Dissertation
A critical Examination of the strategic management of the ASDA resources for achieving competitiveness
Abstract:
The study focuses on the strategic management of the resources for finding the relationship between them and the consequent achievement of the competitive advantage of the organisation. The development of the organisational capabilities and its resultant gain to the company in the shape of the competitive advantage is investigated. The review of the literature has been used as the foundation to analyse the relationship between these variables. The case of ASDA is then used for the implementation of the relationship established from the literature review. The study has found the relationship to be positive and significantly important. The study has found the organisational resources of the company ASDA in terms of the financial, physical, human resources and experiential. The organisational capabilities of ASDA include informational capabilities, product development capabilities and relationship capabilities. The company’s competitiveness is measured in terms of its product-based, cost-based and its service-based elements. The resulting analysis of the company showed that it is competitive in terms of the cost-based element of competitiveness; however, in terms of service based and product-based element of competitiveness, it is not competitive. The study also provides recommendations to ASDA and companies for improving its chances of gaining a competitive advantage.
Chapter 1: Introduction
1.1-Introduction
For any company, the main objective is always to strive to achieve a competitive advantage over its competitors. The attainment of the competitive advantage position which is similar to the competitors and business rivals is dependent on the understanding of the business on its internal strengths and its weaknesses and its effect on the competitive advantage of the company. Thus, an understanding and prior knowledge of the internal strengths and weaknesses of a firm can provide a firm with a way to help in making the strategic business decisions which will aid in its overall competitive position. The research here examines the importance of the organisational capabilities, resources and systems in terms of relationships with competitive advantage.
Competitiveness is something which is not easily achievable as competitive and successful companies are needed to face the challenge and problem of their highly competitive business environment. Any business which is conducting business and operating in the business environment needs to have its business resources. These are the resources which are needed for the success of the company. All companies who are operating in any business need to manage their resources in a way that helps them stay ahead of the competition. Companies are thus needed to manage their resources strategically. It is important to get an understanding of the relationship between the company’s strategic management and competitiveness to provide the required knowledge for the maintenance of success. The research proposal that is being put forward here is going to look at this topic by finding the relationship between the strategic management and competitiveness of the organisation in terms of the various studies conducted earlier (Grobler, 2017). The relationship of the firm’s competitive advantage with its strategic management of resources is going to be evaluated for a specific company in the UK retail industry. The company ASDA has been taken as the main firm on which this study will be applied to research the relationship between the strategic management of resources and its competitive advantage. The study will emphasise the advantages of strategic management of resources and how the firm of ASDA can benefit from the management of its resources in gaining competitive advantage.
1.2-ASDA:
ASDA operates in the UK retail industry and is the 2nd largest supermarket in the country. The organisation is owned by a world-renowned company, Wal-Mart, and is a subsidiary of the global retail leader in the UK. The main focus of ASDA is on the Britain market, and this is the reasons that the company has been focusing on the opportunities in this market only. The company is, therefore, given plenty of opportunities to strategically implement plans for its future in the UK. The goals of the company with respect to its strategic management include exceeding the needs and expectations of the customers by adopting a proactive approach and also becoming more affordable to the customers. The case of the ASDA is one option to study the competitiveness of the company and its strategic management of the resources in terms of their relationship. The proposal is going to consider the relationship and then apply it on ASDA and thus provide the practical importance of this study to the retail company as well. The company has been already quite successful in the UK retail market and thus its strategic management, and competitive position and its relationship would provide sufficient knowledge on the subject. This would also assist highlight the importance of the strategic management of the resources as well (ASDA, 2019).
1.3-Problem Statement:
The company chosen for this research is ASDA, which is one of the largest supermarkets in the UK. The UK, after Brexit, is undergoing an economic turmoil which is reflected in its main companies and businesses as well. The insecurity in the business environment and the pressures of the international retail industry have been shrinking the areas of competitiveness and growth for the businesses. There was a time when the retail sector was believed to be one of the main places where consumers come and visit daily. The marketing and company strategies had been then planned accordingly, as well. However, with the advanced use of technology and the increased competition in the market, the retail companies are now experiencing pushing themselves in the dynamic business environment. This leads them to look at ways to better utilise their resources. This provides more emphasis on the optimum resource utilisation and strategic management capabilities of the firm. This is the reason that is going to be focused in this report in which the ASDA is going to be researched in terms of its perception on the strategic management of resources. The strategic management approaches and the utilisation of the resources and the resulting competitive position of the firms and the relationship of the two variables are going to be examined in terms of the studies conducted in the past. The resulting analysis will aid in the evaluation of the strategic management of the ASDA.
1.4-Research Objectives:
The foremost purpose of the research is to analyse the relationship between the strategic management of the resources and its competitive position. The ASDA Company in the retail segment of the UK is going to be evaluated in these terms as well.
