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Essay: Analysis of Asda (including SWOT)

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  • Analysis of Asda (including SWOT)
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ASDA is a British business firm with large distribution channel. It is a private company subsidiary having retail business. The beginning of the ASDA was in the year 1920s but the expansion & diversification took place in the year 1949. ASDA has its headquarters in Leeds, West Yorkshire, England. Wal-Mart acquired ASDA in the year 1999 and now it is the second largest supermarket in Britain. ASDA is involved in marketing of grocery, general merchandise; financial services & has recently introduced mobile. ASDA has the slogan as- ‘Britain’s lowest priced supermarket’. The main promotional activity of ASDA is their low price strategy. Its operating income is ??638 million & has 175,000 employees working in it. ASDA has been endowed thrice as one of the top 10 UK employer by Sunday times in the years 2001, 2002 & 2003 consecutively (Asda, 2012).

ASDA Mission, purpose and values

ASDA has the mission as to be the best-value retailer in Britain by exceeding customer needs always.

ASDA has the purpose as to make goods and services more reasonable for everyone.

ASDA has a series of values. They are:

  • To respect for the individual
  • To strive for excellence
  • To serve to the customers.

Hierarchical Structure

ASDA has a complex hierarchical structure where many personnel’s are involved and which is aligned with local and global business atmosphere. The structure ASDA follows the Matrix structure aligned with business streamlines and country professional services. A typical structure of ASDA is given below:

SWOT Analysis of ASDA

Strength

  1. There is a wide range of product & service offered at ASDA including the financial services
  2. ASDA is much known for its amazing marketing campaigns conducted
  3. It is in constant touch with its customers. It is via social networking. It asks about the feedback, conducts& competitions, etc.
  4. It renders socially responsible through CSR initiatives
  5. It has nearly 175,000 employees working at nearly 500 stores.

Weakness

  1. The global presence of ASDA is very limited as compared to other competitors
  2. Their ability to sell prices have constrained their entry is few countries as the country has threat of competition with other local vendors.

Opportunity

  1. Expanding the business in some other areas like pharmacies, opticians, jewellery and photo department, etc.
  2. Offering products & services in the markets that are developing like India, China, etc.

Threats

  1. Pricing of the products & services with that of other retail chain brands
  2. There is always a pressure to maintain low pricing.
  3. The changing policies of various Central Governments

Competitors

1. Tesco
2. Sainsbury’s
3. Morrisons

Resource-Based View Analysis

Apart from external factors there are some internal factors affecting business which the company should be more careful. The organization should give equal factors to the internal factors like External factors. Internal analysis of the environment can be best understood with the help of RBV theory. Resource based view theory is initially developed during 1990s. The important points in this theory are Identification firm’s potential key resources and evaluation of resources using VRIN characteristics. This theory is a basis for competitive advantage. (BARNEY.J.B, 1991)

The resources of the firm can be broadly classified into Tangible and intangible resources.

Tangible resources of Asda are its employees, suppliers, customers, infrastructure and IT based websites and software. Intangible assets include brand recognition, low priced policy, goodwill and reputation. The key resources can be evaluated using the VRIN (valuable, rare, Inimitable and non-substitutable).

Tangible Resources

Human Resource Management

Asda is very particular in employing best candidates for all the vacancies. It works jointly with Remploy and Stonewall, to recruit employees from a bigger pool and encourages applicants from different culture and background. Since Asda employs best candidates in the market, it’s very important to retain them for a quality customer service. Asda involved their colleagues in a survey in 2013 and main outcomes of the survey are opportunity for everyone, respecting one another, Proud to be part of Asda and equality at work place. (Fine, 2009)

Technology Integration

Asda uses the technology in all of it functions. The organization has implement enterprise resource planning during the year 2010 to make sure the company achieves effectiveness across the organization. Apart from Physical stores, Asda has created a website to enable the customers to do online shopping. (Bensoussan E. B., 2008). Asda Direct is the software, the company uses for its integration of products.

