Analysis of Asda - Free Business Essay - Essay UK
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.
This direction will help the company to develop the products by using internal resources. Asda will open new electronic firm called Asda electronic, and this firm will produce some home appliances. This will help Asda to have more profit and to become the first largest retails in the UK by market share
. This means the company will pay a lot
of money in the beginning to build the new firm, and in the research but after that the revenue will rise.
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 was first formed in 1965 by a group of Yorkshire farmers and originally sold only grocery products. However in 1990 Asda sold its first range of clothing under the name ‘George’ and was soon in most of their stores. In 1999 Wal-Martbought Asda and has since moved into other retail areas such as electronics, home appliances and home, travel and motor insurance, as well as setting up an order
and delivery service (Saunders, 2011). Now Asda is the third-biggest supermarket in the UK with over 500 stores across the UK and provide around 35,000 products to customer. The following report will illustrate
business-strategy level of Asda by using some strategic analysis
model like PEST, SWOT, Porter’s Five Force and Porter’s Generic Strategies. This report also gives to Asda some advices for future development strategy.
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).
Earlier this year, Asda was named Britain's Best Value Retailer for the twelfth consecutive year in the annual Grocer 33 awards, compiled and presented by Britain's top supermarket trade publication. Asda was named in the Sunday Times Best Green companies as well as
being voted as one of the Top 50 places for women to work by the Times newspaper.
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.
The first strategy is overall cost leadership, this strategy requires Asda provide lowest-cost products to their consumers without reduce quality of products. Overall cost leadership allows Asada to outperform rivals within the industry because it
can charge lower price and its lowest-cost base still allows them to earn profit. The second strategy is
differentiation, if Asda use this strategy, Asda must provide different goods and services which satisfy the needs of their customers. Differentiation requires Asda spend more cost to create and keep their competitive advantage
. However, this cost can be offset in case Asda can increase revenue. The third strategy is focus, Asda can focus on cost leadership or differentiation in a narrow market.
ASDA has a series of values. They are:
' To respect for the individual
' To strive for excellence
' To serve to the customers.
ASDA has a complex hierarchical structure where many personnel's are involved and which is aligned with local and global business atmosphere.
Also for large scale so the management and coordination of management activities is very difficult. There are many opportunities that can be exploited ASDA, which is expanding its market to potential markets such as the EU
. In addition the company can exploit
some other business sectors such as tourism, insurance. ASDA have many opportunities in many fields. Firstly, with the process of economic globalization
, many emerging markets are growing fast, like the turnover of China retail industry is increasing about 30% for every year. ASDA can access to the new market in the future. Secondly, it can grow organic food market. Rising health awareness among
consumers led to a higher demand for low calorie organic foods around the world. Customers are becoming aware of the risks associated with obesity and poor dietary habits. ASDA has taken many initiatives to cater to the health-conscious consumer.
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
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.
The political environment is ideal for business with a stable friendly government. The political environment in the UK is considered to be relatively stable. The UK is a nation under a constitutional monarchy. Head of state is the king, but the king only symbolic role. Executive power is exercised on behalf of the king, but in the hands of actual government. The head of government is the Prime Minister. The Prime Minister is the leader of the majority party in the House of Representatives seat (Williams, 1998).
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.
Environmental factors: Asda supports carbon reductions in most of its stores. Asda's stores are eco-friendly, 40% more energy efficient and emits 50% less carbon dioxide than a standard new build store. Over the past couple of years Asda have been working with their suppliers to reduce the amount of carbon emitted during the manufacture, growing and processing of their products - something that's known as embedded carbon.
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.
Asda can become the cost leader but only within a specific market or Asda can offer special products, service with high value within a segment of market. In pursue focus strategy, Asda could develop their brand loyalty which help Asda decrease threat of new entry. One of dangerous problem in applying Porter’s Generic Strategy is that some
organizations try to do all three and become stuck in the middle. However, in case of Asda it not appropriate, right from the first days of establishment, the company has put out a formula for their business is cost reduction to always discount sales. That means Asda choose cost leadership
strategy to achieve competitive advantage in the supermarket industry in UK
. To following this strategy, Asda always guarantee give to their customer 10% cheaper than their competitor (Asda, 2014). Besides that, Asda also try to minimize their staff’s number by using shopping online and self-service check out to reduce cost.
