Course: HND Level 5 Business (Management) - UNIT 32: Business Strategy- Student ID

BUSINESS (MANAGEMENT) (HND LEVEL 5)

BUSINESS STRATEGY

Submitted

BUSINESS STRATEGY By

[Re-Structured Strategic Plan Of ASDA]

Student Name

Student ID

1/1/2019

r. A. Batra

2019

BUSINESS (MANAGEMENT) (HND LEVEL 5)

TABLE OF CONTENTS
SECTION -1.................................................................................................................................................... 6

INTRODUCTION............................................................................................................................................ 6

TASK-1 – AN ANALYSIS SHOWS HOW THE INTERNAL AND EXTERNAL ENVIRONMENTS IMPACTS ON ASDA’S
STRATEGY...................................................................................................................................................... 6

LO1............................................................................................................................................................... 6

1. ANALYSIS OF MACRO ENVIRONMENT........................................................................................................ 6

2. THE IMPORTANCE OF ENVIRONMENT AUDIT (PESTLE ANALYSIS)................................................................7

2.1 DEMOGRAPHY....................................................................................................................................................7
2.2 ECONOMY.........................................................................................................................................................8
2.3 SOCIO-CULTURE.................................................................................................................................................8
2.4 TECHNOLOGY.....................................................................................................................................................8
2.5 ECOLOGY...........................................................................................................................................................8
2.6 POLITICAL FORCES...............................................................................................................................................9
3. HOW THE MACRO ASPECTS IMPACTS ON STRATEGY...................................................................................9

4 PORTER’S FIVEFORCE ANALYSIS................................................................................................................ 10

4.1 THREAT OF NEW ENTRANTS................................................................................................................................11

4.2 BARGAINING POWER OF SUPPLIERS......................................................................................................................11
4.3 BARGAINING POWER OF BUYERS..........................................................................................................................12
4.4 THREAT OF SUBSTITUTES....................................................................................................................................12
4.5 RIVALRY AMONG EXISTING COMPETOTORS.............................................................................................................12

5. AN ANALYSIS OF HOW ASDA’S MACRO ENVIRONMENT RESOLVE AND UPDATE STRATEGIC MANAGEMENT
DECISIONS.................................................................................................................................................. 13

5.1 ANALYSIS OF NEW ENTRANCE..............................................................................................................................13

5.2 ANALYSIS OF SUPPLIER POWER............................................................................................................................13
5.3 ANALYSIS OF BUYER POWER...............................................................................................................................13
5.4 ANALYSIS OF THREAT OF SUBSTITUTES..................................................................................................................14
5.5 ANALYSIS OF RIVALRY AMONG EXISTING COMPETITORS...........................................................................................14
5.6 SUMMARY REPORT OF FIVE FORCE ANALYSIS.........................................................................................................14
5 .7 SUMMARY OF ENVIRONMENT ANALYSIS OF ASDA................................................................................................15

5.8 CONCLUSION OF ENVIRONMENT ANALYSIS............................................................................................ 15

6. AN ANALYSIS OF ASDA’S POSITION IN RETAIL MARKET.............................................................................15

6.1 THE SIZE OF THE BUSINESS – ASDA.....................................................................................................................15

6.1.1 Size of Capital.......................................................................................................................................15
6.1.2 Number of Employees..........................................................................................................................15
6.1.3 Volume of Sales....................................................................................................................................15
6.1.4 Level of Technology..............................................................................................................................16
6.1.5 Raw- materials Used............................................................................................................................16
6.1.6 Legal Form of Ownership.....................................................................................................................16
6.2 GROWTH OF ASDA..........................................................................................................................................16
6.3 PROFITABILITY OF ASDA...................................................................................................................................16
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 6.4 MARKET STANDING...........................................................................................................................................17
6.5 PRODUCT DEVELOPMENT...................................................................................................................................18
6.5 POTENTIAL.......................................................................................................................................................19

TASK-2 – IDENTIFYING STRATEGIC OPTIONS.................................................................................................19

LO2............................................................................................................................................................ 19

1. ANALYSIS OF MICRO ENVIRONMENT AND CAPABILITIES OF ASDA............................................................19

1.1THE IMPORTANCE OF MICRO ENVIRONMENT...........................................................................................................19

1.2 MICRO ENVIRONMENT FACTORS.........................................................................................................................20
1.2.1 Customers.............................................................................................................................................20
1.2.2 Competitors..........................................................................................................................................20
1.2.3 Suppliers...............................................................................................................................................20
1.2.4 Dealers and distributors.......................................................................................................................20
1.2.5 Investors...............................................................................................................................................20
1.2.6 General Public......................................................................................................................................20
1.3 SWOT ANALYSIS OF ASDA................................................................................................................................20

2. THE CORE VALUES OF ASDA AND ITS INFLUENCE ON STRATEGIC DIRECTIONS...........................................22

2.1 THE MISSION OF ASDA.....................................................................................................................................22
2.2 THE PURPOSE OF ASDA....................................................................................................................................22
2.3 THE VALUE STATEMENT OF ASDA........................................................................................................................22

3. THE STAKEHOLDERS INFLUENCE ON SHAPING ASDA’S OBJECTIVES...........................................................22

5. ORGANIZATIONAL AUDIT OF ASDA.......................................................................................................... 22

