Delivery Products And Services To Consumers

Published Date: 02 Nov 2017

Table of Contents

Introduction

It is very important for the organisations to plan and execute their operations and activities, because the environment where the organisations are operating is very complex and highly unpredictable. Irrespective of the purpose of the firm, whether profit oriented or non for profit, strategic management and planning process is vital and significantly influence their all activities. This report is based on the strategic business management process and a critical evaluation of strategic related activities and function on organisation. For this purpose it has been selected ASDA Stores Ltd which is a leading retailed firm in UK which is a subsidiary of Wal-Mart, the largest and leading retailers in America. Following sub topic are discussed under this report.

Business strategy and plan used by ASDA including their vision and mission

Values and goal process of ASDA together with their cultural, environmental, ethical and business objectives

Ways of monitoring and evaluating their objectives, goals and strategies

Background of the company

ASDA is a private owned subsidiary company to world’s largest retailer Wal-Mart in America. This was founded in 1965 in UK and became a subsidiary of Wal-Mart in 1999. Their range of product categories include grocery, food, clothing, pharmaceuticals, spectacles, general merchandising and financial services in around 565 operating stores with more than 175,000 employees. ASDA became the UK’s second largest supermarket store after Tesco by market share of 16.5% at the end of 2011.ASDA has been voted as the Britain’s lowest price grocery chain from 1997 to present by Grocer 53 Magazine survey.

Task 2 – Evaluation of business strategic and management planning process of organisation

Nature and scope of strategic management

Strategy is the set of activities which firm design and implement the resources and uses them to provide products and services to the consumers which will require in achieving the financial and other objectives of the firm. These objectives have been imposed by the stakeholders based on their different interest and involvement to the firm. According to Wit and Meyer (2010: p.3) the nature of the strategy is been derived by this definition and can be listed down as follows;

Set of actions arrived by designing or accidently.

It is obvious that any firm act upon their pre determined plans. But there might be some situations that these plans cannot implement due to unpredictable environmental constraints. So people have to act even on unplanned activities in opportunistic way.

Development of resource.

This includes knowledge and other resources which on the control of organisation ownership.

Delivery products and services to consumers.

Product and services offer by the firm should be valuable for the consumers. These products and services should have unique and distinctive features as well.

Meeting stakeholder objectives.

Organisation needs to satisfy their stakeholders’ economical and personal interest as well. For a profit company they need to meet the financial objectives of its funders and investors. According to Johnson, et. al. (2008: p. 26) if it is a non-profit, they need to have earnings to survive within their limited resources.

Benefits of strategic management for organisation

Strategic management ensure the profit maximisation and further growth of the business

According to Harberberg and Rieple (2008: p. 8) strategic management help to emphasise the profitability by the means of profits, return on investment and earnings per share.

Strategic management helps top management to selects best approach to make decision.

It provides guidelines to achieve the performances as strategic management is set targets to achieve by people of the organisation.

Strategic management gains competitive advantages to the firm: As discussed by Amason (2011: p.9) this will help firm to analyse its markets, competitors and their strategies to achieve the expected market share than the rivals.

Strategies provide participative process to analyse the environmental changes and provide best solutions to minimise resistance.

Organisation is operating in highly complex environmental forces and strategies help them to analyse the complexity and provide guidelines to adopt the organisational objectives to increase performances.

With the help of the strategic analysis organisation can find best ways to satisfy their customers.

Strategic management process of ASDA

Environmental analysis of ASDA

Harrison and St. Jones (2008) deliberated that it is needed to any organisation to do a macro economic analysis. Business environment are increasing dynamic and those external factors affecting to the business are beyond its control. So the success of the business is highly depends on how effectively they are adopt to its environment through the corporate and business level strategies. Companies are operating in the environment that consists of many external factors that directly or indirectly impact on the company. These are the macro and micro environmental forces and can be analyse through many approaches including STEEP, PEST or PESTAL factors. Form this PESTEL analysis is the best and most using approach and it has been illustrates in below figure 1.1

http://1.bp.blogspot.com/-V5BQzis0OhY/TqTnw9KL9GI/AAAAAAAAACw/RwB2OWOiHrY/s1600/PESTEL21.jpg

Figure 1.1: Environmental forces affecting strategic decision

Source: http://pmmagsmartech.blogspot.com/2011/10/pestel-analysis.html

PESTEL Analysis

PESTAL analysis can be used to identify forces in the macro environment that are currently affecting to the company and also likely to do so in future. As per Allen (2001: p.54) the key to the PESTEL analysis is to identify the key factors that are likely to have a significant effect on the organisation and industry. This might not be a simple task as the complexity of the environment forces at work can be overwhelming. The environmental analysis of ASDA can be listed down as follows;

Political: Factors such as law of the country, government agencies, political part in the power and the opposite leaders. Common lows and regulation in the country also influencing the strategic process. According to Sadler (2003: p.30) these are enforced by the government of the operating country

