This essay will critically analysis and evaluate the strategy of ASDA. With the analysis I will evaluate what strategy they are using, with the purpose and what type of intention they looking to develop for the future of the supermarket.
ASDA is a supermarket that is owned by an American company that is called Wall-Mart. I choose this company because firstly I am a loyal customer and secondly I’ll be a good company to evaluate the business analysis on it. It is a big company that requires different types of marketing strategy analysis for it to be as successful as it is today.
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First am going to be concerned with the role of the external environment of the business. The environment of the business includes PESTLE, five forces and the opportunity and threats strategy. These tools will show us the competitive side of the company to create competitive advantage “in ever more crowded markets and with increasingly demanding customers.” (Graham Hooley 2004).
The second part of this essay will be on cultural analysis. Culture analysis is the way the management assembles combinations of values, rituals, languages and myths. This tool is used as a key factor in successful commitment and passion of employees of the business. These factors are found in corporate culture, will show how they improve their performance of management and as a whole by looking in detail the culture of the surroundings of the business.
For the third part of the essay I will look into the portfolio analysis to see weather or not the business is looking attractive, in growth and has substantial profit margin for the size of the company. The most basic and importance of being in business is making profit and this will show us the situation of the company in the market place.
Finally I will conclude my essay with a conclusion on how the business will be changing in the market for future strategies based on the firm’s ability to adopt the market and take benefit of the nature of the company to optimise their growth and attractiveness.
Lets start with the first strategy management that gives full detailed and creative assessment on the environment of the company, which is called PESTLE. The analysis was done and shown below.
Branding – advantage for company, it brings trust to companies. Disadvantage may be a dislike of a product and may not buy it again.
Lifestyle changes disadvantage for company, as it can be costly to change like cloths. Advantage would be that keeping with fashion could bring more money for the company.
Employment law – can be seen as good view to employees as ASDA needs to be aware of health and safety and other laws but can be source of complications for the business.
Taxation – disadvantage for company, it can be costly for business like ASDA because they need there individual accountant and as a whole. The benefit would be the provision of the public goods.
Inflation – disadvantage for company, people will have less money to spend on luxury goods.
Economic Growth – is an advantage for the company as living standard is higher however interest rate will be changed that will cause to be more volatile and susceptible to change.
Web site – for company to keep it up-to-date can be costly but the benefit will make people buy online which will decrease manpower.
Stock control – can automatically count the stocks sold and reorder however the disadvantage would be unable to count the stolen/broken goods.
Current legislation – is important for the companies to know the status of the environment it is situated to keep its benefits and drawbacks in check for the future.
Environmental issues – is required for the local, national, and international to keep commitment in environmental protection. The benefit will increase loyalty of brand as they seek increase better environment.
Customer values -can target a segment of a market for the company to guide towards and is a key to sustainable competitive advantage.
A PESTEL analysis considers the most important external factors that impact’s ASDA. This analysis will reflect on ASDA’s brand name by merging all the factors in one to create a guide strategic decision-making. If the PESTEL analysis done correctly and accurately, it would make the organisation of ASDA to keep up with the change of the environment and it will be better placed than its competitors to respond to change. For example Wal-Mart decided on a smart decision by merging with ASDA as both company benefited from it by having more leverage on each other.
As ASDA has many franchises in Briton every single one of the PESTLE analysis are different to each other as they are located in a different region. This means that every single franchise company’s manger would use this tool for their area to create value for money, loyalty and trust. Although the environment is different in each location, the main goals and objectives of the original company stays, and managers aim to achieve.
One of the ways managers seek in achieving their objectives is using another analysis on the external environment. This will plan and helps ASDA to focus on key issues of the external environment. The two key elements are opportunity and threats of the company, which is shown below.
-The opportunity ASDA is able to do is to expand globally by strategic alliances with other retailers.
-Second market share leader has the opportunity of reduction of effective food prices for consumers through economies of scale.
-Consumers are likely to change and trends endlessly change so there is always opportunity for ASDA to act upon the next trend which requires good strategic marketing.
-As shown in the market share graph in the next page, it shows that ASDA’s market share comparison to Sainsbury is not that much far apart (0.5 share difference) an Tesco in the lead.
-Technological are also highlighted as threat as cheaper products can be found online or better quality by competitors.
-Tesco’s advertisements on television, communicates about how many products it has cheaper than ASDA.
Identifying theses forces for ASDA are simple and it will be hard to plan the correct strategy with just these to guide the company. To be able to understand better of the external environment of ASDA I need to introduce another analysis to conduct a plan of good strategy for the company, which is called Porter’s five forces as shown below.
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Porter’s five forces element focuses on the circumstance of other elements. For example the supplier power would be increased if there were a high scale of rivalry between companies trying to obtain the supplies. This analysis would show the bargaining power it has upon the elements to increase awareness and create a better business potential for the company.
