E1 Overlook Of My Business
In this coursework I have to look at a business and do a report on it. I have decided to look at ASDA. ASDA is a private limited company and is owned by an American PLC company called WAL-MART. As WAL-MART owns all of ASDA's shares, ASDA is also known as ASDA WAL-MART.
ASDA is a retailer and sells goods and services to the general public. Examples of some goods sold at ASDA include:
* Food
* Drink
* Cutlery
* Home + Leisure (i.e. videos, books, c.d's etc)
* Clothing
* DIY equipment (i.e. paint, paintbrushes, nails etc)
The benefits of being a private limited company are:
* The business can stay small as a private limited company - this isn't much of a benefit as big retailing companies (e.g. WAL-MART) can easily take them over (i.e. by buying their shares) and get rid of them.
* The owners or shareholders usually work in the business everyday
* The shareholders are usually directors who are responsible for the running of the business
* It is generally easy to start up a private limited company as it usually only costs around £100 or £200 to start with
* Shares can only be transferred with the agreement of all shareholders and can't be sold to the public. This provides the owners control over the company
* If the company has a good financial track, banks are more willing to give them loans
* Owners can never loose more than they invested as they have limited liability
* The business accounts are private and can only be seen by the owners and the Inland Revenue.
As well as benefits there are also constraints or drawbacks. Examples of constraints/drawbacks are listed below.
* It isn't possible to sell shares to the general public just to raise additional profits
* Limited companies have to comply with more regulations than Sole Traders. For example, they have to register with the Registar Of Companies and have their accountants audited - or checked - with, by an accountant. They also have to comply with the requirements of various companies' acts.
* A limited company is not allowed to trade under the name of an existing company. This is likely to cause confusion to suppliers and/or customers
* If the company ceases trading it must be officially "wound up" and if the company cannot pay its debts, it will go into liquidation, which is both, time consuming and a difficult process.
* The ownership of ASDA is settled, but WAL-MART could choose to sell them at any time.
ASDA / WAL-MART have to consider the above benefits and constraints and make sure they don't bend any rules and/or regulations. If they were to bend any rules and/or regulations, they could end up in court and be in serious trouble. Recently the competition commission even investigated ASDA's bid for Safeways, to see if it was in "the public interest". The competition commission found that Morrisons bid or a bid from Phillip Green of Arcadia would increase competition in the market, but bids from ASDA, Tesco and Sainsburys would reduce market competition, disadvantaging consumers.
E2 Objectives Of My Business
ASDA's objectives can easily be found in their mission statement. The mission statement is as follows:
"To be Britain's best value for money retailer, providing our customers with value for money food, drinks and clothing, making our customer service legendary and keeping our prices low forever"
This statement fills its purpose in all ASDA stores. Throughout the media, you will find ASDA adverts on TV and magazines. Also in ASDA stores, you will see hanging from the ceiling banners advertising "rollback". Rollback is ASDA's way of lowering prices all at once. Also on the TV adverts, they send a message telling consumers they save you money by, getting the actors to tap their back pocket twice. The sound of change being tapped shows they have good products at low prices. The adverts are also designed to satisfy their present customers.
ASDA also try to increase sales and profits by mass producing items, or getting economies of scale. An example of this is, in the bakery they can produce 24 cupcakes by using the same amount of gas, electricity and heat in order to produce 12 cupcakes. ASDA is also best placed to buy products and materials at a discount from suppliers.
With the takeover by WAL-MART in 1999, new jobs were introduced. One of these new jobs were PIMS manager - Profit Impact of Marketing Strategies. These people have to analyse the marketing factors that have the biggest influence on profits. (More information on the PIMS manager can be found in task C2)
There is a close relationship between market share and profits.
Usually organisations with large market share are more likely to be profitable due to thin profit margins.
A group called "The Boston Consultancy Group" have showed this through a experience curve. This is when market shares lead to falling costs.
Producing each unit will lower its cost as the total input has been produced over time. The more you learn something, the more you excel at it. The Boston Consultancy Group argued that the average cost fell by nearly 20% with each doubling of experience.