There are some employment laws and regulations which government encourages multinational large companies to hire different kind of employment demands such as unemployed young people, disable people and elderly people. ASDA is now start hiring retired people and provide job opportunities for them. Other political factors affecting ASDA;

Increasing of the tax under Conservative’s Alcohol policy

Promotion of free trading blocs by UK’s government

Free trade flows by other countries (China and other Asian countries)

Economical: Macro level factors that have an influence of the production by the means of production and distribution. As per Allen (2001: p.60) this economical factors are included inflation rate, taxation, interest rate, exchange rate, labour supply, market growth rate, trade barriers and etc. Following factors are directly influencing the business activities of ASDA;

Inflation rate

Interest rate

(GDP) Gross Domestic Production and Economic growth

Labour market conditions and employment levels

Exchange differences and variations in currency values

Unemployment rates and trend

International trade policies

Global economic trends

Socio-cultural - eliminate harmful products and encourage socially beneficial decisions to the society. Company always should ensure the health and safety of the community and as per Goyal (2009) they provide accommodations to satisfy their interest.

There are some demographic changes such as increase of aging population, less house wife and trend of eating outside make retail firms to reconsider the accommodations by focusing add more value to the products and services provided.

Technology: Cznkota and Ronkainen (2007: p.10) described the need of respond aggressively with innovations, process improvements and creativity to play best in the market. Machinery, materials and related knowledge used for the production also influence the strategic decision of the business.

Flexibility of work place and retailing has increased by the technological advancements like online purchase methods, IT working environment with paperless and etc.

Environment: Environmental impact of business locally, nationally and internationally and the outcomes of community interest.

UK government has launched a policy for environmental friendly consumption and manufacturing operations to reduce cost of resources, reduce waste and diminishing damage of environment. There is a legislation which imposed a high tax on fatty food advertising. These legislations and policies have a great negative impact towards the products range of ASDA.

Legal: As per Sadler (2003: p.30) this includes rules and regulation in the country which the company operates.

Laws like planning premises regulation in UK, Consumer protection laws, European Union law which prohibit unfair competition and etc has a huge impact to the strategic implementation of ASDA

Strategic planning process

As described by Hill and Jones (2012: p.13) a formal strategic planning process has following steps;

Selecting of corporate vision, mission and corporate goal and objectives

Analyse the external competitive environmental factors which can be bring opportunities and threats to the organisation

Analyse the internal operating environmental forces as well which gives both strengths and weakness to the organisation.

Select strategies which build on the organisation’s strengths and correct its weaknesses in order to take advantages from external opportunities and reduce the impact of external threats. Meantime these strategies should build in line with mission and vision of the organisation to achieve its goals and objectives effectively and efficiently.

Implement the strategy.

Mission, vision, values and goals

Vision: According to the Griffin and Moorhead (2010: p.505), the vision is the dream of an organisation that it will want to be in the future. The vision helps the management and the employees to work towards one direction.

Mission statement: Mission of the company explains the description of the business. This includes nature and scope of the business, what will be it, and what should it be. That should decide on three dimensions: who is being satisfied (group of customers), what is being satisfied (what are their needs) and how their needs can be satisfied. According to ASDA (2013) there mission is "to be Britain’s best value retailer exceeding customer needs, every day". Their mission statement emphasised following;

Nature of the business – retailing

Scope of ASDA – Britain market

Purpose – provide products and services which exceeding customer satisfaction. In ASDA’s word their purpose of business is "to save everyone money, every day"

Values: values of firm state how management and employees should act and behave themselves and especially how they should do business to achieve organisational mission and vision in long term. As per ASDA (2013) their core values are;

Put our customers first, every day

Care for colleagues, every day

Strive to be the best they can be, every day

ASDA has some every day vales process which always ensure everyday benefits to customers as well as their employees. They always believes that the success of the company is totally depends on the people both who work with them and who shop with them. That is their customers and employees. They have develop strategies based on customer requirements and all the policies, activities, goals and values have been implemented by putting customers’ requirements first. Mean time they value their employees as well and they always do care for them.

Purpose: The purpose of ASDA is widening to many areas including customer satisfaction, suppliers, community and employees.

Customers – To save their money everyday

As per ASDA (2013) this is not just an act of doing but it is how they do business. They have treated their customers as the heart of everything they implement. They have some strategies to take active involvement of customers in everything they do. Their strategies of product development and serving consumers were derived from the thoughts and ideas of consumers. ASDA always keeps the lowest price for their products. They are the lowest cost to operate supermarkets in UK. According to ASDA (2013) following are their five customer pledges;

Everyday low price – ASDA delivers low price with great quality goods.

ASDA has been voted as the Britain’s lowest price grocery chain from 1997 to present by Grocer 53 Magazine survey.

Quality you can trust – continuously innovate quality products to guarantee the trust upon ASDA. Ex: they grant 100 day guarantee for their George clothing

They have won 320 quality awards in food including 19 cheese awards, more than any other retailer

Best for new – they provide latest new products and meantime offer great new events to encourage consumers to shop with them.

