Introduction to the Organization ASDA Stores Limited - Case Study Example

and Section # of INTRODUCTION TO THE ORGANIZATION The organization underdiscussion is the prominent ASDA Stores Limited. ASDA is a British supermarket chain that is the biggest subsidiary of the American giant WalMart, who boasts to be the world's largest retailer. It is the second largest chain in the United Kingdom after Tesco; this is enough to understand the size of the organization in terms of market share and penetration. (ASDA, 2009) The international sales of Wal-Mart are more or less accounted for by this international subsidiary of theirs. They compete on price basis; their main slogans since the birth of the company are to provide the cutting edge prices to their customers in the whole of United Kingdom. Their major aim is to highlight themselves in the middle and lower strata of the population to gain maximum market penetration and market share. Going into the history of the organization, it was founded in 1965 in West Yorkshire England, and it is there only that their headquarters are present. The major products that they are offering their vast customer base are grocery, general merchandize and financial services; a domain that is different from their focal business. Associated Dairies and Farms Stores Limited was formed in 1949; the company ASDA was formed after a merger agreement with three supermarket chains in 1965. After a lot of changes in the product base, coupled with mergers, acquisitions and diversifications, they started their focused approach towards extending their food retailers vision forward. This was done in 1989, by buying huge stores of Rivals, Gateway Superstores for a whopping some of 750 million pounds. Problem of selling too many products arose, which are encountered by raising capital from shareholders twice. The journey of then coupling themselves with the American giant Wal-Mart started where the CEO of the company even sent people to the organization in order to access the marketing and technology base that their international rivals were using. The takeover of this British organization by the US giant Wal-Mart, took place on 26th July, 1999; this was when the organization was planning to take over Kingfisher plc. (ASDA, 2009) The organization is basically boasting to provide product and service both to its values customers. It is more of less in the middle of the product-service continuum, sliding more towards to product end. This is because the organization has built a brand name in providing quality service in terms of retail housing to its customers. This requires high quality of product. On the other hand, due to their sound brand name, they have this aspect of after sales service that is being associated with the organization, the customers are satisfied that their queries would be met with. The element we will be focusing on in the assignment is the product orientation of the organization. It is a publically owned organization where shares are being traded on different stock exchanges. The company boasts of an income of 638 million pounds and is currently employing over 143 thousand in its organization, serving the whole of the United Kingdom. They have been known for their marketing campaigns based of fair/low price products that have kept the competition alive in the retailer market. ANALYSIS OF THE ORGANIZATION The organization provides retail to its customers. Apart from the basic grocery products and retail chains that it is providing its customers, the company has also diversified and moved into the financial sector market. They also provide financial services to the customers with the help of the subsidiary organizations. However, the focus of the analysis is the retailer section of the organization's product line. There are several factors for choosing the General Merchandize and grocery sector, in short the retailer business, of the company. One of the most prominent and important one is that this sector has been developed over a large period of time. The organization has achieved competitiveness and a significant market share in the markets of United Kingdom. It enjoys a specific position in the market, controls certain elements of it too. Therefore, the best way to judge the leadership development and inculcation, cultural development, entrepreneurship abilities of the culture that is prevalent in the organization, would be to study the most developed sector of the organization. In order to rate and understand the internal and external factors that are present and working in the organization, a number of tools can be employed. Since it is a retailer chain, the most important aspect of their external environment would be the presence of rivals. The internal environment, would boast of cutting edge technology, efficient supply chain management, smooth management of operations and inventory management to its best. A number of techniques can be used to understand the basic factors that are influencing the organization. These tools are the PEST Analysis, the SWOT analysis and analyzing the environment using Porter's competitive forces. PEST ANALYSIS The PEST analysis of the organization helps one to identify the possible external factors that might be hindering or helping the organization in achieving the competitive advantage of the organization. Political, economic, social and technological factors of the organization are vital in understanding the strengths and weaknesses of the organization. it is very important for organizations to completely understand the environment in which the organization is working, for the development of sound marketing and operations policy. In fact, timely operation planning and forecasting should be done keeping