Business Strategy and Analysis Report: Asda's Performance

This report provides a comprehensive business strategy analysis of Asda, a major UK supermarket chain. It begins with an introduction to business strategy and its importance for organizational success. The report then applies various strategic frameworks to Asda's situation, including PESTLE analysis to assess the external environment's impact, SWOT analysis to evaluate internal strengths and weaknesses, and Porter's Five Forces model to assess the competitive landscape. The report also examines Asda's strategic objectives and the influence of stakeholders. Furthermore, it explores the Ansoff Growth Matrix to interpret potential future plans for Asda, including market penetration, market development, product development, and diversification strategies. The report concludes by summarizing the key findings and emphasizing the importance of situational analysis and strategic planning for Asda's continued success and global expansion. References to relevant books, journals and online resources have been added to support the analysis.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 How external environment impact and influence the organization........................................1
LO2..................................................................................................................................................2
P2 SWOT analysis access within organization............................................................................2
LO3..................................................................................................................................................3
Evaluation of competitive forces and strategies to improve competitive edge...........................3
LO4..................................................................................................................................................4
P4 Implementation of theory to interpret future plan for Asda...................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Business strategy is the basic step for any organization or enterprises which helps them to
design plan in order to achieve its goals or objectives. Strategies help the management of
business for strengthening performance of the organization. This report discusses the situational
analysis of Asda to improve its strategic management decisions like pestle, swot and porter's
five model. It also covers the Ansoff model to make better strategies for management plan in the
future.
LO1
P1 How external environment impact and influence the organization.
Pestle model can be applied to analyse the impact of external environment in Asda and its
strategies.
Political factor – Asda got a good chance to expand its business in European market as most of
the trading blocks eliminated. Asda can trade its products in China as they got the acceptance
from the World Trade Organization, this can develop their market as they can import and export
products to different countries. Political factors influence regulation and regulation shape Asda
business environment.
Economical factor – Asda success and failure depends upon the economy of the country where
they are operating because a time can come when UK's economy will experience major
problems and most of the fall in economy is due to unemployment, there are condition where
people got fired from the organization and overall decreases the power of purchase as their
financial status fall. These factors can influence much income a company generates in a quarter.
Social factors - With increasing customer information, there is increase in food which is more
health conscious. Asda is working on this factor so that it can offer healthy and hygienic food to
those people who are aware about their healthy diet.
Technology - Like other organizations, Asda must ensure that other people must accept
technological innovations such as online trading and electronic marketing must succeed.
Legal factors – The company's headquarter is in UK, so they must ensure that different rules are
respected and Regulations were introduced which is implied by government of UK so that Asda
can be aware of breaking of rules and regulations.
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Environmental factors – The organization implemented various approaches to maintain the
sustainability of environment such as introduced to adopt an approach which is eco-friendly
where companies use recycled materials different situations such as packaging most products.
It is important for companies to conduct external analysis, because the information
gathered shows if there are growth and expansion opportunities. British supermarket chain of
organization that specializes in raw materials, electronics, Financial, clothing and food services.
Starting in December 2010, the retailer's share will become the entire UK food market is 16.5%
(Asda overtakes Sainsbury's to become second largest supermarket,2019).
LO2
P2 SWOT analysis access within organization
SWOT analysis
Strengths- Asda has a good network of its business all around the world which shows its strong
brand recognition and is beneficial in saving as they have many retail outlets which generates
higher revenue. As Asda's parent company is Wal-Mart, therefore, they have strong in
functioning concepts same as the parent company works in United States.
Weaknesses – To improve its competition edge, they sell their products at cheaper rates which is
the main weakness of the organization, although they sell good quality products and services.
Sometimes, this can mean that companies sell low quality products (Chang, 2016). The
management and coordination activities is not that much good which is another weakness and
creates impacts on the organizational goals and profitability.
Opportunities – The possibilities that Asda can use because Britain belongs to the European
Union Asda has the opportunity to expand to high-potential European markets. In addition,
companies can diversify service offerings.
Threats – The organization is having a number of competition in the retail market such as
Tesco, Mark and Spencer etc. There are foreign companies also like Aldi and Lidl which is a
German company and gained a good name in the retail market of UK which is another threat to
Asda.
The mission statement determines the organization's long-term orientation. ASDA's
mission is to be the best UK retailer that always exceeds customer needs. In addition to the
mission, Asda has target requirements. Asda objective is to make goods and services accessible
to everyone. Stakeholder has a big impact on Asda and Kellogg objectives, because they are the
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reason why customers return to their business to buy more products. Internal stakeholders
include director, managers and employees which help the organization to achieve its objectives
by completing organizational goals. Suppliers are external stakeholders which influences Asda
and Kellogg's quality objectives as one of their main goals is to provide the highest quality
products to their customers (Eaton and Kilby, 2015). Now it depends on suppliers offering
products to the public and if the product is not of high quality, the customer will feel dissatisfied
and not likely to return to buy more, it will have a negative impact on profits because there will
be fewer customers.
