Organizational Introduction
ASDA is a bid super store chain in United Kingdom and offering both tangible and intangible products to the potential customer since many decades and with the passage of time ASDA is also updating its business operation with regards to all thing which includes range of products, range of services, range of quality of services and products and playing its role being social responsible for the progress of United Kingdom and for the betterment of public.
Current Business Position
Mostly PESTLE analysis is used by the researchers to analyse the current situation of any business anywhere.
Political Factor
According to Acemoglu and Jackson, (2011) that the customers are paying a lot of money to the government in terms and in shape of value added tax and increment in the employee’s wages. Being the social responsible the ASDA tried it’s best to offer products at reasonable prices to the potential customers, whereas political factor has put a negative impact of organization on the superstores industry in United Kingdom.
Economical Factor
According to the Benfield, (2008) that increment in wages of labour, electricity, fuel, tax rate, profit margins these all factors play role in economic situation and per capita income also represent the nation’s lives status. In this era customer are really worried about their income levels and about high prices and current economical situation is not so good and there are bad impacts on the ASDA customers and business is so slow.
Social Factors
Obviously due to high prices more tax rates people are not happy and they are price conscious rather than quality conscious and they are willing to buy low price products and services.
Technological factors
According to Byars, (2005) that latest technology play its effective role in cost minimization and organizations can get advantages of latest technology and can also take advantages over the competitors. ASDA has adopted latest technology and offering low cost to the customers. Due to advance and latest technology the ASDA has advantage of low cost in all areas of business activities.
Environmental Factors
According to the Capron and Glazer, (2003) that due to weather conditions sometimes the imports are delayed and it has bad impression on the customers and organizations suffered from this delay. In United Kingdom tourists visited the country they buy food, clothes and all other stuff online as well as physically visits to ASDA and increase the revenue.
Business Planning and Strategy
Objectives
ASDA has the following main objectives which are discussed below and relevant strategy to achieve them is also discussed. ASDA has an objective to capture more new clients and retain the old and will capture market share this year about 88%.
| Action | Initiative | Resources | Date of completion |
| Identify clients requirements | Advantages for the clients must be declared | Employees | November 2013 |
| As per client’s requirements developments in the quality and services and designing products as per client’s requirements | Conduct survey | Employees | November 2013 |
| Expansion, review Product, price, placement and promotional activities as well | New ideas to offer and deliver message and making new commitments | Employees | November 2013 |
| Focus on high quality products and services, and low price | Promotions as per high quality and low prices | Employees | November 2013 |
| More quality and value added features, benefits and advantages | Promotional campaign, limited offers, reviews | Employees | November 2013 |
Source: Author
Marketing
Marketing ASDA services and products to the targeted customers
| Action | Initiative | Resources | Date of completion |
| Conduct the survey to make it sure that the product’s features and services are designed as per customer’s requirements. | Select the effective media channel to start the marketing and make it sure that the message is clear and there is no ambiguity in the message | Employees | November 2013. |
| Communicate with all other departments for coordination and make it sure that all other departmental work will remain smooth. | To make it sure about the current business situation the conduct the analysis to know about the organizational strengths, opportunities, weaknesses and threats. | Employees | November 2013 |
Source: Author
Improvements
Get customer’s feedback and increase the quality of products and services
| Action | Initiative | Resources | Date of completion |
| Get feedback from customers and employees, involve the employees in decision making | Offers, promises must be made by the organizations and commitments and offer features, advantages, benefits over the competitors | Employee | November 2013 |
| All the features, advantages and benefits of the products and services as compared to the competitors | Identify the customer’s expectations and manufacture the products as per customer’s needs and wants | Employee | November 2013 |
| Periodically update the clients about products and services information | Start campaign about the promotion by offering some offers to attract new customers | Employee time | November 2013 |
| Select the best one media channel according to the targeted customers | Select the alternative media channel list | Employee | November 2013 |
| Use different channels to communicate with customers | By using the media channel start promotions and the best media channels are emails, letters, text messages | Employee | November 2013 |
| Plan and implement | After review the performance make alterations | Employee | November 2013 |
Source: Author
Assess Opportunities
| Action | Initiative | Resources | Date of completion |
| Assess the opportunities available for the organization to improve the business condition for achieving organizational objectives | Research and development department will conduct a survey and will make it sure about the available resources to avail opportunities | Employees of concerned department | November 2013 |
Source: Author
Improve Employee’s skills and Competencies
| Action | Initiative | Resources | Date of completion |
| Construct and design the trainings objectives and time of training and associated cost | Start the procedure step by step and initiate the procedure after planning his or her personal development plan | Staff members | November 2013 |
| Set the leadership qualities and its objectives | Define the objectives Define the leadership scheduled time Evaluate the positions | Leadership Task | November 2013 |
| Scheduled the training objectives and define its goals | Define the evaluating process steps Gauge the performance | Leadership Task Force | November 2013 |
Source: Author
Financial statement of ASDA
There are the following KPI’s of ASDA to know about the fiscal performance and about the progress and about the main objectives of the ASDA, these financial indicators are given below one by one.