SECTION-2.................................................................................................................................................. 23

TASK-3 – EVALUATION AND SELECTION OF STRATEGIC OPTIONS.............................................23

3.1 DECISION BASED ON PORTER’S FIVE FORCES MODEL...............................................................................................23

3.2 DECISION BASED ON STRATEGIC MODELS, THEORIES AND CONCEPTS...........................................................................23
3.3 RECOMMENDATIONS BASED ON RESEARCH............................................................................................................23
“THERE IS ONLY ONE WINNING STRATEGY. IT IS TO CAREFULLY DEFINE THE TARGET MARKET AND DIRECT A SUPERIOR OFFERING TO
THAT TARGET MARKET.” PHILIP KOTLER”.....................................................................................................................23

TASK-4 - NEW STRATEGIC MANAGEMENT PLAN FOR ASDA........................................................23

4.1 INTRODUCTION.................................................................................................................................................23
4.2 SITUATIONAL ANALYSIS SUMMARY.......................................................................................................................24
4.2.1 SWOT Analysis......................................................................................................................................24
4.2.3 PESTLE Analysis....................................................................................................................................24
4.2.4 Competitors..........................................................................................................................................24
4.6 STRATEGIC OBJECTIVES......................................................................................................................................25
4.6.1 The mission of ASDA.............................................................................................................................25
4.6.2 The Purpose of ASDA............................................................................................................................25
4.6.3 The value statement of ASDA...............................................................................................................25
4.7 CHOSEN STRATEGIC OPTION...............................................................................................................................25
4.8 BUDGETS.........................................................................................................................................................25

4.9 IMPLEMENTATION AND CONTROL..............................................................................................25

4.11 CONCLUSION....................................................................................................................................... 27
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TASK-5 - STRATEGIC PLAN FOR ASDA............................................................................................... 27

5.1 STRATEGIC DIRECTIONS AND OBJECTIVE................................................................................................ 27

5.2 APPLICATION OF PORTER’S FIVE FORCES MODEL FOR EVALUATES THE COMPETITIVE FORCES OF ASDA’S
RETAIL MARKET SECTOR.............................................................................................................................. 28

5.2 COMPETITIVE ADVANTAGE........................................................................................................... 28

5.3 STRATEGIC ROUTE AND TACTICS................................................................................................28

5.4 STRATEGY AND OBJECTIVES................................................................................................................... 29

5.5 NEW MISSION OF ASDA......................................................................................................................... 29

5.6 HOW TO BRING BACK AND GET MORE CUSTOMERS...............................................................................29

5.5 WHAT ARE THE BENEFITS OF “FULL LIFE-HALF PRICE”.............................................................................30

CONCLUSION.......................................................................................................................................... 30

LIST OF TABLES..................................................................................................................................... 31

TABLE OF FIGURES............................................................................................................................... 31
BIBLIOGRAPHY............................................................................................................................................ 32

REFERENCE BOOKS...................................................................................................................................... 32

URL – Visited.........................................................................................................................................................32

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Page |5
Section -1

INTRODUCTION

““Strategy is about making choices, trade-offs; it’s about deliberately choosing to be

different.”” Michael Porter.

The business strategy formulate not only a vision but also a direction to the entire
organization and it dynamic to all human resource within the organization with clear goals
and direction or mission, more over it provide vision and stop them from losing
organization’s aim. In addition, the organization can create a competitive advantage along
with strategy and it reveals more about the organization and the path where the
organization going. (evolve, 2018)1

To crystal clear that the restructuring of ASDA’S business strategy aims to increase
profitability, gain more market share, increase approval ratings or boost customer
satisfaction. (mindtools, 2018)2

“The essence of strategy is choosing what not to do.” Michael Porter

TASK-1 – An Analysis shows how the Internal and External Environments impacts
on ASDA’S strategy.

LO1

1. Analysis of Macro Environment

The external or macro environment forces are demography, economy, and physical, socio-
cultural, political, legal and technological. The internal or micro environment forces are
consumers, competitors, suppliers, dealers, distributors, investors and common public.

1
evolve, 2018. https://evolve.ie. [Online] Available at: https://evolve.ie/q-and-a/business-strategy-important/
[Accessed 10 November 2018].
2
mindtools, 2018. mindtools. [Online] Available at: https://www.mindtools.com[Accessed 10 November 2018].

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Figure 1- Six Macro Environment forces – The DESKTEP model

Source: - (marketing 91, 2018)

It is the basic index on overall market conditions, such as nature and kind of people, society,
culture and life style, role of government, economical conditions and technology. (marketing
91, 2018)3

2. The Importance of Environment Audit (PESTLE Analysis)

The requirement of environment audit is:-

1. To know the resources, liabilities, capabilities, strengths and weaknesses.

2. To analyze the present environment for forecast where the operations going smooth
or not

3. Good opportunities existing thereto pursue or not

4. To analyze customers and stakeholders

5. To analyze of competitors.4

2.1 Demography
Demography has a broad implication on physical attributes of the population of focused
region such as size, age, gender, occupation, density, growth rate, immigration trends like
inter-migration or intra-migration, changes in demographic structure, nature and
characteristics of communities. An overall idea about the characteristics and inter
3
marketing 91, 2018. https://www.marketing91.com. [Online] Available at:
https://www.marketing91.com/what-is-macro-environment/[Accessed 16 November 2018].