Asda employees more than 25% of its employees in R&D to create value to the customer.

Inbound and outbound logistics:

Asda is the cheapest retailer and its main objective is to sell products at a cheaper rate. Asda Woks with it suppliers whenever there is gap in the supply of products. Asda worked with L’Oreal to bridge the gap between the inbound service to the customer and implemented plans to improve the service. This helped Asda to reduce its stock holding days by 39% which is one of the major cost reductions. (Anon., 2010)

Service:

Asda’s main aim is to provide a pleasing experience for their customers. In joint with Wal-Mart Asda follows 10 foot attitude to serve the customers. It means greeting the customers within 10 feet. Also whenever customers return their products Asda accepts them without any question. (Institute of International Relations and Area Studies, 2004)

Marketing & Sales:

Asda generates a low price demand to their customers. Main way of its marketing strategy is it word of mouth. A satisfied customer spreads his experience to friends, neighbours and relatives which is the best way of marketing. Since the main strategy is word of mouth it helps the company to reduce the cost involved in promotion and marketing strategy. (Abraham.C.S, 2006)

As a basis of VRIN Table, some of the points to be concluded about the resources of Asda is integrated technology along with supply chain is a good pair to beat the competition in the market. Leadership, work culture and management help to retain the employees in the organization. (Heene, 2008)

Intangible Resources

Competitive advantage Analysis

Competitive advantage arises when the firms is able to provide the similar services and products like their competitors at a reduced cost. Asda is definitely providing competitive advantage as its main strategy is to low price for their products and services. Porter has suggested three strategies to analyze the competitive analysis. Differentiation, Focus and Cost leadership. (Porter, 1998)

Differentiation:

The main focus is one the one or more standards used by the customers to choose a product or service. Asda should focus on those criteria and improve to be selected by the customers when similar products or services available in the market. To succeed in differentiation Asda should have some internal strength such as primary scientific research, Efficient R& D team, brand image for quality and strong sales and marketing team. (Cowe A., 2011)

Cost Leadership:

The aspect involved in the strategy is low price among the market and become a cost leader. When there is a reduction in price, automatically sales increases and the profits can be achieved at a higher rate. Asda is following this strategy now and a cost leader in the UK retail market. Some of the strengths Asda has to follow this strategy are proper and planned distribution channels, Efficiency in selecting the suppliers and good relationship with their suppliers. (Porter, 1985)

Focus:

The organization should focus on the different segments of the market. In case one segment fails, it can be got from another segment. When the market is segmented, it helps to attract more customers as it gives variety in products and services. One more advantage of focusing on market segment is broader group of people can be targeted.

Understanding how professional development advances leadership in ASDA

The role of a leader was very well played by Archie Norman in ASDA. Re-developing of envision is not much investing, a totally new picture for organisation has to come back to the organisation which has been unsuccessful to keep the possession of its way to their main strategy. Archie Norman was introduced as CEO of ASDA, UK in 1991. The position of ASDA that time was pathetic when compare to its competitors. Basically ASDA was losing upmarket. At that time, ASDA was using a major designer to remodel their stores. For increasing their Product range, introducing own-label products and for appointing new management, ASDA was struggling a lot. Due to which there was increase in costs thereby reducing the customers. Also there was an introduction of new range of non-food retailing products such as furniture and carpets. This led ASDA to a ??1 billion debt burden. Archie Norman’s challenge was to take ASDA to the First Position. It was no doubt a difficult task by financial point of view. But with the good effort of ASDA’s Way of Working, it became possible.

With the great effort of Norman, an altogether new approach was formed of transforming. It was a powerful system where employees enjoyed working and regularly providing customer service. The struggle for Norman was he had to do daily meetings with managers and colleagues rather than weekly. He introduced the sharing option for all employees of ASDA right from the top to bottom. Everyone’s efforts of ASDA brought drastic increase in sales. Every individual of the firm had right to give suggestion directly to Archie Norman. Finally, the profits margin rise within 5 years. Since 1991 to 1996, the profits were ??168.3 million to ??304 million.

