BUSINESS STRATEGY

Business Strategy

Business Strategy

Introduction

ASDA was founded in 1949, and is currently the second largest supermarket in the UK. ASDA was bought by the American multinational Wal-Mart in 1999, and has 243 supermarkets and hypermarkets, where 37 ASDA. ASDA Stores Limited (ASDA) is an in-store and online retailer of a wide range of food and non-food products and is the second biggest supermarket chain in the UK with 17% of the market share. ASDA overtook Sainsbury in July 2003, but is still a long way off Tesco's almost unassailable 30% market share. The portfolio includes food, clothing, electrical products and other consumer products. In addition to several national brands, the company offers private label brands, including George. The company operates through 363 stores of different formats, including 29 ASDA / Wal-Mart Supercenters, 22 ASDA Living stores, 272 Superstores and 40 ASDA stores in the small town in the UK.

Markets Environment Analysis

Porter's Five Forces

The threat of Entry

The threat of entry retail industry like supermarket is low because of the supermarket is very high cost to open; you can not be believed to open a supermarket by a small investment. Therefore, barriers of entry are very high. However, many competitors would like to occupy market shares, but ASDA is under investigation by the monopolies commission. If new competitor want to break into this industry, it need enormous cost in property and establish a large supply system.

Fig1 Porter five forces

Threat of Substitutes

Substitutes can be considered neglect able as everyone needs food and there are no real substitutes. ASDA is mainly to operate a food. UK households spent on average £ 443 per week in 2005-06. Food and beverage purchases soft drinks contributed 45 pounds of household weekly expenditure of 10 €. 20 pounds of which went on meat, £ 3.20 on fresh vegetables and fresh fruit 2.60 lbs. Soft drinks accounted for £ 3.80 and, £ 2 was spent on chocolate and confectionery each week (Terpstra, 1999, pp45).

Buyer Power

The UK is the fifth largest country in the world economy with a GDP of U.S. $ 2,773 million. It is a leading nation in the world trade, which is the second largest exporter, the third largest importer of commercial services, the eighth largest exporter and fifth largest importer of merchandise. But in 2008, during the third quarter share of GDP fell by 0.5 percent, this is the first contraction since 1992, the decline has reached the highest level since 1990. Meanwhile, British consumer price index (CPI) reached 5.2 per cent in September, the highest for 16 years. The figure growth by 0.5 per cent than the 4.7 per cent in August, of which the most important impact factor is fuel prices rise (Terpstra, 1999, pp45).

ASDA customers have high bargaining power because they have a lot of options, such as Tesco and Argos. Supermarket customers are relatively price sensitive and a safe shopping environment. ASDA seeks to strengthen collaboration with its suppliers, ensuring competitive pricing of the final ...