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.
Strengths of ASDA Group is a system consisting of many stores spread across the UK. Chain stores have proven to be an ASDA strong brand. Now, the corporations in approximately 136 company retail stores. ASDA pursue low pricing strategy
. It aims to offer a shopping basket which is 10—15% lower than the chief competitors. ASDA considered the method that can use the Consistent low prices rather than advertisement to give the confidence to customer
. It is that does not need to buy some products in other supermarket for pursue
the value price. In addition, growing market share is
strength, ASDA is the second largest food retailer in the UK, ASDA has outperformed the rest of the retail sector in terms of growth rate and continues to gain market share as shoppers respond to its reputation for low prices.
1. Pricing of the products & services with that of other retail chain brands
1. There is always a pressure to maintain low pricing.
2. The changing policies of various Central Governments
Resource -Based View Analysis
Apart from external factors there are some internal factors affecting business which the company should be more careful.
Analysis of the Porter’s five forces for the purpose of establishing the position of a company in that industry. The factors in the model of Porter is: The five forces are threat of substitute products, bargaining power of buyers, bargaining power of sellers, competitor rivalry and threat of new entrants Future developments in the industry and the ability of the company
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.
A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage.
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. (BARNEYJ.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.
In the above paragraphs the researcher has provided a very positive approach by considering the factors which will have a critical role on the journey to the exploring of the impact of the sales promotion as to how it acts as a very impressive tool and the right utilization of the promotion will have its own effect on the consumer and on the organisation as a whole.. Since the emerging of the recession among the UK retail industry
, the various competitors of the UK have enrolled themselves in a fierce battle for the demand
in holding the consumer those who are already loyal rather than the ones who are interested, because the manufacturers are aware of the fact is getting a new customer is easier but holding on to an existing employee or losing them is the most irritating and very expensive for the company
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).
Human Resource Management
Asda is very particular in employing best candidates for all the vacancies.
Generally the British political system little changed. Even the legal system of the State policy also does not change much Biggest concern of businesses is the continuity of the rules and principles of conduct whether any of
the parties are in power. A change in government, whether by election or coup not always mean changing the level of political risk. Contrary to the fundamental change in policy could create major instability. A sudden change in unpredictable government policies can also hinder business activities of the enterprise, regardless of the changing cause.So，for political factor
, in the future years and current, Britain basic political situation is stable. This situation is good for British supermarket industry to grow in
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.
Online shopping will reduce retailer costs because less staffs are needed in shops to serve the customer. The annual report in 2009 show that self-service checkouts are becoming more favoured in Asda store and the wage costs was saved £10 million. In addition, Asda also try to increase their economics of scale to reduce production cost in long term. In 2010, Asda paid £778 million to take over the Netto - this is an aggressive bid to close the gap with market leader Tesco’
(The Guardian 2010). This action is evidence shows that Asda using economics of scale pursue cost leadership strategy
. Another action shows the cost leadership strategy of Asda pay a large cost for their own machines and the result is that in the long term production of their own brands will be cheaper than other.
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)
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.
The format of the ASDA stores is simple with green and white colors. After it became one of the subsidiaries of Wal-Mart there were many super centers opened by both the companies jointly. At present there are a total of 21 such supermarkets in UK
alone. In 2003 the company brought into
the market "ASDA living" which was the first general store of the company. It sold a range of products including clothing, toys, home electronics, health products, homewares, as well as beauty products. The company has joined
hands with the Compass group that has coffee shops in a few of the stores of the company.
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.
Technological factors: new technologies create new products and new processes. Online shopping and computer aided design are all improvements to the way that Asda do its business. The company has a core competence involving its use of information technology to support
its operations. For example
, it can see how individual products are performing store-by-store at a glance. IT also supports its efficient procurement.
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.
There has been a fierce competition in the field of the promotion and the supermarkets have given the priority for the recent activity in the promotional sector since they are aware that it indeed as worked and will work for attracting the customers
, since the pump prizes set to rise hence discount will always remain to be the important part of the supermarket's
promotional armoury. An interesting outcome from the increasing self-service and consumer been changing kind of trend, the interest in packaging has become an impressive sale promotion tool and a stimulator for a impulsive buying behaviour ( Kuvykaite et.al, 2009). In the latter information one has to
be aware the role of very impressive package can and will really attract the customers in a very positive approach.
