The Diversified Operating Business Environment
As being second largest supermarket in UK, Asda has nearly 143,125 employees. (Asda, 20 November 2007) As we can see from overview of both organizations, we can figure out that these both organizations are facing the same environment factors which can affect them for formulation of strategy. So it will be necessary to understand such factors in such business environment which plays a vital role.
The Diversified Operating Business Environment As it can be said that in the world of globalization where every organization wants to be superior in race, factors like consumers needs, changes in consumers expectation, political, economical, socio-cultural, technological, legal, environment, and so on, are influencing that an organization has to be aware of them while building their scenario to apply strategies.
Today “Grocery Market” has not been jus limited within selling “Food Products”, but in the expansion of market it is now having a broader idea. There is not any concept such as “luxury market” or “discounted market” occurs, while one can get the both variety of products under one roof, according to their necessity. Today, to buy different variety of household products one has not to spend a whole day shopping in town; instead it can be bought, from
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As other factor affecting a business would be said environmental and social responsibility. By providing eco-friendly products. By investing in products such as launching recyclable packing, organic food, etc. as we can see most of organizations trying to provide food containing less salt or sugar. However, today so many alternatives are available and it’s easier to switch from one market to another for a customer an organization must be very much concentrated on giving the best “consumer service”. Today life is getting busier and busier where customer requires a quicker service. To fulfill this expectation an organization has to focus upon building the scenario of providing customers with better and faster service by inventing and installing new technologies, which can be a major factor affecting a business. As well as easy access to the destination has a great impact on a business where providing or maintaining transport facilities, parking facilities etc.
So in this diversification as its been seen that organizations stepping in sectors which are completely different then their basics for instance supermarket are growing on non-food products such as “Fred &Florence” at Tesco, “George” at Asda and in electronics, home &leisure etc. On the other side, non-food retailers such as WHSmith, Boots have started to put their steps in small variety of food, which make the supermarket think about to making their strategies accordingly to face such major changes, where no-wonder any sudden change can occur.(Competition commission, 20 November 07)
If we try to fit Tesco and Asda in SWOT it can be said that Tesco has the biggest strength of being the largest and the most popular supermarket in UK, Where Asda has strength to be known as the part of the family of worlds largest supermarket Wal-Mart. Tesco with a brand name, expanding its market share and being the up most name, it is ruling the UK supermarket industry since 1999, where Asda is expanding with cheaper price. Have the strength of expanding within, non-food market such as clothing, e-grocery international growth etc. the side which are not strength can be seen as weakness such as poor quality for product of Asda.
Strength can be the opportunity by expanding through all over UK as well as internationally too, expansion in non – food market, new technologies. The biggest threat for these supermarkets is each other, by competing and applying aggressive strategies they can create threat to each other. Tesco apply the strategy in four different sectors: UK core business, non-food, retailing services, international market where they want to provide, 1, making customer shopping trip as easy as possible, 2. Reduce prices, 3. Providing easy access by different sizes of stores, 4. Bringing value and simplicity to market.
Where Asda want to make shopping easy for everyone by making products affordable and in reach of even common human beings, Aggressive Strategies Tesco and Asda are the leading supermarkets in UK, and having an aggressive war to be superior, where they applying aggressive strategy by cutting down price, n being successful to raise their market share. Asda wants to make its service affordable to every one where Tesco want to provide every little thing which can be proven help. “Goldman Sach’s latest pricing study from 12 January confirms Asda is already “turning up the heat on pricing in 2006” by being the most aggressive price cutter so far.”(Food and Drink, 20 November 2007)
“The supermarket chain, which accounts for 8 spent on the UK high street, is now the largest online grocer and takes around 30,000 orders per day which are collectively worth 2.5m. (Business Week, 20 November 2007) Seems like today these two supermarket wants to jus fight on the basis of price war by applying the aggressive strategy against each other. The reason behind that is the Asda is the part of the massive Wal-Mart family and because of the huge brand name and reputation its can have the bargain power for suppliers which is creating threat to Tesco.
“Supermarkets are selling beer at a cheaper price than water, fuelling concern over their role in Britain’s binge-drinking crisis. Despite repeated public health warnings, Tesco, Sainsbury’s and Asda now offer lager at just 22p a can – less per litre than their own brand-mineral water and cola, and cheap enough to allow someone to get drunk for just 1.” (This is London, 20 November 2007) Low prices indirect harming the society, where for sake of quality they are trying to maximize profit and competitive by quantity.
Tesco and Asda are huge brand names, should be careful designing strategies as they set examples to retailers behind. Should create the strategies which are not harmful and completive to fight against rivalry, not jus focusing upon superiority. After all research an effort I came to conclusion that by using their swot analysis they should constant rate on other strategy than jus aggressive strategy. In some manners they apply different strategies but some situation these supermarkets facing are similar so they are implementing similar strategies, where they should concentrate on competing on basic which is not harmful to general public as well as to their own reputation.