Greater experience stems from the following:
* Economies of scale
* Cutting out the use of less efficient factors of production and production methods
* Increased productivity stemming from technical changes and learning changes
* Improvements in product designs
Companies like ASDA have high market shares and accumulate more experience. Therefore, ASDA strive for a high market share. Also, by increasing profits, increases shareholder value to WAL-MART. There is no other way to increase shareholder value so this is the only option they have to increase the value. This started when ASDA shares stopped trading. Increasing productivity can be found in task E5.
The best way to find out ASDA's market share is by doing this equation:
Relative market = Market share of company A
share of company Market share of competitor
This can indicate who has the greater strength. The Boston Consultancy Group used statistical evidence to argue, that a ratio of 2:1 would give a 20% cost advantage.
Note - ASDA house obviously deal with these sort of market strategies.
E3 Functional Areas
ASDA has many functional areas. Functional areas are departments that help a business make profits and reach its main objectives. The main functional areas in an ASDA store are:
* Personnel (HR)
* Admin
* George Clothing'
* Rotisserie
* Delicatessen
* Fish counter
* Kiosk
* Café ASDA (coffee shop)
* Home and Leisure
* Opticians* (Spec Savers)
* Photo shop* ( Kwick Shot)
* Dry cleaners* ( Johnson Apparel master Dry Cleaners)
* Groceries
* Customer services
'= George clothing used to be a franchise but ASDA have bought the rights to the name as it had become successful and closely associated with ASDA
*= Are all franchises currently operating in most ASDA stores
The functional areas in ASDA Head Office are:
* Customer service
* Warehouse
* Suppliers
Main functional areas:
* Personnel/HR
* Admin
* Production
* Finance
* Marketing
The next level up from ASDA head office is the WAL-MART company. WAL-MART own ASDA (a subsidiary and a private limited company). WAL-MART have the same functional areas and are based in America, Canada, England, France, Germany and in some parts of Asia ( the countries listed are all subsidiaries).
Each of the functional areas help ASDA to achieve its main objectives.
Some of the main objectives of ASDA are:
* Continuously lower prices
* Produce good quality food, drinks and clothing and domestics at low prices
* Excel in customer services
What ASDA are trying to achieve is, they aim to be better than their rivals (e.g. Tesco, Sainsburys etc), aim to be a one stop shop for all customers and satisfy their customer needs.
The main functional areas of ASDA are:
* Production
* Finance
* Sales and Marketing
* Personnel/HR
* Admin
Production
Production help ASDA achieve its objectives by:
* Organising resources efficiently to offer the final consumer the best in value and top quality goods
* Obtaining resources required to produce goods or provide a service
* Delivering economies of scale
Production can also be split into 5 sub functions.
* Production and planning
* Purchasing
* Store department
* Design and technical support
* Works department
Production and Planning
Production and planning set out targets and standards for each of the production process. The quantity and quality of products coming off a production line will be closely monitored.
Purchasing
Purchasing are responsible for providing the materials, components and equipment required and negotiating down to the best price available.
Stores Department
Stores Department are responsible for stocking all the necessary tools, spares, raw materials and equipment required to service the manufacturing process. There is also a method used in some stores called Just In Time (JIT) Just In Time is just basically getting goods produced on time and are then ready to be sold instead of having to wait days, weeks or months for them to be sold in stores. The whole point of JIT is to just run a company with the smallest levels of stock and work in progress. It needs to be carefully planned. Stock control is used in stores to record how much stock they have and what needs to be ordered and if any new products were to be introduced, where would they go?
Design and Technical Support
Design and technical support research new products and try to find ways of how to modify existing products. They are also responsible for estimating costs of producing in different quantities and by using different methods. They also produce the prototypes of new products. The technical support team are responsible for work study and suggest how work practices can be improved.
Works Department
This department is concerned with the actual manufacture of a product. This department also involve the matinence of a production line and other necessary repairs. The works department may also be involved with quality control and inspection.
Finance
Finance help ASDA achieve its objectives by:
Keeping a detailed report of all money paid in and out and presents the final balance sheet, controlling costs and cash flow, administrating budgets for other departments, securing sources of finance (e.g. getting a loan from the bank), tightening financial control, sources and use of funds, profit and loss account and other financial records at regular intervals. Nowadays accounting in the Finance department is stored on computer files and accounting procedures are greatly simplified by the use of specialised software.