in mind the results of such analysis that should be taken up by the organization at intervals. PEST analysis helps the organization understand the importance of environmental factors and helps the managers undertake important decision keeping in mind the changing variables of the environment. The first factor in the PEST analysis is the political factor. The political environment present in a country greatly encourages or discourages the sales. The political environment that is present in the United Kingdom is pretty stable and the fluctuations in the political environment do not hamper sales much in the negative direction. The policies that have been implemented by the government have been in line with the basic marketing motto of the organization. Cheaper products for all! The government is also under the agreement of the European Union. This is a huge advantage for the organization as they can enjoy the benefits that the countries in this union enjoy. A bigger market share with chances of growth and expansion in other European Union countries is a huge opportunity for the organization. The second factor, the economic conditions of the country that the organization is working in, is also very important as it will help signify the level of sales and expected growth potential for the organization. Since the Economy of UK is fairly stable and isn't going through a lot of fluctuations, this proves to be good news for the organization. However, in recent times, the financial crisis that has engulfed the world has had its toll on all huge economies and its effect can also be seen on the UK economy. This might prove to be one threat to the prospective future sales of the organization. When and if the company plans to embark on international marketing to the other European Union countries, these factors should be kept in mind. Socio-cultural factors also play a dominant role in the external environment of an organization. It helps the managers to access the need to successfully manipulate their products to match the cultural requirements of the country. United Kingdom is a culturally rich country, with an astounding history. However, the overall culture can be termed as modern and people are acceptable to change and new ideas. Technological factors also play a prominent role in the development of businesses in the market. The organization's external environment has a sound technological base and the prospective customers also have a sound knowledge of how to use the technology to their own benefits. Therefore, if new technology is introduced, it would help the organization to increase the earnings and sales. Technology implementation especially in the areas of distribution and supply chain management can help the organization achieve competitive advantage. SWOT ANALYSIS: SWOT Analysis is considered one of the most viable and popular methods of understanding the peripherals of the organization. This analysis helps the researcher understand two important things; the external environment of the organization, as well as the internal environment of the organization. The strengths and weaknesses of the organization being the internal factors while the opportunities and threats are considered as external factors. This analysis is very fruitful for managers in making them realize their future decision making directions. By understanding the strengths of their organization, they can bank on them to decide to enhance these strengths and bank on them to increase profits and shareholder value. By understanding the weaknesses of the organization, steps can be taken in order to decrease their intensity and turn them into strengths. Similarly, the opportunities that are present in the external market, if timely identified, can provide immense competitive advantage to their organization. The timely evaluation of threats would the organization undertake important measures to overcome them. One of the biggest threats is the presence of competitors. Strengths: The biggest strength of the organization is its competitive prices that the organization it offers. The basic marketing campaign is the development of their marketing strategy on the basis of cost cutting and providing affordable prices to their customers. They claim that they are the cheapest providers of retail services to the market of United Kingdom; a claim that is usually challenged by its rivals and competitors. They provide cutting edge technology coupled with high quality products, the ambience to go with it, at an affordable rate. Another important strength of the organization is its affiliation with the US based giant Wal-Mart. Since the takeover of the US organization of this UK based organization, there would have been a sound transfer of resources, technological base and competitive processes between the two organizations. The technology that Wal-Mart uses in maintaining its top position in the US market, would have been transferred to this subsidiary, that may be one of the reasons they are able to provide the cheapest prices to their customers. The third strength in my opinion is the diversification of their brand into smaller brands. The organization ASDA, is currently working through many projects and subsidiaries in the United Kingdom. ASDA Essentials, ASDA Living Stores, ASDA Wal-Mart supercenters and ASDA Supermarkets; all of them are working under the house brand of ASDA. All these formats are copied from different retail giants in order to provide variety to their consumers and customers. Moreover, they have a developed distribution system that is already working across the entire nation. They have also launched an online retailer business that is thriving to compete with competition. They have also been awarded