- To examine the perceptions, point of views and attitudes of the employees of ASDA and itself as an employer in terms of the competitive strategic management of the resources.
- To evaluate the competitiveness achieving capability of ASDA by strategic management of its resources including its employees.
- To investigate the degree of utilisation of the resources in terms of the case profile of ASDA and its employees.
1.5-Research Questions:
- What is the relationship between strategic management of the company’s resources and its competitiveness?
- How can ASDA achieve competitiveness through strategic management of its resources?
1.6-The Rationale of the Study:
The main rationale of the study is to provide knowledge on the relationship between the strategic management of firm resources and its competitive position. The company that is chosen for this study adds to the main aim of providing practical, implementable knowledge on the topic of the main objective of the study. The retail company ASDA is perfect for examining and evaluating the correlation of the strategic management of the resources with its competitive position. The organisation is the second largest supermarket in the UK, and its owner, Wal-Mart, has been trying to maintain its growth rate steady. This research aims to provide commendations to the company in terms of its strategic use of the resources to achieve its competitive position in the market. Furthermore, the study will also provide knowledge on the strategic utilisation of the resources and their relationship to the competitive position of the firm.
1.7-Impact on Future Research
The study will result in showing the approaches of the strategic management of the resources and how it affects the competitive position of the firm. The resulting analysis of the literature will show how the firms should adopt strategic management approaches to help improve their competitive positions in the business environment. Furthermore, the study will also provide opportunities to study further the use of strategic management approaches and its mediators in terms of improving a firm’s performance.
Chapter 2: Literature Review
The resources of any firm include its process, capabilities, all assets, information, knowledge, attribute, etc. that is all controlled by the organisation, to enable it to conceive and implement strategies (Barney, 1991). Natural resources are any resources which exist in nature on its own in the form of fresh water, oil, arable land or minerals. These cannot be created by man, and the firm is considered to have an advantage if the company is operating in a country which has these natural resources in abundance. The companies can, however, also obtain access to natural resources by entering into new countries.
The resources of any firm need to be analysed and understood to understand how best it can be utilised. The company which possesses any resources is thus required to understand their resources for making any improvements to its position. The companies are thus not to be analysed in terms of their products only. Companies need to be examined in terms of their capabilities and their resources. It is the strength of their resources and their understanding of how to best utilise it that shows the success potential of any company. The performance of any organisation is thus needed to be evaluated in terms of its possessed resources (Javad and Cordon, 2010).
Numerous past studies have shown the relationship between the firm resources, its systems, its capabilities, and its competitive advantage (Wernerfelt, 1984; Barney, 2001; Barney, 2007; Shepherd and Wiklund, 2013; Sirmon, Hitt and Ireland, 2007). In addition to this, the firm capabilities provide a much important cog in the associations of the competitive advantage of the organisation and its resources as these capabilities provide the enhancement to the elements of the resources that are needed to achieve the competitive advantage. This is the reason; the firm capabilities and systems also needed to be conceptualised along with its resources for the assurance of the competitive advantage. The literature review of the variables of organisational resources, its capabilities, system and competitive advantage is conducted below.
2.1-Organisational Resources:
In resource-based view of the organization, there are definite kinds of resources which are controlled and owned by any firm to have the potential to yield competitive advantage leading it to better performance (Ainuddin et al., 2007; Wernerfelt, 1984; King, 2017; Sirmon, Hitt and Ireland, 2007; Ross and Miller, 2013; Barney, 2001; Barney, 1991). Several studies have examined the resources owned by the companies and categorised them as tangible and intangible. The tangible resources are organisational, human, financial or physical while the intangible resources are positional, reputational, cultural, social, functional or regulatory. Out of all these resources, the most important ones that are considered in terms of the possession of the company are the intangible resources and the human resources (Barney, 1991; Barney, 2007; Wernerfelt, 1984; Bourne, Mills and Platts, 2003; Morgan, Kaleka and Katsikeas, 2014) as shown by various studies for the sake of the achievement of the competitive advantage. This is because of their nature as both intangible assets, and human resources are difficult to replicate and very valuable for any company. Therefore, resources are fundamentally the basis on which the company relies for the achievement of the sustainable competitive advantage of the company.