Using this analysis it will look at ASDA’s power in the market and allows you to see the gap between where the company is and where it should be, and furthermore, what strategies should be applied. This helps the “bottom line” of the company as it considers profitable rivalry to be a base significance and it should concentrate on the factors affecting the company’s profit. With the combinations of the three analyses shown above, the external environment should be kept equal or increase competitive advantage over their rivals.
Cultural web analysis
The name of ASDA on its own represents different behaviour and values for people. The relationships all people have with ASDA are different depending on their situation or cultural point of view. Corporate culture is the way people do things in an organisation, which sets beliefs, attitudes, core values and behavioural patterns that is shared by the people in the company.
The culture of web is used to analysis the elements that influence the performance and determine the future of the change. Analysing the culture as it is now in ASDA, then look what I’ll be in the future and to find the differences in between them to calculate the change in tomorrow will achieve the high-performance culture that any business wants. Below is the cultural web diagram and each section is described in appendix 2.
(Johnson and Scholes (1999); P. 74)
IT will be imposable for Multi-national Corporation like ASDA to have no conflicts between the local national culture and the imported corporate culture. These conflicts are hard to manage as there are to many to please or have a skilled manager to multi-cultural management. For the ideal strategy for ASDA’s culture should be multi cultured and managers should have an open mind when working with employees to manage the organisation more effective and efficiently as culture differ. For example in the middle east family values are very important and an employee wouldn’t dream of staying late to finish work if this conflicted with a family duty. This does not mean that their work ethic is poor, it is just expressed differently and a western manager would find it offence by suggesting otherwise. ASDA has large group of people to identify across the whole organisation. Instead managers tend to identify the culture with smaller sub-groups. So ASDA would have a mixture of sub-cultures some that may even be abnormal. Again there is a high certainty of conflict between the different sub-cultures as business is rarely simple. It is said ” the collection of beliefs, expectations and values shared by the corporation’s members and transmitted from one generation of employees to another” (Wheelen and Hunger, 1986) which will bring prosperity and growth of the company.
Next is the portfolio analysis of ASDA as it represents the attractiveness, balance, fit, manageability and synergy of the company. The business portfolio is the collection of products that make up the business. The best portfolio is one that fits the company’s strength and helps develop opportunity. ASDA will need to do a set of analyses and decide which businesses needs more or less investments, and conducting growth strategy for adding new products/services and businesses to the portfolio. Additionally work out the time limit of a product or businesses should no longer be retained.
There are three types of portfolio planning however the two best known ones are from the Boston consulting group that the description been added to appendix 3 and by General Electric. In each method the company needs to identify the various strategic business units. The Strategic business units have all have separate mission and objectives and that can be planned independently from the other businesses. The strategic business unit can be dividing the business, for example a product line or individual brands. When ASDA classifies its strategic business units in the portfolio, then it must decide what to do with them. The diagram in appendix 3 shows a cash cow, a dog, starts and question marks. New strategic thinking indicates there are four types of strategies, which is shown in appendix 3. Depending on the strategic business units it will have a different type of strategy as explained before to suit its needs.
Finally to conclude my essay I would start of saying that at this moment that cultural web is essential for ASDA as “Culture is something which makes members of an organisation behave more like each other than non-members!” ASDA uses culture to hunt for steady growth within the market, through very detailed planning and control systems. It is good for ASDA to understand culture as they can implement new strategies and adopt culture with them.
I will explain the reasons and do a summary of how environment analysis affects on ASDA. Any company must seek to understand the nature of its competitive environment in order to be successful in achieving its objectives and in setting up appropriate strategies. If a company fully understands the nature of the environment analysis it will be in a stronger point to defend itself against any threats and to influence its strategy.
By strategising through how each force affects the company it will identify the strength and direction of each force that will provides opportunity to identify the strength of the situation and the ability to make a continued profit (Mind Tools, 2006).
To broaden my analysis feather I could have used STEEPLED which allow for a dedicated Ethical section however they can be included in the original four. “It is the shape and simplicity of a four-part model is also somehow more strategically appealing and easier to manipulate and convey.”
There is also the sixth forces (relative power of other stakeholders) that I could have analysed however is not as popular. If I had more time I could have been able to do more analysis to find new and more of competitive advantages for ASDA. Although using strategic planning it is not always precise. No tool is fixed. It’s a matter of practical choice as to what helps best to identify and explain the matters at hand.
Neither resources nor market are fixed and keep changing every day. The new processes of marketing will require us to learn new ways of doing business in unfamiliar organisations. We may by now be well used to the idea of market needs changing over time and the need to monitor those changes for the success of the business. For success of growth for ASDA they need to constantly to examine and develop their resources and capabilities over time to be able to have a completive advantage in the long run. At the same time it should look at their current set of capabilities and assets to create new opportunities for the short run. Fundamentally ASDA needs to widen its resources to increase profit and deeper relationship with customer to ensure long-term value through the relationships between them. With the new millennium, there is infinity number of ways of competing with rivals. It is an exciting period for competitive marketing.
PESTLE analysis is used to measure the growth or decline of a marketplace, as such the position, potential and direction for the business.
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