This helped Asda to reduce its stock holding days by 39% which is one of the major cost reductions. (Anon, 2010)
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.
The strategies suitable for Asda, these strategies will move Asda from local company to multinational company. Because the firm will alliances another company Aldi. This means the number of customers will increase, and the profit will also rise.
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.
Consumers, worried by the coalition government's measures to rein in record debt with tax increases and public sector cuts, are also becoming more wary in their spending. Britain's grocers are facing more moderate food price inflation and a jump in petrol prices that has left shoppers with less to spend on groceries. According to Asda, research carried out
on its behalf by Cebr showed UK families' disposable income in December is forecast to be 172 pounds, 5 pounds lower than 2009.
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.
Based on strategy of view of us, Asda should choose market development like a future strategy. In more specific, Asda should do alliance with Aldi because of two reasons. Firstly, the market for supermarket in the UK does not have lot space to develop
, so expand to international will
give to Asda more profit. Secondly, Aldi is giant company with wide range of store on the word; alliance with Aldi not only helps Asda expand to Germany but also helpsthe firm will come multinational. All that will make the firm become bigger and have change to get stronger in the UK and capture the market share in other
countries. In addition the firm will receive a huge profit as boost the revenue, build anextremelystrong brand image.
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)
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.
For a big retailer as Asda, a sustainable competitive advantage is the key to get success. A sustainable competitive advantage is about performing different activities or performing similar activities in different ways. That means, Asda must be capable of producing value for the consumer that is recognized as being superior to that of its competitors. The best ways to achieve this goal is that Asda should follow one of three generic competitive strategies which developed by Porter
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.
Asda will development new products to the market in the UK. And the firm will produce home appliances like cooker and microwave and all the home machine. New market, Asda plan to expand in different countries by alliances with Aldi. That will raise the revenue, and help the firm to become multinational.
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.
There are issues about Asda having unfair competitive advantage over other small retailers and potentially driving them out of business. PESTLE analysis will help identify policies, laws and regulations governing monopolies and competition. This is one of the challenges facing Asda in its quest to expand its business. Consumer law helps to protect consumers by ensuring that businesses can compete fairly in the market economy and
competition drive down prices and improve quality of goods and services. Under EU law, there is concern that unfair competition or a large share of the market (dominant) can result in low quality product and services and
consequently increase in prices of goods and services. Fortunately for ASDA, it is not considered to be exploitative but should bear that in mind as it continues to expand its stores.
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)
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's sales in grocery accounts for 60% of its turnover and efforts are being made to increase the share of its non-food products in its stores, which may well help it to challenge Tesco's dominance in the very near future. Asda's own brand includes Asda Smartprice, Asda, Good for You!, Asda Organic, Asda Extra Special and More for Kids.
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.
According to Ian Duncan Smith, Secretary of State for Work and Pensions, 'an across-the-board tax' was needed to increase the costs to all drinkers. Increasing taxes has been announced as part of the Conservative's alcohol policy, but questions have been raised about how effective it will be 'to find a fair formula that could be used to judge whether a product is being sold below cost', as outlined in their Green paper. Alcohol Concern have previously commented that increased taxes are a start, but that minimum pricing is the most effective policy and prevents supermarkets from absorbing tax increases on alcohol as loss-leaders. Asda strategic planners
will be watching this closely and would want to study the impact it will have on their policy of keeping prices low.
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.
The competition between existing competitors is very high because the supermarket industry in the UK is saturation. Therefore the competition within the industry appears to be intense. ASDA is affronting many internal and external
competitors such as TESCO, SAINSBURY,MORRISON and AHOLD of the Holland. TESCO is the largest retailer in the UK. It can contend for markets with ASDA by
its large number stores and attractive price. SAINSSBURY is the second one in UK, its productions famous for high quality. While AHOLD is the largest supermarket in Holland, therefore it has the absolute strategies
. All of these have a high degree to share market with ASDA
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.