For this study, specific attention is going to be paid to the tangible and intangible categories of resources with respect to financial, physical, and human resources. The resource-based view of any organization shows that there are definite kinds of resources which are owned and controlled by the firm that can provide the potential of competitive advantage for the firm. Physical resources like that of equipment, the land capacity of the plants and technology can give the company a competitive advantage resulting eventually in better performance of the firm (Morgan, Kaleka and Katsikeas, 2014; Ainuddin et al., 2007). Similarly, the financial resources of the company like bank deposits, cash in hand, financial capital, savings like retained earnings how the level of the organisational competitive advantage and potential for its better performance (Morgan, Kaleka and Katsikeas, 2014; Ainuddin et al., 2007). The brand name of the company, its experience in the industry and its reputation also are considered as instrumental for the gaining of the competitive advantage of the organization with respect to its experiential resources (Morgan, Kaleka and Katsikeas, 2014; Ainuddin et al., 2007). Administration and top management, middle management and employees of the firm provide the competitive advantage for the firm as well, providing the organisational performance as a result (Morgan, Kaleka and Katsikeas, 2014; Ainuddin et al., 2007; Adner and Helfat, 2013; Abdullah, Rose and Kumar, 2007).
2.2-Organisational Capabilities:
There have been numerous studies which have concluded that there is substantial evidence on the relationship between the competitive advantage of a firm and its organisational capabilities. The capabilities of a firm are in the form its core competencies, its resource development strategies, its collective organizational learning, organizational skills, strategic decision-making process, integration process, product development process, alliances, technological capabilities, relationship building abilities, informational capabilities (Barney, 2001; Morgan, Kaleka and Katsikeas, 2014; King, 2017; Sirmon, Hitt and Ireland, 2007; Enkel and Perez-Freije, 2017). As per studies, organizational knowledge is one of the main ingredients to achieve a competitive advantage and consequently better performance in the business market (Abdullah, Rose and Kumar, 2007). For this study, the organisational capabilities that are needed to be focused are going to be the knowledge of the firm, human resource training programs, marketing activities, product promotional activities, networking with suppliers, customers and distributors. The three aspects include the relationship building, informational and product development capabilities of the firm.
Resources are managed strategically, and this leads to the building of the capabilities for the utilisation of these resources. The capabilities allow the company to develop its core competencies on which they rely for their growth. The competencies of the firms are the ones which show the main activities which are crucial for the success and sustainability of a firm (Paulraj and Blome, 2017). The core competencies and distinctive capabilities provide the foundation for the competitive advantage of a company. Thus, the strategic management of resources of a firm consequently helps in the achievement of the competitive advantage of the organisation. The development of the strategic management of the resources needs different kinds of knowledge of the firm. Tacit knowledge is one of these kinds of knowledge which is required to be acquired and developed to manage better and develop the resources (Sisson and Adams, 2013).
The competitiveness of any firm is dependent on the distinctive capabilities and core competencies of their firm. These core competencies help in the formulation of the competitive strategy of the firm. The strategic management of the resources helps in the drawing of the competitiveness of the firm. The use of reactive or pre-emptive measures in terms of competitive strategies shows how competitiveness can be made sustainable and successful. There are specific operations, which are needed to be conducted to assure the success of the organization by using the strategic management of the resources. The performance aims of the strategic management of the resources are set to make sure that the objectives are achieved successfully. The increase in sales and the maximisation of the efforts can be some objectives for the performance achievement, and these performance aims may be attained by using the strategic management of the resources (Bititci, Cocca and Ates, 2016).
The pricing policies are another major dimension which needs to be looked at as well. The pricing policies can either be revenue related, price related or cost related. The adoption of the policies and its strategic management helps in the maintenance of the resources within a business model. This allows for the continuous development ion a dynamic business environment. The development of the model of the business is significant as it ensures the competitiveness of the firm, and it is also a vital segment in strategic management as it plays an imperative role in the revenue earnings of the organisation.
