Strategic Analysis and Planning for Asda: A Business Strategy Report

This report provides a comprehensive analysis of Asda's business strategy, examining both its internal and external environments. Part A of the report utilizes PESTLE, SWOT, and VRIO analyses to evaluate the macro and internal factors influencing Asda's performance. Part B delves into strategic directions, applying Porter's generic strategies and Porter's Five Forces to assess the competitive environment and recommend a strategic plan. The report covers various aspects, including political, economic, social, technological, environmental, and legal factors; strengths, weaknesses, opportunities, and threats; and valuable, rare, inimitable, and organized resources. It also discusses competitive forces, strategic options, and potential recommendations for Asda's future growth and success in the UK retail market.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Macro Environment Analysis.................................................................................................3
Internal Environment Analysis...............................................................................................4
PART B............................................................................................................................................7
Different Strategic Directions.................................................................................................7
Competitive Environment Analysis.......................................................................................8
Strategic Plan........................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategy is high level plan to achieve one or more goals under different condition of
uncertainty. Asda is the second largest retail supermarket chain store in UK. Asda was founded
in the year 1949 by J.W. Hindell and Noel Stockdale. This reports highlights internal and
external current position of the business with the help of different type of tool and framework.
After that the report highlights the Different strategy theory which can be used by Asda. After
that the report highlights the recommendation and strategic plan which is best suitable for Asda.
PART A
Macro Environment Analysis
PESTLE ANALYSIS
Pestle Analysis is a framework which is generally used to analyse the macro environment
factor which may have impact on organizational performance.
Political Factor: Political factor are at positive side for Asda, as there is good political
stability in the UK. This eventually help company in staying with the same organizational policy
for longer period of time in the stable political situation (Perera, 2017). On the other hand
political decision like Brexit has created some sort of uncertainty in organization as it will get
difficult for company to export the different product that cheaply in UK from neighbour nation.
Economic Factor: Economic factor is also at favourable side, as Inflation rate and
Interest rates in UK are at favourable side, which help company in getting good amount of
finance to run operations of business. At the same time, Increasing Labour cost and Fuel cost in
UK used to impact profit margin of company in long run of business. Also increase in the cost of
the water consumption in the UK has also impacted the business in long run of the business, as
this has increased the cost of the company in the market to carry out different operation of the
business.(Rastogiand Trivedi, 2016).
Social Factor: Social factor used to impact ASDA, as need of customer and trend in the
market used to change on frequent basis. This eventually drive company to adopt different
operation as well. To overcome the same issue Asda used to invest heavily in research and
development program to make a product which can satisfy need of the customer in the market.
Generally, customer in UK are looking to consume healthier food (Christodoulou and Cullinane,
2019.)

Technological Factors: Technological factors are variables that are being used for
evaluating available alternatives with respect to technological capabilities In rapidly changing
environment, technology to carry out operation generally used to change on rapid basis. This
used to create variety of difficulties for an organization. As it gets difficult for the company to
decide the best technology which can be used by organization to carry out the operation of an
organization (Achinas and et.al., 2019). At the same time this factor also used to impact the cost
structure of the company as they has to invest good resources of organization to procure
technology in the organization in long run.
Environment Factor: This factor is on favourable side of Asda, as Asda generally uses
recycled raw material to developed different packaging material in the organization. Also,
organization always used to check the quality of product before offering same to consumer. At
the same time factor like hazardous waste, carbon footprint are factor which need to be
considered by Asda (Perera, 2017). Also climactic change in the UK used to create the variety of
the different issue for the organization, as it used to delay the operation of the business in the
long run.
Legal Factor: This factor looks at different legal laws and regulation through which
organization has to dealt in the organization. Legal Factor are not favourable side for Asda, as
Asda has to compile the operation of business with many type of legal policy (Rastogi and
Trivedi, 2016). This eventually used to impact the efficiency of business as it sometime takes
more than usual time to take different permission to compile with different laws and regulation.
Internal Environment Analysis
SWOT ANALYSIS
SWOT Analysis is the framework or tool which is used to show the internal position of business
in the market.
Strength
Product Line: Asda used to offer good number and variant of product in the market, this
eventually help company in attracting the eye of good number of customer toward organization.
Asda generally used to manage their product line on the basis of seeing the need of product in the
market and offering the same, so that consumer finds it easy to satisfy their need (Gürel and Tat,
2017). Product line of the company includes the retail, technology and childcare product in the