4
mindtools, 2018. mindtools. [Online] Available at: https://www.mindtools.com[Accessed 10 November 2018].

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connection of classified demography provides a clear formula to solve the right identification
problems of viable customer group within the targeted region.

Figure 2-United Kingdom Population

Source: (Trading Economics, 2018)

2.2 Economy
The economy refers to the whole economic scenario of the specific region, it may be mixed
or equal share with government or may capitalist economy where government hasn’t any
control over the market or the organization except law and order or taxation where
organizations can enjoy a wider edge, besides that the particular region’s GDP, GNP, PCI and
standard of living, purchase power and pattern of target group also influence decision of
price.

2.3 Socio-Culture
The social structure of a geographical area provides the dominant culture and
psychographics of the specific targeted audience; it may be mixed community or mixed
population. The most metropolitan cities have a major share of local population.

2.4 Technology
The technology is an important criterion to consider before investing in a particular targeted
area. It is vital to know the technology penetration and user technology interfaces of the
targeted area and use of technology for campaigns and communication, because if the
products used by customers are technology based, they can use technology a tool for their
product.

2.5 Ecology
Ecology is a vital aspect of macro environment, such as its physical setting likewise
geographical location, presence of ecology and biodiversity, weather, temperature, climate
and predominant seasons and through recognition of these features provides market setters
where to sell and what type of products to sell.

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2.6 Political Forces
Political force is the most important external environment force, because the political force
is deciding the policies and laws and it extended to the presence of pressure groups like
lawyers, environmental activists and common people those who hold the ultimate power to
bring or throw the government. 5

Figure 3- PESTEL Analysis

Source- Anon., 2018. bussiness-to-you.com. [Online] 6

3. How the macro aspects impacts on strategy

The macro environmental factors are inter-linked and ecology of particular area determines
its demography such as more people living in tropical zones, besides that economic
conditions and political forces affects demand and supply of goods and services, further
more technological popularity have a vital role to mold social thinking and cultural life style
of people. The macro environment factors are therefore important to make business
policies, because the components lead to the right path to build the strategy of an
organization.

5
marketing 91, 2018. https://www.marketing91.com. [Online] Available at:
https://www.marketing91.com/what-is-macro-environment/[Accessed 16 November 2018].
6
Anon., 2018. bussiness-to-you.ccom. [Online] Available at: https://www.business-to-
you.com/scanning-the-environment-pestel-analysis/[Accessed 18 Novemmber 2018].

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4 Porter’s FIVEFORCE Analysis
The Porter’s analysis is a tool uses five industry forces to decide not only the strength of
competition in an industry but also its profitability level.

(Porter, 2008)

Figure 4 - Porter’s FIVEFORCE

Source :-( Ovidijus Jurevicius , 2013.)

The five forces decides the level of competition and when stronger competitive forces
caused less profit and if industry with low barriers to enter and having less buyers and
suppliers with more substitute products and also with competitors will treated as very
competitive and it is not attractive due to low profitability. 7

Therefore it is the important responsibility of every strategist to evaluate organizations

competitive position such as to address the problems of whether it is attractive industry or
high profile or unattractive industry or low profile.8

Figure 5- Five Forces - high and low profile

7
Porter, M., 2008. The Five Competitive Forces That Shape Strategy. [Online]
Available at: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/
[Accessed 19 November 2018].
8
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].

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Source:- (Ovidijus Jurevicius , 2013)

4.1 Threat of new entrants

The high threat of new entrants is exists when the following facts exist:-

a. Lowest investment required to enter a market

b. Presently existing organizations can enter with little capital
c. Presently running business do not have patents, trademarks or established goodwill
d. If there is no government regulations
e. If switching to other industries to be less cost
f. If there is low customer loyalty
g. If products are nearly identical
h. If can make money easily (Ovidijus Jurevicius , 2013)9

4.2 Bargaining power of suppliers

The strong bargaining power permits suppliers to sell high price or low quality raw materials
to buyers and it reflects negatively buying firm’s profits due to higher price of materials
bought and when the following reasons remains can say the suppliers have strong bargaining
power.

a. If more buyers and less suppliers

9
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
P a g e | 11
 b. If suppliers are more and threaten to get together

c. If less substitutes exist

d. If suppliers hold scarce resources

e. If switching cost of materials particularly high

4.3 Bargaining power of buyers

As and when the buyers bargaining power is higher, they can demand lower price or higher
quality from industry producers. Both lower price and higher quality resulted lower revenue
or profits, because lower price reduce revenue and higher quality increases production cost.
When the following situations exist can say buyer holds strong bargaining power.

a. If buys in large quantities or control many access points to final buyer

b. If there is few buyers exists

c. If switching cost to new supplier are less

d. If they threaten to backward together

e. If there are more substitutes

f. If buyers are price sensitive

4.4 Threat of substitutes

If buyers can easily find substitute products or service with more attractive terms like price
and quality and nominal switching cost like switch from coffee to tea and it is not like
switching from car to bicycle.