In the early 20th century, the global economy has made profound changes due to the volatility of the political situation in the world. The world economy achieved high growth rates in the 2000s and began to decline sharply after terrorism of 9/11 in America
(Colin Grahame Bamford, 2002). The volatile world economy has profoundly affected European countries such as the U.S., Japan … but the UK economy remains sustainable. UK also is an attractive market for foreign investors because the UK has many advantages
, such as the financial centre of the world currency, infrastructure development, and tax is lower than the EU other, skilled workforce with relatively low labour costs compared with developed countries.
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.
Asda is also part of the Institute of Grocery Distribution, a think-tank and research organisation for the sector, working with the British Standards Institute to find a method by which all retailers can measure the amount of
embedded carbon in their supply chains.
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.
The increase in using the sales promotion budget as mentioned earlier initially among the food industries have brought out the reason as to what are the exact or the actual benefits of the supermarkets doing a sales promotion and as to how these benefits will differ from manufactures and the different retailers. There have been researches which have
proved that major supermarket purchases are done without proper planning and therefore have a very huge impact on the decisions of the food purchasing (Narhinen et al, 2000). The differentiating help from the sales promotion comes where in it allows the manufacturers of grocery products to differentiate theirs from the competitors (Kahn & McAlister, 1997), and also help the organisation in developing a brand
image associating with the customer.
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.
In 2006 ASDA introduced ASDA Essentials that stocked the products of the company. This served to compete with the other discount supermarkets in the region. However the store was closed down in 2007. The company also has its
online store that started in 1998. It sells items in a number of categories including travel, entertainment, furniture, electrical, gifts, mobile phones, and flowers. The company also sells its own brand of clothing known as George. In 2007 the company launched ASDA
electrical that focused on electrical products. This is to compete with Tesco Direct of Tesco
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.
Asda has also been recognized for its environmental welfare credentials, winning 'Best large retailer' at the RSPCA 'Good business' awards for animal welfare and a 'Business Commitment to the Environment' Award for its efforts to reduce packaging and literally hundreds of
prestigious awards for our wines and cheeses.
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.
The following factors in the macro-environment (tax changes, new laws, trade barriers, demographic change and government policy changes) will affect the decisions of the managers of Asda. To help analyse these factors, managers can
categorise them using the PESTEL model.
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.
Economic factors. With the budget looming and coalition economic policy still awaiting definition, the call for a new, stricter approach to competition has come under elliptical attack from both the political right and left. Asda like its main competitors Tesco and Sainsbury have been accused of tax avoidance, depriving farmers of a
livelihood and functioning as modern-day monopolies that drive local businesses out of communities. There is increasing pressure on the conservative government to bring a stricter approach to competition to bring the big companies under
control. This may have very serious implications for the long term operations of the supermarkets especially Asda that prides itself on keeping prices low. The question to ask is how important are grocery prices compared with long-term market competitiveness
, small business ownership and the livelihood of agricultural producers? The average family spends 11 percent of their income on food, and this rises to 15.9 percent for those on the lowest incomes. There is suggestion that decreases in food prices considered in isolation over the past two decades have increased the standard of living for the poorest by approximately 2.75 percent, before inflation is taken into account.
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.
Science and technology is developed in the UK now.By 2008 in the UK,there is about 16 million households use the internet for buying food. This was UK households 65%. (Na 2008) 2.The competitive environment within the UK.
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.
Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Technology has been used to support and realise Asda's primary focus of saving money and keeping costs low.
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.
ASDA Group, is the retailer in UK which the researcher has chosen for the study and obtaining the outcome from the organization. ASDA is a wholly-owned subsidiary of the US Wal-Mart, operating around 300 stores and which has it major selling of the primary groceries and apparel. This company has its
operation which is the UK subsidiary of the Wal-Mart's international division
. It is one of the biggest grocery and general merchandise retailers in UK. Though achieved a specialization in selling a variety of range of both food and the non-food products emphasizing on fresh food and the company boast the
maximum number of bakers, butchers and the greengroceries in the stores all around in the UK (Datamonitor,2010). ASDA has been facing a very stiff competition from the other retailers which are the TESCO and SAINSBURY. The company operates its
various formats through
superstore, supercentre, Asda Living and the Asda Essentials. It has the online shopping and home delivery which is operated through the website, provided it also sells its own range of apparel and under the label of private company called as
George which includes women's wear, children's wear, footwear and other accessories.
