organization easily communicate with
each other and change their ideas and views. Right and effective communication is an
important way to achieve the goals of business.
 Desirability (d): It shows the resources and assets of company which are used for
achieving the business objectives.
Moreover, ASDA usually produces its products on low cost and presents its availability
in the entire market. Through this, they can attract more customers and enhance their sales by the
way of providing them low price products. In addition to this, they also use differentiation
strategy in which they are able to develop their products that are perceived to be unique and can
only be bought in their outlet. It is the most effective competitive strategy through which their
consumer base can be enhanced. In this regard, consumers will become more loyal towards
company. On the other hand, Marks and Spencer has faced huge difficulties at the time of
financial crisis in early 2000 (Mason and Sanders, 2009). Due to decrease in consumer spending,
customers are getting more cautious. However, company has developed its strategic choice in the
past years by recovering its image and restructuring its executive team as well. In this regard, it
can be stated that by effectively analysing their strategic choices, companies are able to achieve
their objectives.
7

CONCLUSION
From the above discussion, it has been founded that both the retail stores M&S and
ASDA are developing better strategies for attaining higher competitive advantage and
overcoming with their existing weaknesses. By analysing their business strategies with the help
of porters five force model as well as SWOT analysis model, company can effectively manage
its business operations. It helps them in attaining higher market share and enhancing their
competitive advantage as well. It has been articulated that with the help of developing better
strategic choices, firms are able to meet their vision and objectives.
8

REFERENCES
Books & Journals
Bose, R., 2008. Competitive intelligence process and tools for intelligence analysis. Industrial
Management & Data Systems. 108(4). pp.510–528.
Craig, F., 2008. Business And Competitive Analysis: Effective Application Of New And Classic
Methods. Pearson Education India.
Crain, D. and Abraham, S., 2008. Using value-chain analysis to discover customers' strategic
needs. Strategy & Leadership. 36(4). pp.29–39.
Dess, G. G. and Gregory G., 2005. Strategic Management. 2nd ed. New York: McGraw-Hill.
Freeman, R., 2010. Strategic Management: A Stakeholder Approach. Cambridge University
Press.
Germano, M. A., and Stephenson, S. M. S., 2012. Strategic value planning for libraries. Bottom
Line: Managing Library Finances. 25(2). pp.71–88.
Jeffs, C., 2008. Strategic Management. SAGE.
Kale, V., 2014. Inverting the Paradox of Excellence: How Companies Use Variations for
Business Excellence and How Enterprise Variations Are Enabled by SAP. CRC Press.
Kaplan, R., 2005. How the balanced scorecard complements the McKinsey 7-S model. Strategy
& Leadership. 33(3). pp.41–46.
Larsen, P., Tonge, R., and Lewis, A., 2007. Strategic planning and design in the service sector.
Management Decision. 45(2). pp.180–195.
Mason, A., and Sanders, G., 2009. Strategic Management: A Dynamic Perspective. 2nd ed. New
Jersey: Prentice Hall.
Poon, M., 2008. Attitude towards Online Retailing Services: A Comparison of Student and Non-
Student Samples. Asian Academy of Management Journal. 13(1). pp113–126.
Thomas, H., 2007. An analysis of the environment and competitive dynamics of management
education. Journal of Management Development. 26(1). pp.9 - 21.
Online
Porter, M., 2008. The Five Competitive Forces That Shape Strategy. [Pdf]. Available Through:
<http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1>. [Accessed
on 19th March 2016].
9

10