2.3-Competitiveness or Competitive Advantage:
The pursuit of competitiveness or any advantage is, in fact, an idea which is at the very heart of the literature on the strategic management (Liao and Hu, 2017; Barney, 2007; Barney, 2001; Kramer and Porter, 2006; Cousins, 2015). The study of strategic management has long conducted many studies on finding the sources of competitive advantage for companies (Barney, 1991; Cousins, 2015). As per Barney (2007), the competitive advantage is defined as superior differentiation or any lower costs when compared to the marginal competitors in the market for any product or company. Any company is thus regarded as having a competitive advantage if it creates more economic value as compared to its competitors in the market. The economic value of the products can be explained as the expected value or benefit of any product or service as perceived by the enterprise as compared with the economic cost incurred by the company to produce or provide it (Barney, 2001). The resource-based point of view of the strategic management provides the basis that the basic sources and the driver of the competitive advantage of the firm and its improved performance is linked mainly with the attributes of its capabilities and resources that are both in actual difficult to replicate and valuable to the company (Barney, 1991; Barney, 2001). There are numerous other studies which showed that the best strategy of a company in terms of its strategic management of the resources leads to competitive advantage (Cousins, 2015; Jessop, Nielsen and Pedersen, 2016; Ross and Miller, 2013). Other studies have shown that a well-developed and implementable strategy has the potential to exert an impact on the company to achieve the competitive advantage (Ross and Miller, 2013). The resource-based approach of the companies gives them the plan to develop and implement the organisational strategy by also evaluating the strengths of their internal capabilities and resources for the sake of achieving a competitive advantage. In terms of the competitive advantage of the company, the perspective of the value and the quality is going to be considered as the main elements of the study. These include the cost-based element, the service based and product-based element. The studies conducted in the past years have shown that there is a considerable relationship found between the performance of a company and the cost-based element of the competitive advantage. The companies which usually enjoy the cost-based competitive advantage as compared to their competitor’s exhibit much better performance than the competitors as well. The cost-based element of the competitive advantage is usually in the form of lower manufacturing or servicing costs, lower costs of sales, or lower-priced products. Similarly, there are also studies that have shown how the companies with product based competitive advantage also yield better performance by providing a better quality of the product, design, branding or, packaging (Adner and Helfat, 2013; Paulraj and Blome, 2017; Morgan, Kaleka and Katsikeas, 2014). Likewise, a significant relationship has also been found in studies for the service based competitive strength and its good performance with respect to the higher flexibility of the products, speed of delivery, technical product support, product line breadth, reliability, and accessibility of the product (Barney, 2001).
Competitiveness can be achieved by looking at the competitive strengths of the company and using it appropriately. Competitiveness is a different thing as compared to the operational success of any company. The operational success is represented in the form of the company’s impressive profits, results or earnings. However, the competitiveness or competitive position of a firm shows that the organisation can get a competitive advantage by which it can earn results and profits which are going to be above average. The main question is to know how one can achieve a competitive advantage or competitive position. This is the point which is raised in this study by answering through the question with the answer of strategic management of the resources of the company The strategic management of the firm resources allows a firm to evaluate its internal and external strengths and weakness, opportunities and threats constantly and enable it to yield more profit through this constant analysis and its better utilisation for the business. Strategic management of the resources also helps in the exploitation of the opportunities in the business market, and by doing so; it helps the company to be shielded from its environmental threats (Andersén, 2007; Kianto, Andreeva and Pavlov, 2013).
The literature review of the studies conducted on this topic shows numerous results and answers to the questions raised in the study in terms of their very specific contexts. In these studies, the focus has been on the capability of the company to generate any strategic resources, and the study showed that it is easily done by management and using it in the dynamic and entrepreneurial capabilities of the firm. Strategic resources development needs the utilisation and strategic management of the prior possessed resources of the firm. The use of dynamic and entrepreneurial capabilities of the firm can help in the furnishing of these resources and its development in strategic resources (Andersén, 2007). It has been emphasised in studies that the resources of the firm have an effect on the performance of the organisation. The research has shown that if the resources are not affecting the performance of a company, then the performance of the company would ultimately affect the resources of the firm (Grobler, 2017). The resources of the firm are helpful as they can be managed strategically and help in the long run growth of the company. On the contrary, the operational management of the resources only provides short-run benefits to the firm. Thus, the strategic management of the strategic resources is imperative for a firm which is operating in a constantly changing and innovation-based environment to sustain its long-term growth (Jessop, Nielsen and Pedersen, 2016).
For the competitiveness of the firm position, resources are, of course, vital. Competitiveness is the thing which makes sure the resources of the organisation are constantly improved and focused on. Resources are vitally the main inputs for any products, innovations, inventions, services, or any other kind of output of the firm’s process. The two types of resources that are available to any firm are tangible or intangible resources. Tangible resources are the ones which can be touched, felt by hand. These include resources like machinery, property, land, raw material, land, and commodities or supplies. Then there are also intangible resources which cannot be touched or seen, which include patents, goodwill, copyrights, technology, brand equity, and human resources. The lists of the intangible resources can be very long as includes many assets (Jessop, Nielsen and Pedersen, 2016).
The competitiveness of the firm needs to be achieved for the success of any organisation. However, it can only be achieved if a firm possesses the resources which are managed strategically and possessed only by it and not by any other competitor. The values and strategy employed by the company are internal to its business and provide the basis for the competitiveness of the firm (Barney, 2015). Therefore, this shows that the competitiveness of the firm is yielded by strategic management of the firm resources and its capabilities. Thus, studies have shown that the strategic management of resources leads to the competitive advantage of an organization.
2.4-Capitalising on the Key Success Factors for the Achievement of the Competitive Position:
The key success factors are developed based on the strategic management of the resources. Business has some main factors for success, and the business needs to depend on these factors for the achievement of success. The key success factors show how the company can achieve success when there are also other competitors in the market. The link between the key success factors and the competitive position of the company is significant to be noticed and established to know how these success factors help in the achievement of competitiveness (Anand and Grover, 2015).