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.
This chapter will introduce the competitive challenge in the marketing among supermarkets and the fierce battle among them followed by the key background of sales promotion and buyer's behaviour. This chapter also give s the clear motive of the whole study, the aims and objectives
, the research question and
concluding the further work on this study.
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.
And while Asda, unlike its rivals, do not participate in the convenience market with small stores and its not in the company's real estate strategy to develop convenience stores. It remains a big challenge for the supermarket giant to make stores easy to shop, and therefore delivering against peoples'
requirements for increased convenience" and industry analyst fear that Asda may loose customers to its main competitors, as customers choose to shop in
stores nearest to them.
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.
Asda has opportunities to take over, merge with, or form strategic alliances with other global retailers, focusing on growing both its food and non-food markets. According to Andy Bond, part-time chairman of the company
, set out a series of key targets for the chain, including overtaking Tesco to become 'number one' in non-food retailing in the UK and opening 100 smaller format supermarkets
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.
1. Change in the Management Structure:
Employees work should be task oriented rather than depending on their position.
Sales promotion is considered as one of the important aspect or element of the marketing mix for a number of consumer products in and around the world (Kaynak et al, 1998).Sales promotion has had increased expenditure as a percentage of marketing budgets and
has become a trend which will further continue ( Kotler,1997). A number of marketing manager's use the
methods of price-oriented promotions such as coupons and discounts for increasing their sales, market share ,entice trial and encourage brand switching where as on the counter part of Non-price promotions may encourage brand loyalty ( Shea,1996). The advantages the
consumer looks into this kind of promotions is that since they provide utilitarian benefits which can be the monetary benefits, added value , increased quality and other hedonic facilities.
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.
Asda/Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Like its parent company, Asda's primary focus is saving money and keeping costs low. The company has a core
competence involving its use of information technology to support
its operations. For example
, it can see how individual products are performing store-by-store at a glance. IT also supports its efficient procurement. People are key to the company's business and it invests time and money in training people, and retaining a developing them.
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.
The consumer is at the centre of the whole process of the promotion aspect, in order to reach to the expectations' of the customers or the consumers the companies bring in their best promotional banners, same-product offers and many more to create a connection to the retailer. The most difficult part would be to understand the motivations and the perceptions of different consumers and the key drivers which help them decide on the promotion of the products which attract and further more as to the reasons they end up.
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.
Asda buys Netto supermarket. The move signals supermarket chain's commitment to smaller store format, as it plans to incorporate 193 Netto stores into its portfolio. The sale, which remains subject to regulatory approval, will see Asda convert all of Netto's UK locations into Asda stores and integrate them into its new supermarkets division for units smaller than 25,000sq ft. Asda expects the transaction, which will see it close the gap between rival chain Tesco, to finalise after approval from the Office of Fair Trading later this summer.
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.
Asda has many stores around UK, but the company not expand around the world. The firm must develop and try to stay in the top of sales in the UK and try to compete with international companies. Asda now is the second largest retails in the UK by market share
. Strategy of Asda, Asda will base on two strategies. First one internal growth and
the second one is acquisition.
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.
The main aim of the whole study would be the concept of marketing in the super markets where in the researcher reveals the role of sales promotion being a part of the marketing and how it acts as a tool for the various retail organizations like Asda , Tesco and Sainsbury, of which Asda has been used as a sample here and the
samples being the target managers and the
customer's who have an important role in the analysis of this research.
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.
This study will analyse the impact of political, economic, social, technological, environmental and legal factors on Asda. It will also identify the key forces that represent both opportunities and threats to its profit. Data is supplemented with details on the company's history
, key executives, business description, locations and subsidiaries as well as a list of products and services and the latest available company statement.
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 Group (Asda) owned by Corinth, a fellow Wal-Mart group company, is a grocery and general merchandise retailer in the UK. In 2008, Asda recorded a profit before tax of £520.4m, down slightly from £532.7m but exceeded arch rival Sainsbury's. Asda's sales hit £18.57bn, up from £16.7bn, ranking the chain third in the supermarket hierarchy after Tesco and Sainsbury's.