a number of awards for their work in human resources, culture development in their organization and sound efficient working of their company. For example, in 1997, they were awarded as the cheapest retailer in a survey done by a magazine. They were also awarded the best organization to work with for three consecutive days at the start of this millennium. Weaknesses: There are a number of weaknesses that are present in the organizational structure and the workings of the organization. They have been banking on the Wal-Mart type large retail stores strategy, by making their stores at least 20% bigger than their rivals. This provides them with a differentiation in terms of store layout when compared to their rival competitors; however, it proves to be disadvantageous as well as their layout stores 15% fewer stocks. However, they continue to cater to the niche present in the United Kingdom. The biggest weakness that the organization can work upon is their issues with the employer unions and the problems that they have faced in the past. There have been a number of instances in which the company has been accused of using unfair means to influence the decision of the organization's employees towards their motive and wants. They have been trialed as well in the United Kingdom court, and heavily fined as well, considering their unethical acts regarding union relations. There was a huge rift between the management of the organization and the employees present, which later subsided after a lot of negotiations and threat of legal action from both the sides. These weakening relations with their employees can hamper their development of the sound corporate culture in the organization in terms of leadership and entrepreneurship. Opportunities: The opportunity they can bank upon is further development of their career management schemes. They have already been awarded the best employer awards. They have also been successful at implementing employer branding activities at their stores that motivate their employees to work harder, help them to identify with the organization. Employer branding, an unfamiliar term, is an emerging concept in human resource management. As times are becoming competitive, the need for acquiring key resources is understood by organizations. Described as a set of qualities and intangible characteristics by the guide, the activities make an organization striking, by promising prospective and current employees a certain kind of experience that would appeal to them to work to their best in the culture. Employer branding is deliberate and carefully planned. It can be termed as the marketing of the culture of an organization that the people should expect while working in the organization. . Globalization is another important factor that gave rise to the post-modern conditions of today. Globalization by definition is turning personalized or localized phenomena's into global ones. Globalization relates to thinking the whole world as one and working out strategies according to this thinking. It is the integration of national level economies into internationally integrated economic structures by the help of capital flows, direct investment etc. Globalization has affected the world financially, ecologically-as more and more challenges are impossible to be catered too without international cooperation, informational requirements are increasing, politically and economically. This is also an important factor present in the external environment of the organization. It makes the organization to keep on improving their technological base and their services for the customers. They should bank on globalization and the affiliation of the country in the European Union to their advantage. Threats: The biggest threat in their organization is the presence of other retailer chains in their environment such a Tesco and the fact that they are a part of Wal-mart; they can be a focal point for many organizations to beat them. They can be the target of all the competitors present in the market, for this they have to maintain their position, if not increase their position. Another important factor is the advancement in technological base, this provides other competitor organizations to maintain their technological base, increase their efficiency and operations managements. Therefore, intense competition is present for ASDA in their environment that they need to counter or maintain. PORTER'S COMPETITIVE FORCES: 1. Potential new entrants: There is a low probability of new threats in the form of competition entering the market. Since there are huge organizations already well settled in the market, it makes it difficult for new competition, which is smaller in size, to compete with the giant names operating in the market already. Also, the intellectual and technological capital that the company enjoys due its parent company cannot be matched by any other organization. 2. Bargaining power of buyers: The bargaining power of buyers is considerably higher, since they have a lot of choice present in the market. Apart from ASDA, there are other rival competitors who are providing them with cutting edge prices as well. Therefore, this can be termed as an important force. 3. Bargaining power of suppliers: Bargaining power of suppliers can be high, but because of sound corporate relations developed by the parent company Wal-Mart, this threat reduces considerably. 4. Threat for substitute products: Since ASDA is dealing in more than one product; they have also diversified their product base into many areas, they do not have a considerable threat for substitute products in the market. 