organization. Also organization used to invest heavily on regular basis to improve the same in
the organization.
Financial Position and Goodwill: Asda is having good financial position and goodwill
in the market. This eventually help company in their marketing activity, also at the time of
managing resources in the organization. Goodwill is built by organization with the help of
offering good quality product in the market, it has helped company in earning good profit form
the market. This has built good financial position of company in market (Bull. and et.al., 2016).
Weakness
Profit Margin: Asda used to operate in heavily competitive market, this eventually used
to create the situation in the organization where organization has to sacrifice good amount of
profit from the market, to be competitive. This eventually affects the productivity of an
organization. Also, organization used to provide the variety of the different offer to the consumer
in the festive season. This eventually used to impact the profit margin of the company more
adversely in the long run (Christodoulou and Cullinane, 2019.) .
Employee Turnover: It is another big weakness which is seen in almost all the
organization of retail industry. Asda also faces the same, as Asda finds it difficult to retain
employee for longer period of time in the organization irrespective of different efforts by them.
Asda used to provide one month on board training, different informal activity etc (Phadermrod,
Crowder and Wills, 2019).
Opportunity
Expansion: Their is good opportunity for Asda to expand their business by introducing
new organic product in their product line, as there is good demand of organic product in the
market. This can be done by the organization by analysing the market on the continues basis and
implementing the same information in the product of the company to develop the organic
product of the company Bull. and et.al., 2016).
Technology: Asda also can look to procure new technology in the market to improve the
efficiency of business (Perez, 2016). Asda has to make sure that they procure new operational
management technology to improve product management in the organization. As organization is
also having good financial position, this will not create any financial challenges for an
organization.
Threat

Competition: Competition is one of the biggest threat which is in front of Asda, As Asda
used to defend good amount of challenge in the market, which is offered by competitor such as
Tesco and Sainsbury. This sort of competition also has a greater impact on productivity of
business. Generally this used to enhance the performance of the business, as they have to check
the performance of the different retailer in the organization before taking any decision in the
organization.
Laws and Regulation: Asda used to follow all the legal laws and regulation, to carry out
different operation of business. This at times used to slow down operation of business, as
organization has to take different permission before carrying out operation of business.
Regulation such as minimum wage rate also used to increase the cost of the company in long run
of business (Ervural and et.al., 2018).
VRIO Analysis
Valuable Rare Imitable Organization
Financial resources ✔ ✔ ✔
Product ✔ ✔
Employee ✔ ✔
Patents ✔ ✔ ✔ ✔
Valuable: Financial resources of Asda are highly valuable, which help them in investing
into variety of opportunity. Local food product of organization are valuable product, as this
product are highly differentiated. Employee of Asda are valuable resources of an organization.
As all the employee are given training to carry out different operation (Perez, 2016). Patents of
Asda are valuable resources of an organization. As this help company in getting competitive
advantage in the market.
Rare: Financial resources are not that rare. As there are few companies who also used to
possessed good financial resources. Product of company are not rare, as same product are also
offered by competitor in the market. Employee are rare resources as this employee are highly
skill full and trained. Patent are rare resources of Asda (Perez, 2016). As this patents cannot be
easily available or possessed by competitor.