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).
Looking at the aspects for an increased impact of the sales promotion in a supermarket industry the reason can also be the short-term effect of consumer-directed promotions on sale of food has a pretty good effect , thereby being positive and substantial ( Simpson,2006).
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.
One of the author's perspective (Rundh, 2005), a package has the capability to pulls the customer's attention towards a particular brand, image or influence the customer behaviours and perspective towards a product. When one goes into the non-monetary consumer promotions which when moderated by the categories of products revealed that both the product-related and the reward-timing non-price promotions have a major part in having their influence on the sales promotion, and also the preference of the same product offer is more attractive for the consumers rather than the other-product sale promotion (Liao et al, 2006).
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).
The above objectives will be taken one by one and would be analysed accordingly after the concerning the relevant theories and reading of the secondary information with precise referencing of the articles and thorough investigation on to the related information gathered
. Using the relevant tools which are justified enough for the reason its chosen and producing the right outcome and bringing a better aspect for the managers to handle the
promotion in the best able method in the supermarkets.
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 is not just changing the way business is done; it is more about changing the organizational culture in some or the other way.
Wal-Mart has been criticized by some community groups, women's rights groups, grassroots organizations, and labor unions, specifically for its extensive foreign product sourcing, low rates of employee health insurance enrollment, resistance to union representation, and alleged sexism.
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.
These studies will focus on the behaviour aspects of the customer who wants to decide and know about the right kind of supermarket they would utilize for the best with the best deals and offers for their regular household usage. Especially if we take the recent promotion example of the fight
for the two companies like the Tesco and the Sainsbury where in they had reintroduced their own kind of or more being different by their own perspective fuel promotion for the customer's something like a 5p discount on the fuel, if you take from the store or spend around GBP50 in-store (data monitor, 2010).
(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.
Supermarket business is highly profitable industry, many investors want to invest. Currently in the UK there are several large supermarkets are competing with Tesco and Morrison’s ASDA. Initially, the UK retail industry is highly consolidated with Tesco and Sainsbury. Tesco is key competitor of ASDA. It operates through the multiple store formats
, including Extra, Superstore, Metro, Express and hypermarkets. Besides in the UK, Tesco also operates in other European countries and Asia. Furthermore, the labour wages go up in the UK, according to the Department of Business
Enterprise and Regulatory Reform, labour costs are raising in the UK. It would adversely influence ASDA’s margins.
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.
As part Asda's strategy to grow its non-food business, its George fashion range was launched in 1990 by George Davis, founder of the Next chain of high street stores. George fashion range now accounts for over a £1 billion of its turnover. Asda is the UK's biggest clothing retailer.
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.
Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
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.
If one heads back to the further studies which have been done earlier are that they have focussed on consumer attitudinal and behavioural responses' to price promotion ,hence the most understood sales promotion have effect on the span of how exactly price promotion have the capability to alter the perceived value and the brand choices ( e.g..,Alvarez & Casielles 2005,Darke & Chung 2005,Dawes 2004,Raghubir & Corfman 1999, Tan & Chua 2004,Wathieu, Muthukrishnan & Bronnenberg 2004,) also including the shifts considered and categories involved.
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.
Legal factors: Asda need to be aware of planning permission regulations and make sure that continued store expansions complies with planning regulations. Planning permission is heavily regulated in the UK. A PESTLE analysis would help Asda to identify relevant planning laws and comply with them to reduce any disruption to his store expansion programme by local people's dissent or the local authority refusal. The analysis would assess the potential success of opening a
new store in an area.
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.
The other revealing factor would be what exactly has an impact on the consumer behaviour, which can either be the sales promotion or any other discovering factors that would act as an impending tool for marketing of the
particular products. The main aim of this study is to know the supporting factors which for a part of the whole supporting structure of the sales promotion and the after effects of the promotion on the mind of the consumer.
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.
Sales promotion has itself been divided into a number of channels of communication activities which can be either associated with the advertising, type of personal selling or also public relations. The two most important types of sales promotions are the retail promotion and the consumer promotion. The consumer kind of promotion is the one's which the manufacturers offer direct to the
consumers and not through any medium, and the other kinds of the couponing, sampling sweepstakes, premiums , tie-ins and refunds are common types of the promotions of consumers which are used by the manufacturers ( Liao et.al,2006).
