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SWOT Analysis ON THE Asda Store Commerce Essay

The goal of a SWOT analysis is to identify the amount to which the current strategy of any company and its specific advantages and weaknesses are relevant to, and with the capacity of, interacting with the changes occurring available environment. It may also be used to assess whether there are opportunities to exploit further the unique resources of the business.

It should also be kept in mind a SWOT is only a snapshot of a specific point in time. Given the powerful nature of the present day business community, organizations need to continually monitor their proper position to ensure that their long-term strategies and operational procedures remain relevant to the needs of the marketplace.

ASDA - Internal Strengths

Financial Resources and Economies of Scale

ASDA was founded in 1965 by several farmers from Yorkshire. After that the business has gone through many changes. In the early 1990s the business is at financial difficulty but was rescued by the management of Archie Norman.

From this point onwards the business flourished and was eventually bought by the US large Wal-Mart in 1999. Wal-Mart is on the most significant companies in the world with huge sales earnings ($316 billion). This gives ASDA with two interior strengths:

Financial Resources - Should ASDA desire to develop more stores or diversify into a new selection of products and services, Wal-Mart could provide the necessary money to invest in these new improvements. This means that ASDA wouldn't normally have to count upon exterior providers (e. g. bankers etc) to provide the necessary money for business enlargement.

Economies of Range - Having the ability to fee lower prices on the consistent basis, is an integral factor in conditions of securing a substantial show of any market. Give the massive purchasing ability Wal-Mart offers, it is essentially placed to make a deal substantial special discounts on a very wide range of products and services. ASDA can take good thing about these discount rates.

Diversification

The profit margins on food items have a tendency to be relatively low (e. g. 10 to 20%) in comparison to other goods and services. Asda, along using its three main rivals (i. e. Tesco, Sainsbury's and Morrisons) have diversified into other products and services in order to bolster their profitability. ASDA is also associated with financial services, clothing and property development.

Clothing has became its most successful factor of its diversification policy. ASDA has its own selection of clothing known as George. This is marketed as quality fashion clothing at affordable prices. It is estimated that George is the fourth major retailer of clothing in the united kingdom, after Marks and Spencers, the Arcadia Group and Next.

Diversification into other products, services and marketplaces provides an interior strength because it protects ASDA's earnings foundation from very intense competitive pressures in the grocery store retailing market.

Employee Satisfaction / Environmental Issues

Both of the items are inner talents for ASDA. In 2001, 2002 and 2003, the business was voted a top 10 UK company by the Weekend Times Top 100 Employers Review.

The company recognizes the impact it has on local and global economies. ASDA's long-term aim is to source 100% green energy. It really is committed to reducing fuel emissions by 80, 000 tonnes by 2007. It has already reached half of this target. It really is converting its entire fleet of pickup trucks so that they operate on bio diesel.

ASDA - Internal Weaknesses

Being Element of Wal-Mart

Being area of the Wal-Mart group is double-edged. As specified earlier. ASDA will get internal strengths by being a Wal-Mart company. However, in america, Wal-Mart has been around receipt of major criticism from a number of influential sources over lots of issues. These will be reviewed completely under external hazards. Any form of criticism generates negative press and tv reports - finally this influx of dissatisfaction could spread to the UK. This would reveal badly on ASDA.

As Wal-Mart is the parent or guardian company it can in the end override any decisions made by the ASDA plank of directors. Thus Wal-Mart could drive ASDA to introduce new working procedures based after its American procedures. These working methods could be totally alien to a UK labor force and possibly prove very hard to apply.

Employee Dissatisfaction

In 2006 the company was found to be in breach of the UK employment law with regard to operate unions and was find 850, 000. Also in 2006 there was trouble when some Asian employees employed in their circulation centres were asked to produce their passports to be able to confirm that these were eligible for work in the united kingdom. This action led to claims that ASDA was behaving in a racist manner. In 2005, it was discovered that in a survey, completed by the company that only one 1 in 4 of its staff shopped in-store.

ASDA - External Opportunities

External opportunities would be determined by concluding a PEST examination of the company's external environment. Social factors offer ASDA a variety of opportunities to broaden upon the number of products and services they currently provide.

Life Movements / Demographics

Despite fluctuations in market and trade cycles during the last 30 years, the common disposable income per head of population in the united kingdom has risen progressively during this time period. In addition consumers have grown to be much more complex and demanding. They expect to buy top quality products at affordable prices. Plainly ASDA has were able to satisfy the anticipations of its customers with its George range of clothing.

Given that ASDA presently supports 17% of the food retail market, being second only to Tesco; it has generated an extremely strong existence and brand awareness within the minds of its customers. It really is well placed to adopt advantage of lifestyle changes tendencies and demographics, in conditions of its capability to develop services and services to meet the rising targets and needs of its customers.

Consumer Attitudes and Viewpoints / Consumer Buying Patterns / Advertising and Promotion / Brand, Company, Technology, Image

These areas are closely related alive trends and demographics. As disposable earnings increase, ASDA need to influence consumer attitudes and opinions, and purchasing patterns, by reinforcing its brand image and customer devotion, through effective advertising and campaign.

A key aspect of having a sizable customer bottom is to encourage cross selling. Thus the company's overall number of customers may remain the same but over time the sales and success per head will increase. This will be achieved as ASDA expands the appeal of its products and services to all sections of its customer base.