Sales and Marketing
Sales and Marketing help ASDA achieve its objectives by:
Marketing are responsible for identifying, anticipating and satisfying customer requirements profitably. Marketing is often combined with Sales. Sales are responsible for getting what the customer wants from a company. Therefore Marketing is designed to make the company produce what the customers want. To get this information the combined department need to carry out market research. The particular questions they ask in market research are, who makes up a particular market, what they want, where they want it, how they like it and at what ...
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Sales and Marketing
Sales and Marketing help ASDA achieve its objectives by:
Marketing are responsible for identifying, anticipating and satisfying customer requirements profitably. Marketing is often combined with Sales. Sales are responsible for getting what the customer wants from a company. Therefore Marketing is designed to make the company produce what the customers want. To get this information the combined department need to carry out market research. The particular questions they ask in market research are, who makes up a particular market, what they want, where they want it, how they like it and at what price. Marketing need to co-operate with Production so that the wishes of consumers can be closely tied in with product development.
Personnel/HR
Personnel/HR help ASDA achieve its objectives by:
Covering a wide range of activities. Personnel/HR are mainly concerned with the staff of a business. They have to help the employees and employers maintain a good working relationship and give high quality training e.g. in customer service.
Jobs involved in Personnel/HR include:
* Work communication - Help other departments communicate by passing messages
* Hiring staff
* Policy making - Establishing major policies that cover the place and importance of people in the organisation
* Welfare of the staff - looking after the people at work and their needs
* Support - Helping managers develop their skills in their working environment i.e. helping managers, hire and train staff.
* Administrative - Help with payments of staff, supervision, and implementation of health and safety laws.
Admin
Admin help ASDA achieve its objectives by:
Being centralised within a company. This means they help out within every area of the business. Similar to Personnel/HR, they help with the communication flow, help staff and do paper work for Trading Standards. They are also responsible for filing of materials, word processing and data handling facilities. The modern office focuses on the management of work through ICT and communications systems.
The main jobs of Admin are:
* Taking responsibility for and to organise training of other Admin staff
* Advise other departments about their office layout, equipment, working practice and staff development.
* Co-ordinate the supply of office equipment and stationary
* Study and analyse administrative practice within the company
* Make sure all Admin work is up to standards
* Maintain a communication system e.g. phones, letters, e-mails, fax etc
* Provide statistics for the company board about the effectiveness of existing administrative practice.
The organisational structure that applies to ASDA is the hierarchical structure. The reason to why I have said this structure best suits ASDA is because; there are a lot of different departments (e.g. Personnel/HR, Admin, Warehouse etc) and there are a lot of different workers with different positions (e.g. Fresh Food Manager, Fresh Food Supervisor and Fresh Food Assistants etc) and the hierarchy structure displays/shows the different departments, managers, supervisors and workers and who has span of control over the different sections (e.g. the Fresh Food Managers span of control is anyone below them). A typical span of control in ASDA is basically how much power someone has over a department. An example of this is the Bakery manager. The Bakery manager's span of control is anyone directly below him i.e. his span of control on the bakery department are, the bakery supervisor and the bakery workers (or subordinates).
Below is an example of a hierarchy structure of an ASDA store.
Note - from here draw a hierarchy structure of your chosen business
ASDA HQ has a centralised structure, as they are the ones who make important/key decisions and the ASDA stores just follow on the important/key decisions. This is also known as "centralisation". Centralisation is keeping big responsibilities in certain sections or at the centre of the business. Some businesses choose to centralise some important departments such as finance and production in a large retailing company as they are very important to the business.
The advantages of having a centralised structure are:
* Senior managers have more control over the organisation
* The organisation can create sets of standardised procedures so there is a set way of doing things - which cuts down costs
* Some senior managers will take views of the business as a whole. If a senior manager has a lot of people under them, they (the people below) might not listen to their (the senior managers) views and continue to do what they (the people below) think will help their department only. This can damage the business.