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.
As part of the world's largest retailer, Asda has harnessed Wal-Mart's enormous buying power, especially on general merchandise. Here, its ability to source materials like denim on a global scale has helped drive down the price of a pair of jeans from £14 to £4 over the last five years. But food still accounts for the largest part of Asda's turnover and it is here where its low pricing model has really fuelled sales.
It states eight reasons why change processes do not succeed.
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.
The external environmental analysis may reveal certain new opportunities for profit and growth. To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
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.
ASDA has been reported to be one of the best known companies to work for. There is a discount of 10% on all the goods that are purchased by the staff from the company. Also in December there is a double discount day wherein the staff members are allowed a discount of 20% on their purchases. The company strives to
make shopping at the stores an enjoyable experience for the customers
. The company has many disability as well as family-friendly services that are available at all the stores that ensure that the company is able to cater to the different needs of the customers.
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.
Further on the researcher on the next chapter will be putting all the theoretical aspects of the sales promotion and the buyers behaviours supported by the relevant theories which would illustrate the theories supporting the sales promotion, the different aspects of the buyer's behaviour and the factors governing the consumer attraction towards the promotional aspect relating all the concepts which are discussed in this
chapter but in a more deeper research into the secondary information in the articles, journal and the
various books concerning to the topic of the research.
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.
It’s so important for any firms to extend to another country, but in the same time it’s difficult. The strategy for Asda is to alliances of another company like Aldi. Aldi is German company and has over 8,000 stores worldwide, the company opened in
18 countries around the world. And that’s very important for Asda to become multinational firm. This alliancewill help the firm to make more profit.
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.
To provide goods/services that are cheap and affordable to consumers or the public.
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.
Another measure of Asda in reducing costs is hard bargaining strategy with their suppliers. It means that they decrease power of suppliers, if their current suppliers do not meet their requirement they can simply move to another supplier that will meet their demands. More and more Asda is choosing to use suppliers from abroad because they are often cheaper than suppliers in Britain and regulation is less strict meaning they are able to achieve their cost leadership strategy. (The Guardian)
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.
ASDA leads the way in giving UK customers the products they want at the lowest prices and continue to widen the price gap between our competitors. We have always been committed to keeping prices low, something our customers value and
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.
' Blackhurst, C. (0309.2007). Exclusive MT interview. [on-line]. http://www.managementtoday.co.uk/channel/Leadership/news/735030/exclusive-mt-interview-archie-norman/ Accessed 16 Jul 2014
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Its expansion in non-food has been propelled by Wal-Mart. In the last five years the supermarket has quadrupled its non-food offer to more than 12,000 general merchandise lines. Asda recognised it was a great way to accelerate growth in the UK and has drawn on the expertise of
Wal-Mart in this area. They have taken product, gone on joint buying trips, sourced globally and shared
category management expertise on how to space and display.
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Now is the best time to do these strategies, Asda make huge profit in the last few years. This makes it easy to Asda to build the electronic firm and to acquisitions.
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Investigate the Planning and Range of Tools and Techniques involved in developing a Market Strategy.
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Wal-Mart operates in Mexico as Walmex, in the UK as ASDA, and in Japan as Seiyu. It has wholly-owned operations in Argentina, Brazil, Canada, Puerto Rico, and the UK. Wal-Mart's investments outside North America have had mixed
results: its operations in South America and China are highly successful, while it was forced to pull out of Germany when its venture there was unsuccessful.
HUMAN RESOURCES FOR HEALTH6: - JUN 20 2008
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.
The business sector in which ASDA works is highly competitive. Supermarkets need to keep customers loyal. ASDA keeps them loyal by having a good effect in the places in which it works.
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.
A key Asda weakness is its lack of smaller supermarkets and convenience stores. Britain, like many European countries, has placed sharp restrictions on construction of "big box" stores in suburbs and rural areas. While most Asda stores fall into that category, two-thirds of Tesco's outlets are small or midium stores.
2. Venturing into markets that are growing like India, China etc