4.5 Rivalry among existing competotors

The competitors those who are existing in the industry is a major force and it is the main
determinant factor of how profitable and competitive an industry, besides that organizations
have to compete uncompromisingly for market share and it cause low profits, mean while
rivalry among competitors insistently exists when :-

1. If there exists many rivalries

2. If exit barriers are high

3. If industry growth is negative or slow

4. If products are not differentiated and products can easily substituted

5. If the competitors are equal status

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 6. If low customer loyalty

In addition scholars added one more force that affects industry such as “compliments” and it
increases not only demand of the primary product but also increases firms and industries
profitability, for example, iTunes created for iPod as compliment and resulted increased
value for both and achieved Apple good profit.10

5. An Analysis of how ASDA’S Macro Environment Resolve and update

strategic management decisions.

5.1 Analysis of new entrance

To enter into the industry required large amount of capital and high retaliation possible from
existing companies, besides that no legal barriers protect existing companies and all main
competitors have established products brands and products are differentiated with quality
design and low price.

5.2 Analysis of Supplier Power

There is large number of suppliers and some of them are big and most of them are small,
besides that branded products can’t substitute but substitutions are available and no
scarcity of material also cost of switching probably less and no threat off forward integration
found.

5.3 Analysis of Buyer Power

In November 2018 ASDA holding third largest super market chain in UK and customers are
multy cultural and local general public and size of the order varies from individual customer
to family customers. The switch over of customers is very easy and the pricing strategy,
policies and low cost, price and discount helps to survive. There are substitutes available also
have price sensitivity from competitors and no threat of integrating backward.

5.4 Analysis of Threat of Substitutes

There are large number of substitutes available and performance is high in price and quality also not
too much of cost of changing.

5.5 Analysis of Rivalry among Existing Competitors

There are many competitors existing in the market sector and to leave costs high and the ASDA holds
the third largest super market chain in UK based on turnover (November 2018) and has a steady low
growth. The Industry sector is big and there is future progress and increase of market share. The
product differentiation is possible and or through own products too. There are large firms in market

10
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
P a g e | 13
as competitors also sharing market with much number of small super markets. Customers loyalty is
not steady and competitive context in price and sensation influence it. More over the ASDA is
subsidiary of American Super market giant WAL- MART and the operational performance should be
in geographical area of U.K., further more ASDA spending moderately a large amount for
advertisements.11

5.6 Summary Report of Five Force Analysis

Table 1-Summary Report - Five Force Analysis

Threat of New entrants ++ Very Weak

Supplier Power + Weak
Buyer Power + Weak
Threat of Substitutes + Weak
Rivalry Among Existing Competitors + Weak

The analysis of Five Force Analysis concludes that all external aspects are against the ASDA and
should seriously address in strategic restructure plan.

Figure 6-FIVE FORCES FACTORS

5 .7 Summary of Environment Analysis of ASDA

There are above size and below size competitors exists in the industry and operating in low
growth , besides that the rivalry between the existing organizations are strong and it is hard
to achieve economies of scale in the market, therefore to pursue cost leadership strategy
and product development strategy should be used due to due to slow market growth.

5.8 Conclusion of Environment Analysis

The ASDA facing revolutionary cut throat competition in retail sector The online shopping
markets are familiar with customers and ease of technology making it admired by busy
scheduled people. Therefore ASDA should to reconstruct its strategy for survival and for
their customers.
11
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
P a g e | 14
6. An Analysis of ASDA’S position in retail market
Since 1949 there was revolutionary changes happened to former stage s and in 1965 both
two small companies merged and became the new firm name ASDDA, during these period
there is many take over by ASDA and in July1999 American retail giant Wal-Mart acquired
ASDA. ASDA is the third biggest retailer in UK (As on date 2018 November) just behind
TESCO and Sainsbury’s with a focus of long term strategy compared with competitors with
an annual turnover of GBP-22.2 bn.

6.1 The Size of the business – ASDA

The size of the business determines by mainly six factors such as size of capital, number of
employees, volume of sales, level of technology, raw-materials used and legal form of
ownership.

6.1.1 Size of Capital

The size of business determined by the capital invested by the owner and it used for
comparison of two or more organizations that operating in same industry or producing
similar products. The vital part is how much able to do in business with this capital.

6.1.2 Number of Employees

The number of employees determines how the business is, such as big or small. There are
different types of business like micro to mega corporations. The sole trader will do all the
works of the firm, but if a sole trader with various sections need more human resource and
also it measure how much spent for salary or wages.

6.1.3 Volume of Sales

The volume of sales also a measuring unit of the size of the business, because to generate
revenue required resources and make more revenue required more resources, so it

reflected in revenue and can measure how much resources behind it. The business with high
volume of sales are usually treated as big and the capital contribution is high also if the
premises are big means more staff will be there for operations and treated it as big invested.

6.1.4 Level of Technology

The level of technology used is also a measuring factor of size of the business. The
automation of production or functional areas with sophisticated technologies shows the
volume of investment or size of the business.

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6.1.5 Raw- materials Used
The annual consumption of the raw-materials also a measuring factor for the size of
business. It is also used to measure where firms are using similar products.

6.1.6 Legal Form of Ownership

The legal form too discloses the size of the business and it may incorporated as micro, small,
medium or large or corporations also it may partnership or sole proprietorships.