This proposal is based on establishing the link between strategic management of the resources and the competitiveness which are possessed by the organisation. The relationship also then goes to be analysed in terms of the retail supermarket of ASDA. For a retail supermarket like ASDA, the key success factors need to be highlighted to provide industry-specific knowledge on the competitiveness of the firm.
For ASDA there may be several key success factors which can be used for the identification of the competitiveness of the firm. The low-cost operations are one of the main key success factors which need to be established for the competitiveness of retail firms like ASDA. The company, for the establishment of such a success factor, would need to show operational efficiency to reduce its costs. Any retail company is the one in which the commodities are bought in bulk, and efficiency is made a priority in all operations of the retail operations. Another major goal of any retail company is to maximise the buying power as they want to increase the number of commodities that may be bought with less spending. Other than this, another key success factor means differentiation as the customers would like to see the company provide diversified commodities in the market, giving them several choices as a consumer (Vogel and Paul, 2015).
As mentioned earlier, competitiveness is the outcome of the growth of the core capabilities and main competencies of the firm, which are developed by strategically managing the firm resources. Strategic management provides the company with long-term guidance, and the company is then needed to depend on the key success factors for the achievement of sustainable success in the future. The resources and capabilities of the firm are in actual means to move towards competitiveness by its better utilisation and management. The management of these means needs rationality and smart management skills so that it may be converted into an advantage that is not possessed by any other competitor (Anand and Grover, 2015).
Any retail business has resources which are usually in the form of numerous stores, its revenues, its location and its other resources, which assist it in the development of its business. The strategic management of these resources aids it in gaining competitiveness from it. There can be some stores who are better known for their differentiation, but then there are also others who are better known for their cost-effectiveness. Some of them are better known for their capability to fulfil the requirements of particular customers and markets. This is the reason; the resources are required to be managed strategically to retain competition in the market (Enkel and Perez-Freije, 2017).
Therefore, on the basis of literature, the variables are researched, and the relationship between these variables is identified. This relationship is now going to be applied to the ASDA, and its resources and management of resources are going to be analysed to understand the competitiveness of the organisation better.
Chapter 3: Research Methodology
The research that is conducted is based on the variables of organisational resources, organisational capabilities, and competitiveness. The study depends on the qualitative research of the literature that has analysed the secondary sources of data for the analysis of these variables. Constructs from the literature review are used, which are then followed to be implemented in the case of ASDA. The relationship of the competitiveness of the firm with the strategic management and utilisation of the resources and its development of the organisational capabilities is going to be deduced from the literature review. The establishment of a strong relationship between the variables will lead to the researching of this relationship and implementing it on ASDA. The ASDA Company is used to practically see the results of the implementation of the relationship as established from the previous studies. The most important question which is going to be answered through this study is also the title of this study, which is that ASDA can gain competitive advantage by the strategic management of its organisational resources. The study is using secondary sources of data (Merriam and Grenier, 2019). Research is dependent on the database accessible on online forums, websites, and company portals. The information published in journals, articles, news journals, and websites are analysed to research the relationship of the strategic management of the resources and its competitive advantage. Then, the company website of ASDA, the House of companies on the UK website for privately held company’s information is used to access the financial statement information for ASDA.
3.1-Research Approach and Philosophy:
The context of this study calls for the use of a qualitative research method and secondary data sources for its investigation of the relationship. The research method employed helps use the needed content from easily accessible sources of data. The approach used is also very cheap as it does not incur any costs. The desired outcome of the research is done by conducting qualitative archival research of the literature to find the relationship between organisational resources and the competitive advantage of the firm.
3.2-Sources of Data:
The main data sources which are going to be focused on this study for the investigation of the relationship are the secondary sources of data. The collection of data on the variables of organisational resources of ASDA, its organisational capabilities and its competitive advantage are all going to be collected from secondary sources of data (CIRT, 2019). The peer-reviewed articles are going to be analysed to seek data on the relationship between the variables. Other than this, the official websites for the gathering of the data on the financial information of the company of ASDA are going to be utilised. The qualitative data sources are majorly from the secondary sources of data which are in the form of news articles, company website, company press releases, the company official financial information published on government websites, the journal articles, etc. (Bryman and Bell, 2007).
3.3-Ethical Consideration:
The study conducted is done on the company of ASDA. The variables used are chosen from the literature review on strategic management and is implemented on the ASDA. The resources that are used in the study are all appropriately referenced and cited. Publicly available information is used for this research. The results and findings of this research are all published and also produced as recommendations for the company ASDA that can also be used by any other retailer or any other organization. All ethical considerations are observed in this research, and it has been considered as the highest priority of this research.