Imitable: Financial resources of Asda are very difficult for any other organization to
imitate or build. It has been retained by company with the help of continues profit (Desai, 2019).
Product of company also not that costly to be imitate by anyone in the market. Employee of
organization are easy to imitate in the organization. Patents of Asda are very difficult to imitate.
As it is not legally allowed to imitate patent of some other company or product.
Organization: Financial resources of Asda are organized to capture value of same.
Product of Asda are well organized. Patent of Asda are not properly organized as organization is
not using this patent to their full potential (Perez, 2016).
PART B
Different Strategic Directions
Porters generic model
Porter's generic model is the model which used to describe how company used to pursue
the competitive advantage across the different chosen market of an organization (Desai, 2019).
There are three different type of strategy which is given by Porter's generic model. Strategy
given by porters are as follows:
Cost Leadership Strategy: As the name suggest this strategy used to look at applying
different tactic in the organization to reduce cost of company product in the market. After that
this strategy use to offer two option to company to see a good amount of growth. First option is
increasing the profit margin of Asda by charging industry average price while cost of the
company product is reduced. Another way is to improve the market share by reducing the price
of company product apparently with downfall in cost of company product (Desai, 2019).
Differentiation Strategy: It is the second strategy which explains that organization can
look to make a product in the organization which is different from the product of other company
in the market. Organization has to make sure that they used to develop a product which is more
attractive and useful for the customer, as compare to that of a competitor product. Generally,
organization adopting this strategy used to invest heavily on to research and development
process.

Focus Strategy: Companies that uses focus strategy in the organization, used to
understand the dynamic of different market by understanding the need of the customer in the
market. On the basis of the same the organization used to develop uniquely low-cost or well-
specified product for the market. This strategy can be used with both of other strategy as well.
Cost focuses, is the strategy in which organization used to focus on the price of product and
different services which are being offered in the market.
Differentiation focuses is the strategy in which company used to produce new and unique
product in the market by targeting customer and gaining higher profit from the market (Hales
and Mclarney, 2017).
Competitive Environment Analysis
Porters Five forces
Threat of substitute product (Low): This force is favourable for Asda, As Asda used to
offer good amount of the product which generally includes substitute product of organization as
well. This eventually improves offering of company in the market and lowers down the force of
substitute product (Haselwanter, Muskat and Zehrer, 2016).
Threat of Supplier (moderate): This force is moderate for Asda, due to large amount of
competition which is seen by Asda, it eventually gives good power to supplier in the market. As
all the organization always look to have product from good supplier. Asda used to survive the
same force by maintaining good amount of relationship with the supplier of an organization.
Bargaining power of customers (moderate): This force is at favourable side for Asda
as number of customer in the market are much higher than the product to be offered in the
market (Haselwanter, Muskat and Zehrer, 2016). There is less amount of Power in the hand of
customer in the market. In the case of Asda, this threat is at moderate level as customer are
having some sort of power by choosing any other competitor in the market. At the same time
quality of Asda product drive all customer to consume Asda product only (Hales and Mclarney,
2017).
Threat of Competition in the industry (High): This threat is not at that favourable side
for Asda, as there are many competitors in the market which used to offer good amount of
competition in the market. This make tougher for Asda to maintain customer base of an
organization. Asda generally used to invest in research and development program of an

organization to maintain good competitive position in the market (Haselwanter, Muskat and
Zehrer, 2016).
Threat of new entrant (High): This force is also not that favourable for Asda, as there
are many small business who used to enter into the market, on the basis of innovative product to
attract the eye of customer in the market. This used to impact Asda, as organization has to plan
different activity to survive against such competition.
Recommendation and Justification
After going through the all the strategy which is given by model it can be recommend
that, cost Leadership strategy in this strategy the company has to make sure that they used to
offer the company product at lower rate than market average pricing. Reason behind the same is
that it will help company in attracting eye of customer (Haselwanter, Muskat and Zehrer, 2016).
Ansoff Matrix
Ansoff matrix is a tool used by firm to analyse different plant which can be used by an
organization for the purpose of seeing growth in the market. This matrix used to show four
different type of strategy which can be used by organization. Strategy are as follows:
Market Penetration: Market penetration is the strategy in which organization look to
improve the market share of company. This strategy might help Asda in improving the
performance of company product in existing market. As Asda will able to touch more number of
customer in existing market.
Product Development: Product development is the strategy in which organization look
to develop the product, which can be introduced into the existing market to grow the profit of the
company from existing market (Hales and Mclarney, 2017).. Asda, can adopt this strategy in the
organization by introducing a good range of organic product in existing market. Reason behind
the same is that there is good and strong demand of organic product in existing market.
Market Development: This is the strategy in which the organization used to enter into
the new market with their existing product. This is generally done in the organization on the
basis of understanding new market in which organization is looking to enter. Asda, can enter into
many Asian market, as Asian market are developing market and there is good sort of demand of
quality product among the consumer in the market (Haselwanter, Muskat and Zehrer, 2016).
Diversification: It is the strategy in which organization used to enter into new market by
launching new product. Generally, in this strategy the organization used to study the situation of