Critical evaluation of methods of leadership development in ASDA

There are a large variety of leader development methods. Major ones are discussed below:

1. Developmental relationships – Leaders and mentors are the role models for the followers. But a good leader is one who provides proper improvement guide to its followers. He should provide learning support & also are expected to contribute to the development of their employees by teaching, coaching, giving feedback to them. The online social networking sites are allowed for disseminating of information speedily.

2. Developmental assignments – Leaders should be given the right challenges so that they can develop their needs and goals. They should be given promotion, chance to work in a multi-country project team & also working in a joint venture. It is also very useful to develop cultural awareness and adaptability in this fast moving world.

3. Feedback Processes – Providing honest feedback is must. There should be no partiality in the feedback process. The processes may include direct feedback for all managers with the direct reports. The team, in the end of a project, should be free to give the feedback.

4. Formal programs – It should be mainly off-the-job. All the individuals shall be allowed to share learning and development experiences.

5. Self-development activities such as reading books, articles, using internet, all-staff meetings etc. also play a very important part.

Change Issues:

1. Change in the Management Structure:

Employees work should be task oriented rather than depending on their position. Every employee will be inciting and motivated to perform the task allotted by this transitional structure.

2. Evaluating individual capabilities:

Capabilities of employees can be measured through different tests conducted in the organisation. These tests could be:

  • How to deal in an abstruse situation
  • Ability to act alone in a particular situation
  • Methodical and intellectual capability
  • Interpersonal efficiency
  • Problem-solving approach

3. Developing a new culture:

Culture and change issue are two different aspects. Recognizing the culture in which the organisation is functioning can be a valuable starting point for the suitable type of change and the strategy approach to development through change process.

Applying transformational change without taking into account cultural changes can determine to be hazardous for the organisation and change realization will be more difficult. However, working with it can service aid change. Dearlove (1997)

In the interview of Norman conducted by Steve Tappin (co-author of THE SECRET OF CEO’S), he clearly told that if we need to change culture, we need to change people and shall keep only those who fit with the strategy. Blackhurst (2007)

Top manager’s requirements as seen by Norman ARCHIE:

  • Business creators.
  • Highly motivated.
  • Highly disciplined.
  • Fast moving.

4. Continuous Improvement Methods:

Continuous improvement is always required in a standard organisation (The Management System) which avoids the organisation from reverting.

Improvement is not restricted to quality initiatives but it has to be performed everywhere within the organisation. Business strategy, Business results, Customer service, Employee motivation and Business relationships are some methods for improvement.

5. Motivation:

Motivation and self-esteem are the keys for effectively working organisation. In threatening situations managing motivation is important. After the selection of the right people, motivating them in the right way is beneficial. ASDA gets a lesser rate of absence than any other retailer or any other of its competitor. The reason for this is the motivation and not the salary (as the payment given was less than in Sainsbury’s& Tesco).

6. Recruitment:

In the times of difficulties in the organisation, the manager must not get depressed. Nor he should stop his routine activities. Rather he should be consistent in recruiting & promoting the development of company’s capabilities.

Recruitment people in this situation means, he is dealing with deficit and showing his team or people that they are generating progress. If the human resource is inappropriately& unskilled, and also if they are not enough in number, then the resource restructuring with recruitment becomes necessary (Dawson, 1996).

7. Reward & Performance Management:

Reward based on the performance of the employees should be awarded. Successfully performing workers are required to be given individual reward.

Organizational transformation:

Organizational transformation is not just changing the way business is done; it is more about changing the organizational culture in some or the other way.

Organizational transformation is a part of organizational change. Here the change goes in-depth of what an individual feels and it affects what people feel about the organization. It also includes what people do in the organization and maybe sometimes what they find valuable to their life. (K. Ferlic, 2014).

Organizational transformation refers to any significant change made to an organization. It includes restructuring or reengineering an organization or a significant change in the way the business is to be done.