6.2 Growth of ASDA

Refers to ASDA “as on 15th November 2018, achieved 13.8% growth in online grocery sales
and launched a new Free From range with 113 new lines and increased a chilled range by
42% also increased grocery range by 21%. “(ASDA, 2018)12

6.3 Profitability OF ASDA

““The best marketing strategy ever: Care.” Gary Vaynerchuck””

Refers to The Guardian (THE GUARDIAN, 2018), ASDA’S profit falls down 10% after price cuts
in the year 2017. The pre-tax profits fell down from GBP- 791.7 m in 2016 to gbp-712.6 m in
2017 and sales increased by 2.6% to GBP- 22.2 BN.

Figure 7-ASDA- Income Statement-2017

12
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
P a g e | 16
Source: (corporate.asda.com, 2018)

The income statement of ASDA as on 31 st December 2017 showing a revenue of GBP-

22,219.8 m and earned a operating profit of GBP-735.4 m and profit for the year 2017 was
GBP- 666 m and 2016 profit was GBP - 657.2 m.

6.4 Market Standing

“There is only one winning strategy. It is to carefully define the target market and direct a
superior offering to that target market.” Philip Kotler”

The 2017 ASDA’s financial statements showing sales increased by 0.5% and operating profit
GBP-735.4 m decrease of 13% from last year and cash flow from operating activities of GBP-
1289.3 m and net cash flow of GBP-309.0 m and continued strength of balance sheet and
146,000 sq ft of new space opened. (ASDA, 2018) .The market share of ASDA shows decrease
in 2018 and remains in third position behind TESCO and Sainsbury’s. (statista.com, 2018)13

Table 2- Market Share of ASDA

Months Feb.2018 April 2018 June 2018 August 2018 October 2018

market share 15.6% 15.5% 15.1% 15.2% 15.3%

Figure 8-market share- ASDA

13
statista.com, 2018. www.statista.com. [Online]
Available at: https://www.statista.com/statistics/280208/grocery-market-share-in-the-united-kingdom-uk/
[Accessed 22 November 2018].

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Source- (statista.com, 2018)

6.5 Product Development

According to AC Nelson, Europe is the most developed private label region (Nelson, 2005)
the ASDA has 45% share grocery and 50 percent share in non-food out of total store share. 14
ASDA is a brand maker and provides own brands in food products and general merchandise
products also it provides its own and it added value to the organization.

Figure 9- private label - AC Nelson (

Source- Nelson, A. C., 2005. The Power of Private Label

6.5 Potential
Service marketing is the potential of ASDA and it measures through its people oriented
service marketing. ASDA have physical evidence of facilities, equipments, uniforms, livery
and artifacts, signage and symbols. ASDA focused to service design, standardization,
customization and operational efficiency, besides those promotions like internal marketing,
direct website marketing sales, advertising and other promotional methods.

ASDA maintains connections with people, customers, employees, social interactions, roles
and scripts and relationships. (MSG Management Study Guide, 2018)15

14
Nelson, A. C., 2005. The Power of Private Label. [Online] Available at:
http://users.ugent.be/~xgellync/Rob/PrivateLabel_RMS.pdf [Accessed 20 November 2018].

15
MSG Management Study Guide, 2018. managementstudyguide.com. [Online]
Available at: https://www.managementstudyguide.com/seven-p-of-services-marketing.htm
[Accessed 21 November 2018].

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TASK-2 – Identifying Strategic Options
LO2
“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be
different.” Michael Porter

1. Analysis of Micro Environment and capabilities of ASDA

The micro environments are within the immediate reach of organizations. If perfectly
collaborated both micro and macro environment, it provides a successful and consistent
business operation. If one of the component mishandled will reflect on the other end,
because the internal factors are components within the macro ones and any problem in
external environment slowly reflects in the internal front. s.

1.1The importance of micro environment

Micro environment known as the first pillar to build up a business, besides that all the
strategies, marketing plans and objectives brings to practice through these components. The
executive brains of business make practical implementation of the ideas, thoughts and
concepts based on the ideas, thoughts and concepts based on the sensitive response of
these components and it decide to move forward or quit, besides that it act as a guide to
future communication policies of a firm, so micro environment factors has an integral part to
realize the potential and determination of future of an organization.

1.2 Micro Environment Factors

1.2.1 Customers
Customers include an individual, households. Service recipient, companies to industries and
factors. They have power to boost the trading or ruin it. The option of customers is high,
therefore hold them is better.

1.2.2 Competitors
The direct and indirect competitors are threat for the existence, when many competitors the
customers go for more attractive offers or competitive price and quality. Therefore adoption
of new strategy or re-building the strategies for to overcome techniques and tactics of
competitors

1.2.3 Suppliers
The suppliers are important due to control the manufacturing cost; price and brand image
and to maintain the customers in any circumstances.

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1.2.4 Dealers and distributors
They are the media to channelize products to customers and their active action helps to
deliver the goods to end user.

1.2.5 Investors
The prime asset of the organization are investors, if they invest more can channelize to with
different departments. Therefore investors should be satisfied and if they get ROI motivate
them for more capital investment, meanwhile customer satisfaction also vital.