Chapter 4: Analysis and Discussions
The analysis of the literature showed that there is a considerable relationship found between the organisational resources, its capabilities and competitive advantage. The analysis showed that the organisational resources that are deemed the most important for any organization’s competitive advantage are its physical resources, experiential, financial and human resources. These resources are going to be looked at for the company ASDA.
ASDA mission is to be the best retailer in Britain by exceeding the needs of its customers every day. The company’s main purpose is backed by its focus on saving money for everyone every day. The mission of the company is reflective of its owner, US-based Company Wal-Mart, which also shares the same culture of value of money. The company’s values and beliefs are both similar to the parent company and are at the heart of its operations. This is also reflected in its employees and its services.
4.1-ASDA Organizational Resources:
Looking at this, for ASDA, which is a private limited company wholly owned by Wal-Mart Inc, the company tangible and intangible resources are analysed to identify if it has the potential for competitive advantage. The main features which are analysed include the cash balance of the company, the property, plant and equipment of the company, the retained earnings of the company, and its financial capital. Other than this, in terms of the experiential resources, the brand name, its reputation and experience are analysed. The analysis of the human resources is going to include the examination of the employees and top management of the company.
4.1.1-ASDA Physical Resources:
ASDA has over 633 locations as of April 2019. The balance sheet of ASDA shows how the company’s physical resources are worth. The company has property, plant and equipment assets worth £ 4361 million in 2017, which has declined from 2016. These include the plant, fixtures and fittings, assets under construction, finance leases, and improvements, and freehold properties. In terms of physical resources, the company has substantial physical resources to yield for its competitive advantage.
Table 1: PPE 2017 ASDA
| 2017 | 2016 | |
| Plant Property & Equipment | £ 4361 millions | £ 4371 millions |
(Comapanies House UK, 2017)
4.1.2-ASDA Financial Resources:
For the analysis of the financial resources of ASDA, the cash in hand, share capital and retained earnings are analysed. The company cash in hand or cash equivalents amount to £ 334.4 million in 2017 as compared to £ 284.9 million in 2016, which shows substantial improvement. The Retained Earnings of the company is £ 3392.6 million in 2017 as compared to the £3499.9 in 2016. The company share capital and share premium account hold £ 757.6 million and £950.3 million, respectively (Comapanies House UK, 2017). The company seems to have a strong financial foundation and has considerable financial resources to use for its competitive advantage.
Table 2: Financial Resources 2017 ASDA
| 2017 | 2016 | |
| Retained Earnings | £ 3392.6 million | £ 3499.9 million |
| Cash Equivalents | £ 334millions | £ 284 millions |
| Share Capital | £ 757 millions | £ 757 millions |
(Comapanies House UK, 2017)
4.1.3-ASDA Experiential Resources:
In terms of Experiential Resources, the brand worth of ASDA and its brand reputation and experience is analysed. The brand worth of ASDA shows that it is worth £ 7.3 Billion, combining the share and the cash (The Grocer, 2018). The company intangible assets which constitute to the patents, goodwill and reclassified lease buyouts to intangible assets and perpetual license of the acquisition of the George brand acquired in 2006 are worth £ 191 million in 2017 rising from £ 165.2 million in 2016. The company has a good reputation for its brand; however, recently, it has been undergoing some turmoil period after the dismissing of its merger with Sainsbury (Walker, 2019). However, overall, with being owned by the number one retail giant of the world and the mentioned brand worth, the company has well enough experiential resources as well.
Table 3: Intangible Assets 2017 ASDA
| 2017 | 2016 | |
| Intangible Assets | £ 191 million | £ 165.2 million |
(Comapanies House UK, 2017)
4.1.4-ASDA Human Resources:
The company is owned by Wal-Mart, and its director is David Buars. The company has around 165,000 employees that are employed in the UK. The company has a vast pool of human resources, which does not only employ, but also provides with good opportunities. These skills are important and significant for the competitive advantage of ASDA.
4.2-ASDA Organizational Capabilities:
The study of the literature has also yielded information on the significant relationship between the organisational capabilities of a company and its competitive advantage. For this study, the organisational capabilities that need to be focused are categorised as three aspects that include the relationship building, informational and product development capabilities of the firm. The focus for ASDA is going to be with the knowledge of the firm, human resource training programs, marketing activities, product promotional activities, networking with suppliers, customers and distributors.