5. Rivalry Among competition: The biggest rival that the organization has is TESCO, followed by Sainsbury. It needs to constantly monitor performance of their operations and other factors to maintain their position. MONITORING OF ENVIRONMENT: In order to understand the environment and the way the organization works in harmony with it, it was important to conduct a sound analysis of the environment. Various variables are analyzed to understand the environment and get the right kind of information for future decision making processes. The environment plays an important role in these sorts of decision making. Planning, forecasting and development of corporate strategies are highly banking on the environmental factors. For this purpose, ASDA is currently employing benchmarking activities to develop their strategies in the long run. Benchmarking is a approach where the market leader and its every move is studied by all the other competitors and the location of the market leader is set as the benchmark, where the company then tries to reach gradually and progressively. As far as ASDA is concerned, they are effectively targeting the market leader Tesco. Operations management is very important aspect of the retailer business. Therefore, the benchmarking is being done on the basis of operations management. ASDA strives to achieve growth and development, by providing efficient services to their customers, by improving their operations and production department. The aspect of operations management is a broad domain which is used to effectively and efficiently manipulate the factors according to your own benefit, so that the inputs can be changed to outputs in an efficient manner. Another area where benchmarking should be done, is the development of a supply chain management. This is the biggest most important factor in the market this organization is prevailing in. LEADERSHIP WITHIN THE ORGANIZATION: Daft (2003) defines leadership as being the ability to influence people towards the attainment of a single goal. By this definition we can gauge the role that the leader plays in any group or team. The leader is assigned with the responsibility of not only accomplishing the task, but doing it in such a manner that the whole team contributes towards its fulfillment. Two other styles of leadership are the bureaucratic style of leadership and the Laissez-Fairre leadership style. The bureaucratic style of leadership involves little creativity on the part of the leader as he follows a regime which is strictly following procedures and protocols. They do not take steps on their own and simply enforce the existing rules placed by the establishment. The Laissez-Fairre style of leadership on the other hand gives employees freedom to do as they please and have very little involvement of the management. The leader has faith in the team that they would accomplish the task on their own and allows them to set their own objectives, goals and processes to accomplish the task. This type of leadership entails an open minded and trusting approach on the part of the leader as the employees work on their own most of the time. The selection of the type of leadership highly depends on the workforce and the organizational culture. Another factor to consider when selecting the type of leadership is the nature of the job involved, as selecting the wrong style of leadership for a work force would result in losses in resources and output. For an organization like ASDA, it is highly important to develop a leadership enriched culture. With the proactive nature of the environment, it is important that every department has someone who has the ability to motivate the employees and encourage them to take steps on their own that would help the organization achieve competitive advantage. It has been observed overtime, that with the help of Laissez-Fairre style of leadership, they are able to achieve that proactive culture, that would help this organization. Motivation, as one can see, is a result of the type of leadership given to the subordinates. If the leadership works in line with the employee's attitudes then they would be willing to work more strenuously and with more determination. The result would be an increase in the motivation of the workers and more profitable results eventually. However, if the leadership works in the polar opposite of the employee's attitudes then the employees and group members would be highly de-motivated and they would not find any satisfaction in the work that they do. Before beginning the discussion on the motivation and its relation to Leadership, we must first acknowledge the types of motivation that exist. Motivation can be classified as Intrinsic Motivation and Extrinsic Motivation (Definition of Motivation - What Is Motivation What Is It Worth, 2009). Intrinsic Motivation deals with the feeling of attaining a goal based on the inherent desire to accomplish the task or fulfill it for personal satisfaction. When a job is accomplished due to the drive exhibited by the team for the purpose of internal reasons they would be said to be intrinsically motivated. Feelings of overcoming challenges, improving one's skills and similar reasons would be motivating factors in an intrinsic motivation. Extrinsic Motivation on the other hand is created by the influence of some external factors such as rewards being offered by the management, fear of being laid off in a recessionary period, and getting bonus or praise from some third party. Extrinsic motivation is often believed to be short termed since if the external environment is changed, the drive or motivation is affected as well. Whereas, in intrinsic motivation the individual does not care about the external environment as he is aiming for the accomplishment of self satisfaction. Motivation and Leadership: How one affects the other Motivation and Leadership