1.2.6 General Public

The mass decides the long term existence of the organization, but the company never sells
to each individual, even though investing in community is essential for long term existence.
(Marketting 91, 2018)16

1.3 SWOT Analysis of ASDA

Figure 10- SWOT ANALYZIZ

Source:- (fernfortuniversity.com, 2018)

Table 3- SWOT Analysis (Internal) Table 4- SWOT Analysis (external)

STRENGTHS OF ASDA WEAKNESSESS OF ASDA

1.`Strong private branding of products 1.Gaps in the products range

2.Successful track record of operations 2.Abscence in integration of different work

culture

3. Good dealer community 3.Failed to stop new entrants

4. Skilled work forces 4. Shortage of training and development to

employees

16
Marketting 91, 2018. marketing91.co. [Online]
Available at: https://www.marketing91.com/what-is-micro-environment-in-business/
[Accessed 21 November 2018].

P a g e | 20
5. Strong financial flow 5.R&D Investment is very low compared to
competitors

6. Good performance in new market 6.Less investment in technologies

7. Good rate of return on investments 7. Profitability ratio is less standard

percentage

8. Low prices and friendly employees 8. Quality of substandard food

17

OPPORTUNIITTES OF ASDA THREATS OF ASDA

1. Opportunity to enter in new markets 1. Absence of innovative products

2. Ease of stable fund availability 2. Liability laws vary in different countries and ASDA to be
exposed to various liability claims given change in policies
in those markets.

3. New trends in consumer behavior provides new 3. Absence of well trained HR in global markets
opportunities in market

4. New environmental policies and technologies can 4. Any ante US thoughts reflect in sales
utilize

5. Government green drive also opens doors to state & 5. Highly profitable products sales are seasonal and
federal govt. needs unlikely events affects revenue

6.Market expansion reduce threat from competitors 6. Rise of price of raw-materials affect the revenue

7. The takeover BY Wal-Mart make ASDA more stronger 7. Currency fluctuations affect the profitability

17
fernfortuniversity.com, 2018. fernfortuniversity.com. [Online] Available at:
http://fernfortuniversity.com/term-papers/swot/1433/1162-asda.php[Accessed 19 November 2018].

P a g e | 21
2. The core values of ASDA and its influence on strategic directions

2.1 The mission of ASDA

The mission statement of ASDA set out for its long term aims, that is “‘to be Britain’s best
value retailer exceeding costumer needs always’ “”

2.2 The Purpose of ASDA

The Purpose of ASDA is, "To make goods and services more affordable for everyone”.

2.3 The value statement of ASDA

The value statement of ASDA is “Respect for in the individual, quality and customer service”

3. The Stakeholders influence on shaping ASDA’S objectives

Refers to the financial statement of ASDA as on 31 st December 2017, (asda-financial reports,
2017), the attached strategic report , the directors of ASDA declared the strategic priorities
such as continue to focus Strengthening customer propositions, Developing a trusted online
offer, Developing a low-cost operating model.

5. Organizational Audit of ASDA

The organizational audit consists of reviewing the auditors financial statement with directors
strategic report, further examine the application of vision, mission and values statement and
a close watch on the factors like achieving goals, action plans, tasks, time tables, responsible
persons, development of HR hiring and training, achieving desired goals, continuous quality
improvement and service provided and products used. (organizationa leffectiveness group,
2018)18

Section-2

TASK-3 – Evaluation and Selection of Strategic Options

By analyzing the entire business with various tools recognized that, ASDA is a for-profit
organization and to be focused on Increase Profitability, Attain more market share Boost
customer satisfaction Implement new strategy under budget.

18
organizationa leffectiveness group, 2018. organizationa leffectiveness group. [Online]
Availableat:http://www.organizationaleffectivenessgroup.com/Consulting%20Areas/Organizational
%20Audits.htm[Accessed 22 November 2018].

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3.1 Decision based on Porter’s Five Forces model
Based on this model ASDA is in critical situation due to new entrants, dominancy to supplier
and buyer and very high threat of substitutes and price war and rivalry from existing
competitors. (Table 5-Summary Report - Five Force Analysis)

3.2 Decision based on strategic models, theories and concepts

The past of ASDA was bright up to an extent, but by analyzing the present with different
tools it need a strategic re-construction and to implement in time bound. The analysis based
on different tools mentioned previously.

3.3 Recommendations based on research

“There is only one winning strategy. It is to carefully define the target market and direct a
superior offering to that target market.” Philip Kotler”
The analysis of ASDA reveals that the competitors also in track with price war, market
development, diversification, market penetration and product development. The
advancement of technology, globalization, communication changing rapidly consumer
behavior, but good offers in price, discounts always an attraction to customers. So ASDA
need a new strategy simple to adopt and exceptional to others but transformational to ASDA
to Global Giant. (Explained in TASK-5)

TASK-4 - New Strategic Management plan for ASDA

4.1 Introduction
“Strategy is style of thinking, a conscious and deliberate process, an intensive
implementation system, the science of insuring future success.” Pete Johnson”

The strategy formulation or restructure existing strategy under the globalized business
environment should be generated increased profitability, gaining more market share,
increased customer satisfaction and completion of a project under budget. Therefore the
strategy creation required to analyze not only the context where the organization operating,
but also identifying strategic options more over evaluation and selection of the appropriate
options.

4.2 Situational Analysis summary

4.2.1 SWOT Analysis

SWOT Analysis is a situational one and it helps to internal strategic factors and external
strategic factors and it helps to generate different strategies such as Strength – opportunities

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strategies, Weaknesses – opportunities strategies, Strengths – threats strategies and
Weaknesses – threats strategies.