They won 100 wine medals in 2009 for their own labelled wine

Always available – ensure the availability of the products on their shops

They hold the "Gold star" retailer award of the year in annual Mother and Baby awards

Help to happy 0 they have train and develop their employees’ skills and attitudes to offer friendly service to the customers who are shop with them.

They were recognised as Britain’s most friendly supermarket by Tommy’s

Community – they consider their employees also as a integral part of the community where they live and work through fundraising and volunteering. Their employees are working with and supporting the local community, as a average in 2009 they have spent more than 50,000 hours with the community support programmes and according to ASDA (2013) they raise over £9 million through fundraising events in 2009 for charities such as Tickled Pink, Children in need, Pedal Power and Tommy’s

Employees – they value their colleagues with best employment practices. Especially they have "Everyone Matter’ approach which always ensure that their employees the most important sources of the company. Following are some of benefits they offer to their employees;

World-class reward package – this includes all employee bonuses which ASDA has paid over £129 million since 1999.

Flexible working practices

Renowned fun and vibrant culture

As per ASDA (2013) they have many employees who have more than five years service with ASDA and as an average it is longer than any other retailers in UK.

Suppliers – to deliver great products at lower price to the consumer, ASDA works and partnering with many local as well as international suppliers around the world. They have started their own network hub with suppliers especially provide opportunities for small suppliers to supply goods to ASDA. ASDA always try to ensure the relationship among suppliers to enhance the product quality. As per ASDA (2013) over 500 specialist suppliers provide more than 6000 local products with great value.

Environment – they work toward the sustainability and it has been aligned with their lowest cost retailing commitment in UK. Following are few example of their environmental engagements to enhance the sustainability;

Reduce their direct carbon emission by 83,000 tons

Reduce their usage by 53% of carrier bag rate over the past 3 years through recycling them

Introduced ‘eco-depot’ in 2009 and it has been constructed by eco-friendly timber.

Sustainability Objectives: their corporate objectives can be shown in figure 1.2 as bellow

Figure 1.2: sustainability objective of ASDA

Source: www.asda.co.uk

Business strategy

The strategy of ASDA is based and relies upon their mission, purpose and values which always guide them to work towards achieve them. Their strategic framework has been developed under for quadrants which include benefiting their customers, their operating model, their employees and their shareholders. Figure 1.3 illustrates their four categories of strategy.

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Figure 1.3: ASDA business strategy

Source: www.asda.co.uk

Porter’s Generic Strategies

As described by Mollona (2010: p.152) the external environment of the organisations is not totally exogenous but it is in parts which created by managers with their decisions. Therefore organisations need to fit into the patterns of resources exchanges and other competitive actions of their rivals within the industry. Porter analysed this competition through ‘five force analyses’ and suggested generic strategies to being effectively competitive in the industry. These generic strategies include cost leadership strategy, differentiation strategy and market focus strategy. According to Griffin (2011: p.244) an organisation that apply differentiate strategy seeks to distinguish themselves from the competitors through products and services especially through the quality. Whereas an organisation applying overall cost leadership strategy always attempts to gain competitive advantages by reducing its costs below the cost of their rivals in the industry. These generic strategies can be shown in below figure of 1.4.

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Figure 1.4: Porter’s Generic Strategies

Source: http://www.flixya.com

Cost Leadership

According to Porter (1998: p.22) the concept of generic strategies is based on the basis that there are many ways where the competitive advantages can be achieved depending on the industrial structure. Cost leadership strategy is generic to ASDA. Since ASDA became a part of Wal-Mart family, they too committed to the strategy of ‘Every Day Low Cost, Every Day Low Price (EDLE=EDLP)" Wal-Mart is committed to serve more than 200 million customers in every week with a promise of ‘Saving people money to help them live better’ and ASDA contribute to this strategy with their low cost strategy and ASDA has contributed 31% of sales as a integral part of international portfolio to the Wal-Mart. With the global sourcing capability of parent Wal-Mart, ASDA is successfully expanding their cost leadership strategy in UK.

Conclusion

ASDA is well established in the industry of retailing industry and having the second largest position having over 16% market share of retailing supermarkets. The success behind the ASDA is the corporate strategies which have been implemented accordance with their parent Wal-Mart strategic directions. It is clear that they are able to achieve their success because they have adopted their competitive strategies based on the analysis of environmental factors influencing them. Strategic analysis is very important for every company to been more and more competitive in the industry. This helps them to analyse their environmental influences both macro and micro level, analysing their strength and weakness of their internal systems and procedures and identifying what are the opportunities and threats for their operation, identifying the competitor strategies and other competitive forces such as buyers, suppliers and etc to design and implement best and unique strategies to gain competitive advantages. This study broadly discusses the strategic management process of ASDA which help them to achieve their operating excellent with cost leadership strategies in the industry of retail.