form a circular relationship as both affect each other and tracing the origin is extremely difficult to do. A person may be motivated by the leadership to work harder or more efficiently if the leader creates a favorable impression or the leader may have to adjust his style to accommodate the nature of the employee to bring out his/her true potential. Hence, the conclusion can be made that both Leadership and Motivation affect each other equally and a good leader must always be flexible to accommodate change in his style of leadership and motivate the employees under any circumstance. (Maxwell, 2007) Relating the motivation and leadership to ASDA, one should realize how both the factors work in unison to help towards the common purpose of the organization. A leader as well as proper compensation in terms of intrinsic and extrinsic rewards can prove to be a fulfilling experience for the employees. The organization is already known for their committed workforce management and attraction. It means they are amply applying these concepts in their strategies in order to motivate their employees. How Leaders can motivate their teams A leader must motivate his employees by keeping a check on some points. If the leader does not observe the surrounding and adapt to the changing atmosphere then the team or group he is leading would not work as effectively and efficiently as it could. A leader should motivate his employees by actively showing a concern for the employees and proving that he cares about his team (Sarkus, 2006). When the team witnesses concern on the part of the leader they would be more willing to work harder and more efficiently for the accomplishment of the task set by the leader. Being able to communicate effectively with the team would create proper channels and the employees would be motivated to work as per the requirements and losses caused by miscommunication would decrease. By becoming a good role model for the team, the leader may intrinsically motivate them to work harder and meet the expectations set by him. Following his lead the team would work in a manner which falls in accordance with the task. Leaders can also motivate the team by providing benefits and clearly elaborating them to the team. Providing shady benefits would decrease motivation, whereas rewards which have been clearly conveyed to the team would encourage them to their attainment. Using this measure the leader can extrinsically motivate the team to accomplish the task. Organizational Development through team building: Organizational development activities such as team building and symbolic leadership were being applied in the organization. In order to introduce this cultural change, specific methods were being used, such as directly linking rewards with specific employee ideas. For example, with each usable idea they offered a lump sum amount. They also fostered team building activities in the organization's employees, such as developing a program in which they were asked to form teams and find specific solutions to specific problems. Organization Design Dimensions: Basically, the organization is undergoing change that needs to be flexible so that it is able to interact with the changing environment and adapt to it firmly. Therefore, they have de-centralized their organization and have focused on the power of team building and task identity in order to strengthen their organization and facilitate the change. Contextual dimensions are also introduced, such as introduction of technology and a sound working environment. The goals of the organization remain the same; however, the approach used to reach the goal has been changed. Culture Development through Human Resources: Environment in which the individuals are asked to work is a high motivator for many. With lots more at stake in today's organization, it is required that the culture that is prevalent in an organization is in line with the kind of environment they are present in. In volatile environments, where risks associated and uncertainty is high, flexible cultures are more prevalent and successful. Individuals get to choose the best way in their opinion, they are allowed to take chances and feel a sense of responsibility on their shoulders which helps them to deliver the best. However, in stagnant environments, bureaucratic organizations work better. Cultures help to provide a regulating medium, a language pertaining to the organization, a voice to the organization (Martin, 2000). It helps in integrating the different people into one common workplace and helps them to work for a common goal. If there is lack of a common culture prevalent, it is difficult for individuals to relate to the certain organization, which can divert their goal attention towards something else. Therefore, culture forms an important part of helping the organization achieve the goals through employee's relative relatedness with the organization in an air of uncertainty (Daniel, 1997). BIBLIOGRAPHY Daft, R. L. (2003). The Nature of Leadership. In R. L. Daft, Management 6th Edition (p. 514). Thomson South Western. Webb, R. L. (2003). Motivation and Leadership Styles. from Motivation Tools: http://www.motivation-tools.com/workplace/leadership_styles.htm .Retrieved April 15, 2009. Maxwell C. J. (2007) The 21 Irrefutable Laws of Leadership: Follow Them and People Will Follow You. Thomas Nelson Incorporated. Definition of Motivation - What Is Motivation What Is It Worth (2009). from radical-leadership-management.com: http://www.radical-leadership-management.com/definition-of-motivation.html .Retrieved April 15, 2009 ASDA, www.asda.co.uhk. Retrieved April 15, 2009. About-ASDA.com. (2008). About ASDA. Available from http://www.about-asda.com/ [April 15 2009] Read More