ASDA's Exterior Threats

The Anti-Wal-Mart Lobby

There is popular resistance to the further development of new Wal-Mart stores. Why? It really is argued that the company undercuts local sellers by having goods manufactured in developing countries (e. g. China and Bangladesh) in sweatshop conditions and then selling them at prices, no-one else in the neighborhood area can contend with. Ultimately small stores are obligated out of business and Wal-Mart benefits a monopoly within that area. Wal-Mart also operates anti-union campaigns.

Since taking ASDA over in 1999, Wal-Mart has mainly left the united kingdom management team to get on with the jogging of the company. However, if it attemptedto use some of its more ambitious policies in the UK - then, as evidenced by the American experience, this might result in a great deal of damage to ASDA in terms of lost customers and poor promotion.

Office of Rational Trading Investigation

In 2000 an investigation into the domination of the food retail market by the four big companies was turned out. Since then, all companies have implemented aggressive expansion guidelines. They now control 74% of the marketplace. This time there is a groundswell which implies supermarkets won't escape regulation. Difficult curbs on their ability to extend, or even guidelines forcing them to market off stores where they dominate, could be introduced.

Stakeholder Mapping

In order to determine how ASDA should progress in respect of the results from the SWOT research, it's important to construct a stakeholder mapping. That is necessary in order for ASDA to understand the support and opposition it will generate for a planned change.

Opposition

Support

Active Opponents

Passive Opponents

Fence Sitters

Passive Supporters

Active Supporters

High

Office of Fair Trading

ASDA Shareholders

Stakeholder Power

Medium

Anti-

Wal-Mart campaigners in the USA

Various other groupings opposed to new retail developments e. g. local neighborhoods, local authorities

ASDA customers

Food manufacturers

Low

Association of Convenience Stores

Other food retail customers

Stakeholder Power

Stakeholders all have electric power, whether it is the formal power invested in a position or authority invested in a social vitality of being able to persuade others to aid or oppose the change. People that have the higher vitality are going to be ASDA's most useful supporters or most dangerous opponents - thus power analysis will help ASDA to prioritize its give attention to its stakeholders.

The Office of Fair Trading (OFT) is a fence-sitter as it must stay impartial. The Association of Convenience Stores can be an active opponent. It is because its associates are adversely afflicted when ASDA opens up a fresh store. The Connection has low ability because its participants cannot compete with the best four retailers in the market place. However, by building an alliance, it is possible for an opponent to move up-wards and in to the high power box. This is because the Connection has wanted to any office of Fair Trading that an investigation should happen.

How Active Opponents With Low Electric power Can Increase Their Vitality Status

The anti-Wal-Mart campaigners in america are listed because there is nothing to avoid the anti-ASDA competitors from forming an alliance with them. Forging alliances between opponents helps to cause them to more powerful because they can exchange ideas etc. Plus several parties, acting as you body offers a stronger center point in conditions of raising multimedia interest and general population awareness.

It must be kept in mind a stakeholders' mapping is vibrant and the position of the various functions on the map are likely to change depending upon what ASDA makes a decision to do. If the company adopts the same intense insurance policies as Wal-Mart in the USA, this will convert passive competitors into more active ones. Also such action could convert passive followers into passive competitors. ASDA must consider most of its options before proceeding to do this.

A Pre-emptive Hit IN ORDER TO AVOID OFT Sanctions

Probably the most effective plan of action for ASDA to check out is to sell off some of its grocery shops and become more vigorous in diversifying its selection of non-food products and services. This might be a proactive approach and may possibly help the company to avoid any sanctions the OFT could impose. If it do pursue a diversification insurance plan it might meet stiff level of resistance from employees who do not like change.

Management and Command Theory

The major reason why employees do not like change is because it causes doubt. For example, will I still have a job after the changes are complete? Will I have new obligations? And so on. When an organization is confronted with massive change it out needs to build relationships its labor force and explain the problem in full. A number of varieties could be used by ASDA to provide this message. For instance, a newsletter, a series of presentations by customers of the mature management team, question and answer lessons etc.

ASDA would have to describe the implications of doing nothing i. e. the OFT may possibly force the business to sell off some its stores. Such action will probably result in personnel redundancies. By being proactive in terms of broadening its diversification plan - the likelihood is that all of the staff would be redeployed within the business's new non-food retail outlets. Herzberg's Motivators and Cleanliness Factors theory could be used to facilitate this change.

The first level involves cleanliness (or maintenance) factors:

Status

Security

Relationship with subordinates

Personal life

Relationship with peers

Salary

Work conditions

Relationship with supervisor

Company insurance policy and administration

Supervision

The employees need to feel secure and comfortable about the changes that are going to be implemented. They are the hygiene factors which need to be addressed. They are merely a kick off pad for much more developmental work - when these factors are harmed or undermined - no system for progress prevails.

The second stage involves using the next motivators:

Achievement

Recognition

Work itself

Responsibility

Advancement

Personal growth

These items are being used to encourage the staff and make them feel positive about the changes that will be implemented. In other words the personnel should see how they will benefit from the new direction the company is pursuing. The process of motivating the personnel to embrace change will be improved upon if they're actively employed in developing this content and responsibilities that their new position will entail.

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