4.2.1-ASDA Informational Capabilities:
In terms of the training programs for its employees, it is evident that the company spent a substantial amount each year on the training of its employees. The company’s main purpose is backed by its focus on saving money for everyone every day. The company’s values and beliefs are both similar to the parent company and are at the heart of its operations. This is also reflected in its employees and its services. The company recognises that it needs to have the service which also puts its customers first. For this, they need a time, which believes in this purpose. The company has been developing a family atmosphere in its stores and provides career opportunities to its employees. Around 80% of the managers of ASDA had begun their jobs in ASDA stores. The company has been providing leadership training programs for leading their store team. The General Store Managers is a position which is usually given to the store retail staff for which training is provided. A long term succession plan has been in place in ASDA for a long time for the development of the Regional Operating Managers. The GSM or the General Store Managers are responsible for more than £ 1 million of the store turnover and supervision of over 500 plus staff. The GSMs provide the on the job and off the job training to the staff. The transition of the GSMs into ROMs includes long training, coaching and development opportunities (Millar, 2012).
4.2.2-ASDA Product Development Capabilities:
The product development capabilities are found to have a significant relationship with the competitiveness of the firm and its strategic management of the resources. The ASDA product development capabilities are assessed by looking at its research and development capacity and its promotional and marketing activities. The company ASDA is known to be pushed 80% by its business insights, which it gains from its research and business intelligence capabilities. The company became the first food retailer to measure how its customers can save by cutting back on the waste. This was done by using the Knowledge Transfer Partnership with Leeds University. The collaboration was based on using the insight data of ASDA and applying it to investigate how the customers can reduce their food waste. This is one big step by any retailer towards the sustainability efforts. The research program with the university has provided the company with the position of being the innovator in the market (University of Leeds, 2019).
In terms of the marketing and promotional activities of the firm, the company believes in the aggressive marketing policy. The eye-catching commercials, and billboards, newspaper advertisements, radio advertisements, hoardings, and leaflets, all are used for the promotion of the retailer. The company also uses social media platforms for its positive brand equity building. The company announces promotional discounts and incentives as one of its promotional strategies periodically. ASDA is also a believer of celebrity endorsements. The company is endorsed by personalities like Hattie Jacques, Leonard Rossiter, James Bolam and many others. The tagline that the company uses is “Save Money Live Better”. Other than this, the brand also uses taglines of “All Together Better” and “ASDA is ASDA”.
The company has also been in numerous deals to better position itself in the market. It is also very socially responsible and makes periodic contributions to the community development programs as well. It supports charities like Fields in Trust, Children in Need, ASDA foundation and Tickled Pink. The company has also been rewarded as the Employer of the Year Awards as well(AdBrands.com, 2019).
4.2.3-ASDA Relationship Building Capabilities:
The relationship building capabilities are also analysed in the literature to have a positive and significant relationship with the competitive advantage of the firm. In terms of this capability, the measurement can be done by looking at the relationship of the company with its suppliers, and its customers. In terms of ASDA, the company was termed as the worst supermarket by the suppliers because of its treatment to the suppliers. The company was at the bottom of the list released by the 1200 grocery suppliers’ survey conducted by the industry watchdog. The complaints that were raised by the suppliers of ASDA showed that the chain never or very rarely complies with the Supply Code of the Practice. The complaints raised by the suppliers claimed that the company takes incorrect deductions on its invoices without giving any notices and requests lump sums to make their profit margins and are usually very abusive in terms of the forensic audits of the accounts of the suppliers (Butler, 2017). The company has, however, committed to improving their supplier relationships in 2018. The company has collected feedback from its suppliers and shown its commitments by showing the steps they have taken to better their supplier relationships (ASDA Supplier, 2018).
In terms of the customer relationship, the reviews of the customers of ASDA on the rating website of TrustPilot.com show that the company is considered bad by 69% of the reviewers and only 14% consider it as excellent, while 5% consider it as great and 4% consider it as average. The reviews have numerous complaints ranging from problems in delivery service, late deliveries, free speech problems causing sack of employees and its online shopping missing orders. The more problems are from the online shopping of the retailers (TrustPilot.com, 2019).
Looking at the organisational resources of the company, the company has good enough physical, financial, experiential, and human resource to use for the building of its competitive advantage. The company can strategically manage it to gain a competitive advantage in the UK retail market.
In terms of the informational capabilities of the firm, the company seems to have substantial capabilities developed by its long term training and succession plans for its employees. The product development capabilities consider the research development capacity and its marketing efforts. The product development capabilities of the firm are also substantially good with its alliance with Leeds University, its aggressive promotions and innovative collaboration for the business intelligence utilisation. The company is also working for improving its contribution to the sustainability efforts of which waste reduction is one of the many steps. On the contrary, the relationship capabilities of the firm are quite worrisome. Being nominated as the worst supermarket by the suppliers to complaints about its online delivery service by customers, the company has not been putting much effort into building these relationship capabilities. Therefore, all in all, the company has the information and product development capabilities to develop its competitive strength and advantage, but needs to work on its relationship capabilities for its improvement.
