Asda Strategic Initiative Report

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Kingston University London

Kumi D. Atiadevey (K1038399)
MSc Information System

Strategic Initiative Report

Strategic Information System for e-business (CIM401)

June 2011

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EXECUTIVE SUMMARY Asda stores ltd. is a British supermarket chain which retails food, clothing, toys, general merchandise and financial services,[1] as well as a mobile telephone and broadband network (Asda mobile launched in April 2007). ASDA’S roots dates way back to the 1920s when a group of Yorkshire farmers came together and formed the Hindell's Dairies. Its first supermarket was then opened under the 'Queens' name in Castleford in the early 1960s and became a subsidiary of the American retail giant Wal-Mart (world’s largest retailer) in 1999.[2] As at the end of the 2010 fiscal year, Asda's share of the UK grocery market stood at 16.6% [3] making it the second largest supermarket chain in the UK after Tesco [19] and operating over 370 stores (and still growing) in the UK. Due to the tense and stiff competition, and saturation by its major rivals (Tesco, Sainsburys and Morrisons) in the industry, Asda is required to plan strategically and initiate new ways to further explore their multi-channel sale strategy and give them a competitive advantage over its competitors. This strategic initiative report is to critically analyse and evaluate Asda’s macro, micro and meso business environment. Strategic evaluation tools such as PESTEL, Porter’s Five Forces and SWOT analysis of the company are identified, areas of improvement, and a recommended e-business tool for Asda disorganised data system are suggested to help achieve this aim whiles considering the organisation, people and processes.

1. INTRODUCTION Asda is among the largest food retailers in the UK with a recorded revenue of $31.2 billion during the financial year ended January 2010 (FY2010) and employs about 170,000 people. [4] They currently operate approximately 377 stores in the UK (Subject to final regulatory approval, Asda will in addition to its 377 stores, operate another 147 Netto stores in the UK, adding 1.2 million square feet of space to its portfolio). Asda which was founded by farmers of Yorkshire in 1965 currently provides a multi-channel retail chain including a www dedicated online chain (www.Asda.com launched in 1998). In addition, Asda currently provides a home telephone and broadband service, and financial services (credit cards, savings account, and insurances) through Asda Personal Finance (APF). Over the decades, Asda has evolved to become the second largest UK food retail supermarket (Datamonitor, 2010). Below is Asda’s comparative positioning with the other major competitors in the UK market (Euromonitor, 2010):

Fig 1: Share of Leading Players in UK Food Retail Market

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2.0 ASDA’S ENVIRONMENTAL ANALYSIS 2.1 SWOT Analysis
STRENGTHS  Strong financial position  Strong bargain power  Financial performance OPPORTUNITIES  Acquisitions and Takeovers  Emerging markets and expansion abroad WEAKNESS  No loyalty scheme  Signs point to serial acquisitions THREATS  Increased Competition  Economic slowdown  External changes (government, politics, taxes, etc)  UK structural change Table 1 – Swot Analysis

2.1.1 Strengths
 Strong financial position/performance: According to Datamonitor (2010), Asda is ranked the second largest grocery retail company in the United Kingdom, operating over 377 stores and a market share of 16.6% of the UK supermarket. Asda, a subsidiary of the American retail giant Wal-Mart, (the world’s largest retailer) has a very strong financial position coupled with its un-abating financial performance underlines its strategic capabilities over its competitors. A summary of its 2009 growth of Asda and its UK competitors is shown below. Supermarket Asda Tesco Sainsburys Morrisons Consumer Spend (£000s) 3,411 6,453 3,239 2,327 Market Share March 2009 17.5% 30.4% 16.1% 11.8% +/- from March 2009 8.5% 4.3%, 5.7% 7.2%...
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