All organisations are implied in some or the other type of transformation practice. The transformation of business process has to be continuous. It is necessary for any organisation to implement its business strategy and attain its desired vision. It is the requirement of any organisation to cope up with the changing economic world. The ingredients contributed in the business are money, men, assets and entrepreneurship and in return to them, the outputs we get are physical commodities and insubstantial services.

For improving the effectiveness of the business, the managers have to take steps for producing more output with the same level of inputs or producing the same output with reduced level of input. This could be achieved in different ways:

  • By changing the working traditions,
  • By investing in new expertise; or
  • Motivating and captivating employees for more effective working; &
  • By altering the ways in which the goods are produced.

There are five stages of approach for the business process reengineering model architecture. They are as follows:

  1. Develop the business vision and objectives of the process.
  2. Identify the business process which needs to be redesigned.
  3. Understand and assess the existing processes.
  4. Identify the IT competencies which will influence the process.
  5. Design and shape a prototype for the new process.

The new areas of organisational transformation for the future improvement of ASDA

1. e- Leadership

E-Leadership is a tool for balancing many roles and transporting those roles via communications technologies. Leadership is not a position or a degree. It is a way of delivering the task. Leadership plays a vital role in the functioning of any organisation. A good leadership is one which provides assistance & support at any point of time whenever it is required. E-leadership in the world today can provide such support & help to the organisation. Using communications technologies, leaders can assist their employees to achieve the desired strategic goal. E-Leadership takes place in the context of e-environment in which the work is mediated by information technology particularly the internet.

2. Change Phase Model:

The change phase model helps any organisation to cope up in any difficult situation. In any particular situation if there the organisation fails to perform, this model will help it to come out of it. This model is the creation of John Kotter. It states eight reasons why change processes do not succeed.

1. Complacency
2. Fail to build sustainable coalition
3. Vision, if not clear
4. Vision not communicated clearly
5. Allowing blocks against the vision
6. Short term results not planned & considered
7. Success declared soon
8. Fail to make changes in corporate culture

Eight steps to encounter change through change phase model:

1. Establish the sense for urgency
2. Create Coalition
3. Develop clear vision
4. Share the vision
5. Engage people to clear the obstacles
6. Secure short term goals
7. Associate & keep moving
8. Announce the change

Recommendations based on the internal and external analysis

Asda’s strategy of reduces cost in the market is very successful. Asda should be aware of its Strengths, Weakness, opportunities and threats and work towards make the most of its current strengths, reduce weaknesses, seizure opportunities, and careful of threats.

It should strive to maintain the same without compromising the quality of products and the customer service. To achieve this, the company must ensure good relationship with suppliers in terms of payment and bulk orders. Though Asda contribute towards the economy growth of the country, the company has been fined certain times by some government organizations which has to be avoided to maintain the brand image. Currently Asda is restricted in UK and with increased technologies and brand name. There is scope to enter into complete European markets and Asian Markets too. (FORBES, 2012)

With the good leadership and management, the employees are well satisfied about the work place and Asda should maintain the same to lose its valuable employees as it highly competitive market.

From time to time, Asda should review its strategic plans and also should be aware of its competitor’s policies to maintain its position in the market.

Conclusion:

Norman Archie ran ASDA for eight legendary years. During which he transformed it into an organisation ready to take risk at any time; it provided good strategy and best managers. ASDA has become an entrepreneurial organisation whose two main criteria are:

  1. Well-structured organisation: All the members of ASDA are allowed to take advantage, each at their individual level of opportunities as they are provided with right information and required tools.
  2. The existing environment in the ASDA impulses its employees to take specific initiative. And all the errors and failures that occurring taking initiating are measured as progress for the personal and organisational excellence.

Change management cannot be restricted to the single change process. The leading practices of how to contrivance and transfer the change was considerably progressed.

Commitment can be obtained only by informing the employees and clarifying the importance of the changes. Having educated and clarified that, all energies or resources available will be motivated for the same objective.

Transforming the company and against the same enemy for fight is resistance to change.