4.3-Competitive Advantage of ASDA:
In terms of the measurement of the competitive advantage of the company ASDA, as analysed in the literature review, the following three elements of competitiveness are considered; the cost-based, service-based and product based elements. The cost-based element of the competitiveness is analysed by looking at the lower production or servicing costs of the company, and its lower-priced products as compared to the rivals. The product based element of the competitiveness is measured by looking at the highest product quality, service quality of the company. The service-based advantage is analysed by looking at the higher delivery speed, reliability, flexibility, and accessibility of the service. In terms of ASDA, the cost of operating margin in 2017 is 49.68%, while it was 49.54% in 2016. This means it the cost of operating has increased on a small level. The company product prices have always remained lower as its mission is to provide the best value for the money and provides the customers with ways of saving money. Therefore, in terms of cost saving, the company is competitive in the market. In terms of the product based competitiveness, the service quality of the company is not much appreciated by its customers. The delivery service and its customer service are regarded as not the best in the market. Thus, in this element, the company is not competitive. For the service based element of the competitive advantage as well, ASDA is not considered to be the best service provider. The company has seen many complaints in its delivery of the online service. However, it is easily accessible through online services and its more than 600 stores all around Britain. Still, it cannot be considered its competitive strength.
Chapter 5: Conclusion & Recommendations
5.1-Conclusion
The analysis of the secondary data and the literature review helped the study to show how the organisational resources have a significant relationship with organisational competitiveness. There are numerous studies which have found the relationship to be significant between the organisational resources, its capabilities and its competitive strength. The organisational resources that are most impactful for the competitive advantage of the firm include the firm’s physical resources, the financial resources, the experiential resources and the human resource of the firm. The company of ASDA has been analysed in terms of its human resources, its physical resources, its financial resources, and its experiential resources. The company was found to have substantial organisational resources that have the potential to yield a competitive advantage.
The company organisational capabilities are also analysed as first explained in the literature review. In terms of the informational capabilities of the firm ASDA, the company seems to have considerable capabilities developed during its operational years. The company has long term training and succession plans for its employees. The product development capabilities show the research development capacity and promotional efforts of the company. The product development capabilities of ASDA are also considerably well with its association with Leeds University. The company has its aggressive promotions, which are all evident in its commercials and various promotional campaigns. The innovative collaboration with the University of Leeds for business intelligence utilisation has benefited the customers to reduce their food waste. The company is also working for improving its sustainability hard work of which the waste reduction is one of the many steps. On the other side, however, the relationship capabilities of the firm are not doing well. The company has been nominated as the worst supermarket by the suppliers, and the review websites have tons of complaints from the customers. The complaints are mostly on its online delivery service by customers. The company seems to have not been putting much effort into building these relationship capabilities. However, some steps have been taken recently to improve its relationship with suppliers.
The company has the required organisational resources for the development of organisational competitiveness. However, it lacks in its relationship capabilities. The information and product development capabilities are good enough to develop its competitive strength and advantage, but work is needed to be done on its relationship capabilities.
The competitiveness of the firm is also analysed in terms of the guidance from the literature review. The review of the literature has shown that there are three elements of the competitiveness of a firm. These are the cost related element, the product related elements, and the service-related elements of the firm. The analysis of ASDA shows that the company has a substantial competitive advantage in terms of the cost related element, which is also the main vision of the company as well. Being a cost-saving oriented company, this is what it works for; hence, it is the main competitive advantage of the company as well. However, in terms of the product based and the service-related elements of the competitive advantage, the company is not doing well enough to gain any competitive advantage.
5.2-Recommendations
Concluding, it can be said that the literature on strategic management of the resources shows that it has a positive and significant relationship to the competitive strength of the company. The use of the resources in a way that it enables the development of the organisational capabilities, then consequently in the achievement of the competitive strength of the company is supported by many studies. The relationship has also been applied on ASDA, and positive relationship is found for the company competitiveness and its strategic management of the resources and its development of organisational capabilities. The company is lacking in its organisational capabilities in terms of relationship capabilities with suppliers and its customers, and this is the reason the company has not achieved a competitive advantage in its service and product-related activities. The poor delivery and service of the company have caused problems for the bad reputation of its online service and its supplier relationship. The following recommendations are provided to the ASDA retailer;
- Work on the development of its relationship and trust with the suppliers
- Develop skills of its customer service representatives and delivery service providers
- Provide training to its delivery persons, and its customer service representatives
- Identify the loopholes in its online delivery service
- Provide alternatives to customers for online delivery
- Develop its service structure and improve its delivery processing time.
These are some of the steps that ASDA can work on to improve its relationship capabilities, and gain product and cost related competitiveness in the market.
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