ASDA and TESCO Businesses - Case Study Example

Introduction The success and failure of any business depends upon the evaluation of the strategies for marketing and finance and the proper application of the same. A detailed study of the internal and external factors is required to be studies through the proper use of PESTEL Analysis, SWOT Analysis and the marketing mix. Knowing the economic and social factors of a foreign company is needed before investing or starting business beyond international borders. This assignment studies the various reasons for the success and failure of the two big retail giants namely ASDA and TESCO. The reasons behind the success of ASDA and fro the failure of TESCO has been discussed in details. Both the companies began at a very small level and grew over the years to rank among the top positions not only in the UK but globally. But the business polices and strategies of both the company have made them taste the flavours of success and failure. ASDA ASDA was started by a group of farmers in Yorkshire in the year 1920. Since the date of its beginning and till date it has seen many ups and downs but today is a leading grocer’s store of retail in the UK. The business model of ASDA has gained from its acquisition with Wal-Mart decades ago and in the present day Wal-Mart has done a great job to keep the business confidence levels high for the new subsidiaries to keep working better. This provided the opportunity for Wal-Mart to enter into UK and for ASDA to adapt the success factors of Wal-Mart. With the better application of marketing strategies the company has implemented the four P’s very strongly an example of which being the ‘ASDA price guarantee’ scheme that has been very effective. This evaluation of price policy has worked well as the consumers are becoming more focussed regarding the price of the product than ever before. The company was the first in its category to face the challenging decisions and exciting opportunities like the launch of the five-year strategy (Clarke, 2014). The objectives of the company are very clear presenting a strong marketing policy of offering the best value weekly shop and prices that are independently shown to be lower than the price offered by the competitors like TESCO, Sainsbury. The store offers a strong mix of fresh food, grocery, clothing, home, leisure and entertainment products. The success rate of the company is also seen by the fact that it has over 525 stores across the UK. The commitment of the company to put the customers first and concentrating on commitment towards its values, quality, colleagues and employees has backed in its success rate and this has contributed in increasing its profits by 6% even at the time when the company’s new chains of small stores were running and incurring losses up to £30m (Wood, 2012). The organisational culture of the organisation has been another factor in adding to the success of the company. The culture of the organisation has been built over time and it states how the colleagues behave, the way of treating their customers and other external stakeholders and also the behaviour amongst themselves. There is culture of trust that pervades in every aspect and operations of the organisation. Better human resource management and training and selection process of the organisation have been some strong pillars of success over the years. TESCO The business of TESCO started way back in 1919 when the surplus groceries were sold from a staff and then in 1924 the brand was first established. The company was a great success and was one among the top till the recent years. But off late the in 2013 the company for the first time saw a decline in its profits for 20 years and this decline continue in future. The company kept on slashing dividends and entered the long list of British failure companies (Clark and Chan 2014). The success and failure of the company was not a one day process and its policy of playing harder on the treatment of suppliers planning process was one of reasons towards failure. The Competition Commission also found the company acting against the interest of the public and it being too powerful for a healthy retail ecosystem. The company was quiet overconfident regarding its local success in the UK and started looking for opportunities in foreign markets like that of US, China and also Japan. This step of the company was under question when the investors were not so confident degrading such a big move. The super-market company landed up in no man’s land between deep cost cutting and quality brands. Heavy investments in large edge-of-town and out-of-town markets and strong increase in the internet shopping market added to the failure rate. The company tried to revive its old status by trying to convince customers as a visit to the store like an extra family outing and other features like yoga classes, child-friendly restaurants and independent pattern coffee chains but to no benefit (Simms, 2014). Unlike ASDA, TESCO has seen a decline in its growth rate just because of the wrong policies that were formulated at the top levels with the company stated believing that it can do no wrong. ASDA’s acquisition in 1999 was a landmark and a famous acquisition to look for opportunities to grow its business and the other hand the urge for higher revenue and fast business in international market, with no great marketing strategies, led to the decline of TESCO. Conclusion ASDA has been strong working in the development of improving the perceptions of its food quality and increasing the range to improve its business in the existing markets rather than focussing on foreign markets like TESCO. Through the concept of offering low process and a wide range of products that are more likely for faster sale in the local markets have concluded the company to make better profits. With the adding of new business in the work process like living stores, ASDA financial services and home shopping services marked a rapid development in the success of the business. TESCO has a different view and perception regarding its business. The company is still a big organisation in the UK but failed to reap profits in the international arena and added to the cut in dividends of the shareholders even in the domestic sphere. References Clarke, A. 2014. Comment: Why Asda is playing a long game for retail success. Retrieved on 16/05/2015 http://www.retail-week.com/comment/comment-why-asda-is-playing-a-long-game-for-retail-success/5063553.article Clark, T. and Chan, S.P. 2014. A history of Tesco: The rise of Britain's biggest supermarket. Retrieved on 16/05/15 http://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html Simms, A. 2014. Tesco: why did it all go so wrong? Retrieved on 16/05/15 http://www.theguardian.com/commentisfree/2014/sep/22/tesco-pursuit-of-profit-britains-biggest-supermarket Wood, Z. 2012. Asda sees 6% rise in profits. Retrieved on 16/05/15 http://www.theguardian.com/business/2012/oct/04/asda-profits-rise Read More