4.2.3 PESTLE Analysis

The PESTEL analysis shows that ASDA have a low profile, where low barrier’s to enter,
suppliers and customers have strong bargaining power, besides that many substitute
products available and switching cost is comparatively low and most unfavorable is intense
competition and price war.

4.2.4 Competitors
ASDA have third position in retail sector (Kantar World Panel, 2018) and competitora are
strong enough to conquer the market share with price war and latest technologies. The
expansio and change over to new technologies by competitors may make behind ASDA in
short future. So to measurable stebs in strategies required.

Figure 11-UK RETAIL POSITION19

4.6 Strategic Objectives

“Sound strategy starts with having the right goal.” Michael Porter”

The objective of ASDA is providing quality products for lowest prices and increase fresh
products and reducing packaging for sustainability.

4.6.1 The mission of ASDA

The mission statement of ASDA set out for its long term aims, that is “‘to be Britain’s best
value retailer exceeding costumer needs always’ “”

19
Kantar World Panel, 2018. kantarworldpanel.com. [Online] Available at:
https://www.kantarworldpanel.com/en/grocery-market-share/great-britain[Accessed 20 November 2018].

P a g e | 24
4.6.2 The Purpose of ASDA
The Purpose of ASDA is, "To make goods and services more affordable for everyone”.

4.6.3 The value statement of ASDA

The value statement of ASDA is “Respect for in the individual, quality and customer service”

4.7 Chosen Strategic Option

The strategic options are alternative action oriented response to the external situations,
such as Strength – opportunities strategies, Weaknesses – opportunities strategies,
Strengths – threats strategies and Weaknesses – threats strategies. As part of long term
existence, Let take precautions to handles threat and reduce weaknesses. The focus to the
combination of Strength and Opportunities option to execute for sustain.

4.8 Budgets
The determination and distribution of financial resources for the planned strategy
implementation program required detailed budgetary process from various functional
departments; therefore allow sanction to perform the micro budget process in functional
heads.

4.9 Implementation and Control

“Without strategy, execution is aimless. Without execution, strategy is useless.” Morris
Chang’’

“”Successful leaders understand that if their organization is to grow in the long term, they
can't stick with a "business as usual" mindset, even when things are going well. They need to
find new ways to increase profits and reach new customers””. (Mind Tools , 2018)

The Ansoff Matrix provides (Fig.12) matrix to weigh the risks associated for a number of
strategic options. The market or product expansion grid, there is four strategies to use for
grow and it helps to analyze the risk associated with each one, besides each time move in to
a quadrant either horizontally or vertically risk increases.20

Figure 12-Ans off Matrix

20
Mind Tools , 2018. The Ansoff Matrix. [Online] Available at:
https://www.mindtools.com/pages/article/newTMC_90.htm[Accessed 22 November 2018].

P a g e | 25
Source :(Mind Tools, 2018)

Figure 13-Aansoff Matrix

MARKETT DEVELOPMENT DIVERSIFICATION

Focus Family Groups, Old Aged Group, Diversification not possible.

Youngsters

Within UK Start new out lets Adding up new services suggested

Boost up online sales

MARKET PENETRATION PRODUCT DEVELOPMENT

New Market Strategy New product based natural like herbal teas- flower teas
and other natural resource from all over the world

Introduce a new scheme

Buy a running Company

“Strategy is a commodity, execution is an art.” Peter Drucker”

4.11 Conclusion
“Execution is the ability to mesh strategy with reality, align people with goals, and achieve
the promised results.” Larry Bossidy”

To avoid risk of implementation of strategy needed application and alignment of

organizational goals with vision, mission and values also alignment of department goals.
Furthermore confirmation of employee skills and competencies exist to achieve goals and
Development of systems to reinforce and reward employee’s behavior, and develop
continuous quality improvement feedback.

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TASK-5 - Strategic Plan for ASDA
“A vision and strategy aren’t enough. The long-term key to success is execution. Each day.
Every day.” Richard M. Kovacevich”

5.1 Strategic Directions and objective

The strategy objectives aims to increase in revenue by more production, sales, and client
loyalty and develop new products, customer relation and customer service staff, further
more align sales team and facilitate client interactions. In addition, the strategy plan
execution measures those factors and fixes the targets and takes initiatives. (Fig-14) 21

Figure 14-Balanced Score Card

Source:- (Pangarkar, 2015)

5.2 Application of Porter’s Five Forces model for evaluates the competitive forces of
ASDA’S retail market sector.
The analysis of ASDA’S external environment shows a weak profile.

Threat of New entrants ++ Very Weak

Supplier Power + Weak
Buyer Power + Weak
Threat of Substitutes + Weak

21
Pangarkar, A., 2015. Linkedin Slide share. [Online]
Available at: https://www.slideshare.net/AjayPangarkar/building-strategic-linkages-mapping-and-measuring-
your-learning-strategy
[Accessed 20 November 2018].

