The Asda Effect - Assignment Example

ASDA - ARCHIE NORMAN What exactly were the problems that Archie Norman and ASDA faced The overall chaotic situation of Asda by mid-1991 is described in detail by a research study conducted by James Weber and Michael Beer published by the Harvard Business School in 1998. Before 1991, Asda was one of the most successful retail businesses in the United Kingdom It had a competitive advantage due to its unique superstore structure and its low price leadership in the market. Everything changed all of a sudden as Asda found itself with demoralized employees, slow growth in sales, and declining profits in 1991. It had been a 1 billion pounds cash surplus supermarket chain in 1987, and by 1991 it had a debt of over 1 billion pounds. (Weber and Beer, 1998a: p. 1). That was precisely the state of affairs at Asda when Archie Norman entered into the scene as Chief Executive Officer (CEO). The main reasons of the problems that Asda and Archie Norman had to face were due to complex organizational inefficiencies that they had to solve as soon as possible, right away, in order to survive, and at the same time Asda had to become an efficient organization once again. Among the different reasons behind Asda's failures by mid-1991 were the following: Asda as an organization with its own culture had become a bureaucratic and hierarchical institution beginning in the 1980s. As a direct result of this rigid functioning structure in the company any kind of innovation was stopped from being encouraged or implemented. Without any innovation Asda was unable to keep its competitive advantages in the retail market in the United Kingdom. (Weber and Beer, 1998a: p. 6). So Asda and Archie Norman had to face the challenge of transforming the superstore in relation to its management style of doing things as well as implementing a sense of culture based on the core values of Asda. Management and leadership had to change significantly in order to create a new productive and efficient organization. 2.- What should Archie Norman do Norman was clear about the fact that beyond the immediate financial crisis there were also dangerous threats of strategic, organizational and cultural nature that had to be faced as soon as possible. (Weber and Beer, 1998a: p. 11). When he met on his first day at Asda with the Management Team he told them right away that "incremental change is not enough." (Weber and Beer, 1998b: p. 1). Right from the beginning Norman knew that drastic changes were needed in order to bring change and transformation into Asda. During his first day at Asda, Norman met with the Management Team, replaced the Chief Financial Officer (CFO), and met with the Financial Team. All along the next days he met individually with the Directors, visited stores in a random and non-official spontaneous way, and created a new Top Team that included Allan Leighton as a main figure due to his plural and multi-tasking abilities. 3.- What changes should Norman make, when, and in what order should they be made The following are some of the most important things for Archie Norman to do: 1.- Make an accurate diagnosis of Asda's situation. 2.- Choose the right strategy.. 3.- Make a drastic decision regarding the rights issue for raising fresh capital.. 4.- Decide about the Asda's focus in terms of priorities in relation to stores, trading, finance, and logistics.. 5.- Decide what to do regarding the nonfood businesses belonged by Asda. 6.- Decide on building a new team of managers as well as a new organization structure. 7.- Find relevant help from consultants in different areas of expertise. 8.- Decide about bringing new efficient employees, as well as deciding on how many, at what levels, and the ways of attracting them. 9.- Decide what to communicate to the shareholders and the employees about his plans for the near future.. 10.- Decide what to do right away in order to make quick and results-oriented decisions by meeting with the Asda people at the very beginning of his arrival at Asda. (Weber and Beer, 1998a: p. 11). The top priorities included the following actions and issues: 1.- The urgent need for cash. 2.- Asda stores had to be built around its original core values, emphasizing its competitive advantage in lower prices. 3.- Two experimental stores formats had to be set up within the next six months as pilot or experimental stores. 4.- Culture had to be based on common goals and values like listening, learning, and speed of response, from the store upwards to the headquarters. 5.- Management had to be reorganized in order to keep a clear focus, shorten lines of communication and build an efficient management team. 6.- Everybody had to feel close to the stores, love them from the heart. (Weber and Beer, 1998b: p. 2). When Archie Norman met with the Management Team on his first day at Asda, he stated very clearly his style and vision about leadership and management by asserting to them that "I am forthright and I like to argue." (Weber and Beer, 1998b: p. 2). The challenging characteristics in the way of Archie Norman facing the problems ahead, helped Asda be successful again in spite of all its organizational and cultural problems. Allan Leighton contributed with Archie Norman into getting Asda back into a successful situation as Kate Rankine states it in The Telegraph. (Rankine, 2005). In the article entitled "The ASDA Effect" in The Grocer by the Egremont Group, Richard Brown, managing partner of strategy consultancy Cognosis, remembers his time at Asda under the leadership of Archie Norman and Allan Leighton emphasizing that Asda became "a true people-oriented business." (The Grocer, 2004). Indeed, these are not original ideas, but when they are implemented they can really make a difference as the case of Asda shows it. Thanks to new models of leadership and management, Archie Norman was able to make drastic changes in the organizational structure and the cultural values of Asda in a very short period of time. Works Cited Rankine, Kate. "Morrison Deputy Targets Saviour of ASDA". (23 June, 2005). In The Telegraph. Deputy City Editor. 19 May, 2006. . The Grocer. "The ASDA Effect". (24 April, 2004). In The Egremont Group. 21 May, 2006. . Weber, James and Beer, Michael "ASDA (A)". (6 May, 1998a). Harvard Business School. 9-498-005. Weber, James and Beer, Michael. "ASDA (A1)". (1 May, 1998b). Harvard Business School. 9-498-006. Read More