LO3
Evaluation of competitive forces and strategies to improve competitive edge.
Porter's Five model
Threat of substitute product – When new retailers enter the market with similar product and
customer can acquire from any retail shop which divides the market share of that product and
creating threat for the existing retailers. In Asda's perspective, department stores are usually
called corner shops, health food stores, licences can be considered as a substitute threat (Linder
and Williander, 2017). This threat can be low as not all the products are similar in the shops,
customers have to go for buying products to the supermarket which are not available with the
competitors at the reasonable rates.
Bargaining power of buyers – The customers have the opportunity to negotiate with the
buyers as they sell large number of quantities at sales. Therefore, Asda provide their
customers to shop at reasonable rates and can bargain with the price if the customers are not
satisfied with the quality and quantity.
Threat of new entrants – The company is having threats from new participants which can
considered as low because this requires several Newcomers make the most capital investment for
every newcomer to establish themselves in the market. However, new entrants will need a long
time, until participants are examined.
Bargaining power of suppliers – The external stakeholder like suppliers plays a significant role
in achieving organization goals and therefore, giving them the power to negotiate with the
organization and the ability to negotiate with Asda suppliers is low. They must deliver products
according to the conditions of different supermarkets.
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The following can be the appropriate strategies for Asda to improve the marketing
position and competitive edge.
 Be the first on the market - Buyers tend to stick with what they know and Asda are the
first on the market, they can take advantage of the fact that have no competitors with their
offer. However, it might take a while for new ideas to reach the market.
 Switch to the market – The organization can expand its business in different markets in
order to give competition and distinguish to their rivalries.
 Make product something new and better - Asda can explore competitors and find out
how they deal with market problems.
LO4
P4 Implementation of theory to interpret future plan for Asda
Ansoff Growth Matrix is an important planning tool that companies can use to determine
their growth strategies.
 Market penetration – When the company plans to sell its existing product in the same
market where they are operating and the strategy has low growth according to Ansoff
model. Most of the organization uses this type of strategies to maintain their business in
the market.
 Market development - The process in which companies are looking for new markets for
current products. Asda decided to enter the Indian market and this is an example of
market development (Menon and Yao, 2017). This is a risky strategy because new
markets have not been tested and however, the risk is moderate because the product is
available.
 Product development - It's about introducing new products in existing markets. Asda
has developed new products such as organic food for sale on existing markets. This is a
risky strategy because new products are very common. However, the risk is low because
new products must be sold on market in which they are currently operating.
 Diversification – When the company plans to create new products with their innovative
ideas in different markets leads to diversification. This is a very fast growth strategy that
has been successfully used by many companies, such as ASDA. However, this is the
most risky choice because there are no products or markets that have been explored
before.
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The important strategy for planning can be improved by analysing the organization with the
Ansoff's matrix model. The growth of the company can increase its potential and improves the way
of thinking with using this model. This analysis can help organization to review their markets and
products in a manner that will enhance their organization strategies for future planning.
Asda level strategy - The company has many stores but it is not expanded worldwide, Asda must
develop plans to stay on top of UK market and also compete with international market. The first
level is internal growth and second is acquisition (Pisano, 2015). First direction is internal growth
which will help the firm to develop new products by using internal resources like opening new
electronic firm. Second direction is alliances which is important for Asda to extend into the another
country by making alliances with another company as it will help Asda to become multinational
firm and make more profit. Asda will develop new products like home appliances and all the home
machines and these strategies will Asda to move to the multinational company and will boost the
profit, revenue and also build brand image.
CONCLUSION
From the above report it had been summarized that it is necessary for any business to do
the situational analysis like pestle, swot, porter model to analyse the business market which can
be beneficial for Asda to expand its business worldwide. This report also shows model like
Ansoff which can be suitable for Asda to develop its strategic marketing plan to enhance its
profitability, productivity and its brand image all over the world.
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REFERENCES
Books and Journals
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Eaton, D. and Kilby, G., 2015. Does Your Organizational Culture Support Your Business
Strategy?. The Journal for Quality and Participation. 37(4). p.4.
Higgins, D., Omer, T.C. and Phillips, J.D., 2015. The influence of a firm's business strategy on
its tax aggressiveness. Contemporary Accounting Research. 32(2). pp.674-702.
Linder, M. and Williander, M., 2017. Circular business model innovation: inherent
uncertainties. Business strategy and the environment. 26(2). pp.182-196.
Menon, A. R. and Yao, D. A., 2017. Elevating repositioning costs: Strategy dynamics and
competitive interactions. Strategic Management Journal. 38(10). pp.1953-1963.
Pisano, G. P., 2015. You need an innovation strategy. Harvard Business Review. 93(6). pp.44-
54.
Zhong, T. and Li, J., 2018. Business strategy, managerial expectation and cost stickiness:
evidence from China. In The Routledge Companion to Accounting in China (pp. 127-139).
Routledge.
Online
Asda overtakes Sainsbury's to become second largest supermarket.2019. [Online]. Available
through : <https://www.bbc.com/news/business-47784817>.
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