P a g e | 27
Rivalry Among Existing Competitors + Weak

5.2 Competitive Advantage

Table 6-Competitive advantage

Competitive Advantage (Creating and Sustaining Superior Performance)

1. Cost Leadership Lowest Cost Competitor (Continue Price War)

2. Differentiation Develop Products That Provide Superior Value

(Add new + invent new+ Introduce from Globally)

3. Focus Retail Supermarkets (Existing + Add New+ buy existing)

5.3 Strategic Route and Tactics

Table 7-Strategic Route & Tactics

STRATTEGY↓ TACTIC ACTION(Short Term Action STRATEGIC GOAL↓ FUNCTIONAL TACTICS↓

Plans) ↓

DOING THE RIGHT DOING THINGS RIGHT↓ INCREASE IN↓ (ROUTINE ACTIVITY) ↓
THINGS↓

1. Product→ Superior Value Customer Loyalty 1.H.R. Management

2. Pricing→ Lowest Cost Sales 2. Marketing

3. Marketing→ FULL LIFE HALF PRICE Customer relation/ sales team 3. Finance

(New LONG TERM Tactics )

4. Operational→ Maximum Performance Production/new 4. Production/operations

products/customer service
staff

5. Financial→ Easy Fund Increase Revenue 5. R & D

(ACTIONS) (AFFORDABLE PLANS) (EXCELLENCE IN SERVICE) (QUALITY PRODUCTS)

5.4 Strategy and Objectives

“Execution is the ability to mesh strategy with reality, align people with goals, and achieve the
promised results.” Larry Bossidy”

Table 8-Strategy Objectives

STRATEGIC OBJECTIVES
PROVIDE PRICE INCREASE REDUCE

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 Quality Products Lowest Price Fresh Products Packaging for
Sustainability

MISSION
(ALWAYS ) TO BE (FIRST) EXCEEDS

Britain’s Best Value Retailer Customer Needs Always

Always To be first in Britain’s Best Value and exceeds customer needs always
Retailer

PURPOSE
TO MAKE FOR

Goods and Services more affordable Every one

VALUES
Individuals Strive for Excellence Service to Customers

5.5 New Mission of ASDA

“Always To be first in Britain’s Best Value Retailer and exceeds customer needs always”

5.6 How to bring back and get more customers

1. “FULL LIFE – HALF PRICE”

Open “FULL LIFE – HALF PRICE” Section or branches inside the existing premises and open in
populated areas new small outlets for only ““FULL LIFE – HALF PRICE” individually or with all
products.

2.WHAT PRODUCTS SELL FOR HALF PRICE

Fill with perishables, food products, new invented products, self branded products, products
from global sources and a selection of economically not hurt too much to company for
exactly half price.

3. HOW THE HALF PRICE LOSS MANAGED:-

Table 9 - Half Price Loss Calculation

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4. HOW THE LOSS MANAGED

Find raw- materials cheap, reduce production cost, find new ways to produce quality
products, allocate the loss to self branded unique products.

5.5 What are the benefits of “FULL LIFE-HALF PRICE”

1. Developing a long term customer base
2. Customers increase means revenue increase and
3. Conversion of customers from half priced to full priced is easy with excellence of service

Conclusion
To recapitulate, to compete for price war it is suggested to “FULL LIFE-HALF PRICE” long
term tactics suggested and the mission suggested from”” Britain’s Best Value Retailer and
exceeds customer needs always”” to “ Always To be first in Britain’s Best Value Retailer and
exceeds customer needs always”. The price war, technological advancement, diversification,
invention are all in common and practicing all the competitors in retail industry. Therefore
further runs with R&D, invention, development, unique products and patents to be focused
for “Always To be first in Britain’s Best Value Retailer and exceeds customer needs always”.

LIST OF TABLES
Table 1-Summary Report - Five Force Analysis................................................................................15

Table 2- Market Share of ASDA............................................................................................................19

Table 3- SWOT Analysis (Internal) Table 4- SWOT Analysis (external)...............................................23

Table 6-Competitive advantage...........................................................................................................30

Table 7-Strategic Route & Tactics.........................................................................................................30

Table 8-Strategy Objectives.................................................................................................................31

Table 9 - Half Price Loss Calculation.....................................................................................................32

TABLE OF FIGURES
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Figure 1- Six Macro Environment forces – The DESKTEP model.............................................................7

Figure 2-United Kingdom Population.....................................................................................................8

Figure 3- PESTEL Analysis.....................................................................................................................10

Figure 4 - Porter’s FIVEFORCE..............................................................................................................11

Figure 5- Five Forces - high and low profile.........................................................................................12

Figure 6-FIVE FORCES FACTORS...........................................................................................................15

Figure 7-ASDA- Income Statement-2017.............................................................................................18

Figure 8-market share- ASDA...............................................................................................................19

Figure 9- private label - AC Nelson.......................................................................................................20

Figure 10- SWOT ANALYZIZ..................................................................................................................22

Figure 11-UK RETAIL POSITION............................................................................................................26

Figure 12-Ans off Matrix......................................................................................................................28

Figure 13-Aansoff Matrix.....................................................................................................................28

Figure 14-Balanced Score Card............................................................................................................29

BIBLIOGRAPHY

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4) KIM, W. C. and MAUBORGNE, R. (2015) Blue Ocean Strategy. Expanded Ed. Boston: Harvard
Business Review Press.

5) ROTHAERMEL, F. (2014) Strategic Management. 2nd Ed. Maidenhead: McGraw-Hill.

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