new market and on the basis of the same used to develop the product to satisfy their need in the
market (Learn, 2019). For adopting this strategy, Asda can invest heavily on research and
development activity of company. Investing in research and development activity will help
company in understanding the real need of developing market. On the basis of same information
organization can develop product in the organization to satisfy need of consumer in developing
market.
Recommendation and Justification
After going through the all the strategy which is given by different model and theorist, it
can be recommend that, Product development will be the primary strategy (Haselwanter, Muskat
and Zehrer, 2016). In this organization should develop the product and introduce the product into
existing market. This strategy will help the company in improving the current market area
coverage. As in current situation organization used to see good amount of competition in the
market
Bowman's Strategy Clock
Bowman's Strategy Clock is a model used in marketing to analyse the competitive
position of a company in comparison to the offerings of competitors. According to this model
Source: Bowman's Clock strategy, 2017

there are eight different position through which all the organization used to go throughout the
operation of the business. Different position of Bowman's Strategy clock are as follows:
Low price and Low added Value: This is the strategic position of a business in which
the organization used to keep the price of the product relatively low in the market, this will help
company in competing with different competitor in the market. At the same time the product of
the company also used to bring very little value for the customer. This situation is not that
competitive.
Low price: The companies using this strategy used to produce large quantity of product
and also there is some value of such product in the market. This strategy used to lower down the
profit margin of the company in long run of the business. This position in strategic clock regards
to cheaper market leader who used to focus on price of the company.
Hybrid: This is the position in the clock which used to define that organization has to
make sure that added value in the product is kept consistence in nature and being offered on
regular basis to customer in the market (Haselwanter, Muskat and Zehrer, 2016).
Differentiation: Differentiation strategy is the position at Bowman's strategy clock, in
which they try to offer the product which is high on realms of quality and used to offer at an
average price and wish to offer highest level of perceived added value to them (Perera, 2017).
Focused Differentiation: It is the position in Bowman's Strategy clock, which looks at
offering the top quality of product and also keeping the price of the product high in the market
(Hales and Mclarney, 2017). Company using this strategy generally maximize profit margin as
they used to perform target promotion, segmentation strategy.
Risky high margin: This is the type of position in which all the organization used to
charge higher prices from the customer for the product which is mediocre in value by the
customer. This strategy is somewhat risky in long run of business, as customer will always look
to cut down the cost (Perera, 2017).
Monopoly Pricing: This is the strategy which is used by the organization who are only
one in the market and they are the one who used to set the price of the product in the market.
Reason behind the same is that there is no fear of competition in the market (Hales and
Mclarney, 2017).
Loss of Market Share: This is the position which used to describe that company is not
able to offer the product in the market, which is desired by different customer in the market.

There are many reason behind the same as price of product is high, quality is not that up-to the
mark and many more (Desai, 2019).
Recommendation and Justification
After going through the all the strategy which is given by different model, it can be
recommend that, Asda has to look at Hybrid and Differentiation strategy. The reason behind
the same is that it will help company in maintaining quality of product in the market and
maintaining the customer for longer period of time .
Strategic Plan
Elements Application
Mission “To be Britain's best-value retailer exceeding customer needs
always”
Vision “To be the most highly valued business by: the customers we
serve, the communities in which we operate”
Objective  To increase the sale of company by 20 percent in
coming one year.
 To improve the customer base of company 10 percent
in coming one year.
 To add different variant product in company product
line.
Strategy  Primary Strategy: Product Development
 Secondary strategy: Cost leadership Strategy
 Alternate Strategy: Hybrid and Differentiation Strategy
Tactic Product: Asda is looking to bring organic Biscuit
Price: Screaming pricing method
Place: Domestic market of UK. Direct and Indirect channel
Promotion: Social media marketing and newspaper marketing
People: Hire new employee in the organization and will
provide training (Perera, 2017).