Financial Indicator
Different financial indicators are called the financial indicators which are used to gauge the financial achievements of superstore from 2012 to 2013 (http://www.walmartstores.com/sites/annualreport/2012/financials.aspx).
2012/2013 (4.0)
2011/2012 (3.4)
2010/2011 (3.0)
These above mentioned figures showed that every year the financial growth is gradually start from 2010 to 2011 and the figure was 3.0 million pounds, whereas in 2011 to 2012 it was 3.4 it showed that there was an increase of 0.4 million and in 2012 to 2013 it reaches up to 4.0 means 0.6 million increment in one year (http://www.walmartstores.com/sites/annualreport/2012/financials.aspx).
Targets
As explained above that in coming 6 years ASDA has objective to capture 88% market share and it means that ASDA will achieve more 22% margin in next 6 years which is a huge amount and is challenge for the employees.
Initiatives
To achieve the above financial objectives ASDA management has designed the following action plans to achieve above stated objective
Resource allocation at right time to right person
Maximum resource utilization
The business strategies are designed and developed in such a way to attract about 88% of market share in coming six years
Customer Indicators
ASDA has belief in that the revenue can be generated and can be enhanced by only creating loyalty and satisfaction among the clients and this satisfaction and happiness is based on the features and quality of products and services to achieve its overall objectives.
Key Performance Indicators
Basically the main key performance indicator is the reference group which we call it recommended customers.
2012/2013 (82)
2011/2012 (76)
2010/2011 (66)
Targets
To increase the customer’s recommendations the super store has decided to improve the quality of products and services.
Initiatives
Create happiness and satisfaction among the clients and increase the level of loyalty
To achieve organizational objectives the super store has decided to improve the quality of services and also measure the employee’s skills and performance and improve the skills and abilities by giving.
Business Indicators
Here main objective of the superstore is to create loyalty and satisfaction among the client to enhance the revenue of the superstore.
Key Performance Indicators
There is a gradual increment in this sector starting from 2010 up to 2011 it was 54 and then from 2011 till 2012 it was calculated as 65 means that there was an increment of 09 million great British pound and from 2012 to 2013 it was recorded as 79 means 14 million increment (http://www.walmartstores.com/sites/annualreport/2011/financials.aspx).
2012/2013 (79)
2011/2012 (65)
2010/2011 (54)
Targets
ASDA has planned to get 70% as new target
Initiatives
To achieve above mentioned target ASDA management team has decided to take following steps to achieve above mentioned goals.
To get proper recorded feedback from customers and make contact with them and handle their problems and provide them solution as soon as possible, the ASDA has decided to install proper latest procedures and technology to minimize the cost.
Financial Ratios
Following are the financial ratios for ASDA Super Store
| ASDA in United Kingdom | |||
| Ratios | 2012 | 2011 | |
| Liquidity Ratios | |||
| 1. | Current Ratio = Current assets /Current liabilities | 26740 / 37400 =0.70 times | 23460 / 41420 =0.56 times |
| 2. | Quick (Acid Test) Ratio = Current assets – stock/Current liabilities | 26740 – 980 / 37400 =0.68 times | 23460 – 1270/ 41420 =0.55 times |
| 3. | Operating Cash Flow To Maturing Obligation = Cash Generated from Operations/Current Liabilities | 3310 / 37400 =0.088 times | 1330 / 41420 =0.032 times |
| Gearing Ratios | |||
| 1 | Gearing Ratio = Long-term (non-current) Liabilities/Share capital + Reserves + Long-term Liabilities | (79730 / 2880 + 6920 + 79730)*1000 =88 % | (81420 / 2880 + 4300 + 81420)* 1000 =90% |
| 2 | Interest Cover ratio= Profit before interest & tax/Interest Payable | -5310 / 1360 = -3.88 times | -4010 / 1770 = -2.29 times |
| Profitability Ratios | |||
| 1 | Net profit margin = Net Profit before interest & after tax/Sales | (-4250 / 79940)*100 = – 5.31% | (-3580 / 89920)* 100 = – 3.98% |