References

  • Blackhurst, C. (03.09.2007). Exclusive MT interview. [on-line]. http://www.managementtoday.co.uk/channel/Leadership/news/735030/exclusive-mt-interview-archie-norman/ Accessed 16 Jul 2014
  • Cowe A., M. G. M. A. a. D. T., 2011. Sources of competitive advantage. 3 ed. Harlow: Pearson Education Limited .
  • Daily Mail, 2008. Recession hits Tesco: Grocery giant sales fall to lowest figure in 16 years as shoppers turn to budget rivals.. [Online]
    Available at: http://www.dailymail.co.uk/news/article-1091079/Recession-hits-Tesco-Grocery-giants-salesfall-lowest-figure-16-years-shoppers-turn-budget-supermarkets.html
    [Accessed 10 Apr 2014].
  • K. Ferlic, (2014). What is organizational change and organizational transformation [online] Ryuc.info. Available at: http://ryuc.info/transformingtheorganization/what_is_org_ch_trans.htm [Accessed 18 Jul. 2014].
  • Fine, L. G., 2009. The SWOT Analysis. LLC: Kick It.
  • FORBES, 2012. Among Top Retailers, Walmart Dominates Mobile Check-Ins. [Online]
    Available at: http://www.forbes.com/sites/jjcolao/2012/09/20/among-top-retailers-wal-mart-dominates-mobile-check-ins
    [Accessed 15 Jul 2014].
  • Heene, P. R. S. a. P. A., 2008. Research in Competence-Based Management. s.l.:Emerald Group Publishing Limited.
  • K., M., 2009. Asda defies recession with 7,000 new UK jobs. [Online]
    Available at: http://www.investmentmarkets.co.uk/20090128-2940.html
    [Accessed 19 Jul 2014].
  • Kefalas, A., 1975. Analyzing changes in the external business environment. s.l.:MCB UP Ltd.
  • Porter, 1985. Competitive Advantage. New York: s.n.
  • Porter, M. E., 1998. The Competitive Advantage: Creating and Sustaining Superior Performance.. NewYork: Free Press.
  • Wikipedia, (2014). Asda. [online] Available at: http://en.wikipedia.org/wiki/Asda [Accessed 17 Jul. 2014].

BIBLIOGRAPHY

  1. Ackerman Anderson, L. (1997). Types of Change.
  2. Armstrong, M. (2007).Strategic human resource management: a guide to action. 3rd Ed
  3. Cameron, E. & Green, M. (2004). Making sense of change management: a complete guide to the models, tools & techniques of organisational change.
  4. Mabey, C. et al. (1998). Human resource management: a strategic introduction. Blackwell
  5. MARCIA, T, (2009). Strategic Human Resource Management in U.S. Luxury Resorts–A Case Study. Journal of Human Resources in Hospitality & Tourism2009, Vol. 8 Issue 1, p82-95.
  6. Millar, M. (2006). Ex-Asda chief label managers the ‘threat’. Personnel Today 9/19/2006,p12
  7. ML, O. (2008).Human resource leadership: the key to improved results in health. HUMAN RESOURCES FOR HEALTH6: – JUN 20 2008

Appendix:

SWOT Analysis

Strength

1. Wide range of product offerings and service offerings include financial services
2. Known for its amazing marketing campaigns
3. In constant touch with its customers via social networking ‘ asks feedback, conducts competitions, etc.
4. Socially responsible through CSR initiatives
5. Has over 140,000 employees working at over 500 stores

Weakness

1.Limited global presence as compared to few other competitors
2. Their ability to sell prices have restricted their entrance is few countries as the country fear a competition with local vendors

Opportunity

1. Expanding in new areas of pharmacies, opticians, jewellery and photo department.
2. Venturing into markets that are growing like India, China etc

Threats

1. Price war with other retail chains brands
2.Pressure of maintaining low prices.
3. Ever changing policies of various central govt.

Competition

Competitors

1.Tesco
2.Sainsbury’s
3.Morrisons

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