| 2 | Return on shareholders’ funds = Net Profit after tax /Ordinary Share Capital + Reserves | (-4250 / 2880 + 6920)*100 = – 43% | (-3580 / 2880 + 4300)*100 = – 49% |
| 3 | Return on capital employed = Net Profit before interest and tax/Share Capital + Reserves + Long-term Liabilities | (-5310 / 2880 + 6920 + 79730)*100 = -5.3% | (-4010 / 2880 + 4300 + 81420)* 100 = -4.52% |
| Efficiency Ratios | |||
| 1 | Asset utilization ratio = Sales/Capital Employed Capital Employed = Current Asset+ Fixed Asset- Current Liabilities | 79940 / (26740 + 79730 – 37400) =1.157 times | 89920 /(23460 + 81420 – 41420) = 1.42 times |
| 2 | Average settlement period for debtors = Trade Debtors/Credit Sales x 365 | No Information about Credit Sales provided so Assume sales on Cash | No Information about Credit Sales provided so Assume sales on Cash |
| 3 | Average settlement period for creditors = Trade Creditors/Credit Purchases x 365 Credit Purchases = Cost of sales+ Closing Stock-Opening Stock | (6230 / (2900 + 980 – 1270))*365 = 871days | (6660 / (3690 + 1270 – 11200 ) )* 365 = 633days |
| Working Capital Management | |||
| 1 | Working Capital = Current Assets – Current Liabilities | 26740 – 37400 = -1066 | 23460 – 41420 = – 1796 |
| 2 | Working Capital Turnover = Sales / Working Capital | 79940 / -10660 = -7.49 | 89920 / -17960 = – 5.0066 |
| 3 | Inventory Turnover = Cost of Goods Sold / Inventory | 2900 / 980 = 2.96 | 3690 / 1270 = 2.91 |
| 4 | Days Inventory = 365 Days / Inventory Turnover | 365 / 2.96 = 123.3 Days | 365 / 2.91 = 125.43 Days |
| Solvency Ratios | |||
| 1 | Current Liabilities to Net Worth Ratio = Current Liabilities / Net Worth Net worth = (Total Asset – Total Liabilities) | (37400 / (106770- 85640))*100 = 177% | (41420 / (104880-86420))*100 = 224.37% |
| 2 | Current Liabilities to Inventory Ratio = Current Liabilities / Inventory | (37400 / 980)*100 = 3816% | (41420 / 1270)*100 =3261 % |
| 3 | Total Liabilities to Net Worth Ratio = Total Liabilities / Net Worth | (85640 / (106770-85640))*100 = 405% | (86420 / (104880-86420))*100 =468 % |
| 4 | Fixed Assets to Net Worth Ratio = Fixed Assets / Net Worth | (79730 / (106770-85640))*100 =377 % | (81420 / (104880-86420))*100 = 441% |
Source: (http://www.walmartstores.com/sites/annualreport/2012/financials.aspx)
References and Bibliography
a. Books and Journals
Acemoglu, D. and Jackson, M.O. (2011) History, Expectations, and Leadership in the Evolution of Cooperation 2nd ed, Oxford: McGraw Hill publishers
Benfield, E. (2008) The Moral Basis of a Backward Society 3rd ed, London: Free Press
Byars, L. (2005) Strategic Management, Formulation and Implementation, Concepts and Cases 2nd ed, New York: HarperCollins.
Capron, N. and Glazer, R. (2003) Marketing and technology: a strategic coalignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21.
Cooper, L. (2004) Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15.
Jan, Y. (2002) A three-step matrix method for strategic marketing management, Marketing Intelligence and Planning, Vol. 20 Issue 5, pp.269-272.
Johnson, G. and Scholes, K. (2003) Exploring Corporate Strategy 3rd ed, Hemel Hempstead: Prentice-Hall
b. Websites
http://www.walmartstores.com/sites/annualreport/2011/international.aspx [Accessed on 3rd February 2013]
http://www.walmartstores.com/sites/annualreport/2011/ecommerce.aspx [Accessed on 3rd February 2013]
http://www.walmartstores.com/sites/annualreport/2011/directors.aspx [Accessed on 3rd February 2013]
http://www.walmartstores.com/sites/annualreport/2011/financials.aspx [Accessed on 3rd February 2013]
c. Bibliography
Kotler, J. and Schlesinger, L. (2001) Choosing strategies for change, Harvard Business Review, 3(12), pp.24-29
Kotler, P. (2008) Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.
Locke, R.M. (2002) Building Trust in A Flora 5th ed, Manchester: Pearson publisher
Putnam, R.D. (2003) Making Democracy Work 3rd ed, Princeton: Princeton University Press
Robinson, S., Hichens, R. and Wade, D. (1988) The directional policy matrix-tool for strategic planning, Long Range Planning Journal, Vol. 11, pp.8-15.
Thompson, J. (2002) Strategic Management, 4th Edition, London: Thomson Press
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