* Some senior managers might already have experience on decision making, which can help them to create better decisions
* The business needs strong leadership which is best given from above.
Below is an example of an ASDA HQ centralised structure:
E4 Management Styles
As ASDA has many different departments, they all have different managers. Each of the managers has complete power of who they will hire and who will work on their department. The most important thing for a manger to do is, maintain a good working relationship with their employees. If this weren't to happen, working environments will turn very uncomfortable to work in.
There are 3 different types of management styles:
* Autocratic
* Consultative
* Democratic
An autocratic manager is used to giving instructions - telling others what to do and is the only person to make decisions. This sort of managerial behaviour shows a strong resistance to giving up power.
Consultative managers are those who consult others before a decision is made. They would want to see and hear other people's opinions on an idea. They would often hold a suggestion box and ask for ideas/opinions and analyse their comments and turn it into reality.
The third managerial behaviour is called democratic. Democratic involves empowerment. Individuals and/or groups are all given responsibility and are all given responsibility and are also responsible for the decisions that it choose to make. This sort of manager basically feels comfortable leaving others to make decisions. However they need to have a good understanding on why the decision was made. They would also want feed back on the final decision results.
Like I mentioned before ASDA has a variety of departments and managers. Some mangers have been in ASDA since it opened (Slough store opened 15 years ago) and some have recently started.
3 managers I know who behave in the above management styles are:
* The GSM (General Store Manager)
* Provisions Manager
* Fresh Food Manager
The GSM's management style is like the consultative management style. He would like to hear the opinions of other ASDA workers before making a decision.
The Provisions manager's management style is like the democratic style. Even though he has been in ASDA for nearly 4 years, he would rather place other people in charge and would see what the effect was like afterwards.
Finally the Fresh Food manager. This manager has been in ASDA since it opened and has changed position over the years - from shop floor employee, to shop floor supervisor to the Fresh Food manager. His management style is the autocratic style. He doesn't consult anyone on any decisions, doesn't take much notice of his own department and doesn't like to be bossed about - even by the GSM. This sort of managerial style isn't good as it can make other people loose respect for that certain individual and there is no decent working relationship between the manager and the employees.
In the three above paragraphs, you can see there is a lack of consistent management style. You can see this, as they all have different styles of management and the different styles seem to be the opposite of each other. This shows there is a weakness in the management culture. I think that the most appropriate management style used in ASDA is the GSM's style - consultative. I have chosen this style as, he would like other different peoples opinions on future plans and their points of view. This managerial style also allows easy communication flow between him, the managers and co workers.
There is a clear description of culture and structure of many organisations.
* Tall organisations - have a culture based on "them and us". This depends on where individuals stand in the hierarchy. There is likely to be authorisation culture
* Role culture - is typical of bureaucracies. Bureaucracies are large organisations which all members have a defined job or role to carry out. In the Role Culture, businesses would be divided into various functions (e.g. accounts, production etc) and they would then have a hierarchy ordering of offices (e.g. Production Manager, Production Supervisor etc)
* Flat organisations - tend to be more democratic. With multi - directional flows of communication between organisational members, there is more, likely to be a team approach.
* Task cultures - are very important in 21st century business world. Nowadays many workers work in teams in order to complete projects. Teams might last a long time or a short time to complete work. In the task culture there are strong emphases on building team work. Team workers have to be treated with respect and fairness so that they feel the organisation values them. In a task culture, teams will often have considerable input in determine how a particular job will be done.
* Matrix structures - tend to be more democratic than tall organisations. In the matrix system, there is more than one functional area. This can also create bonds with all the different departments.
* Hierarchical structures - are based on a top down approach with an emphasis on communication down the line
* Centralised organisations - key decisions are more likely to arrive from head office or from the centre of the organisation. Failing to understand decisions often cause other units to be at "war" with HQ and carry out sabotage activities
* Decentralised organisations - are more likely to be based on democratic structures/teamwork/empowerment.
The best culture to describe ASDA is the "task culture". The reason to why I have chosen the task culture is simply because, ASDA is a equal opportunist and aims to develop strong working relationships and ASDA want everyone to be respectfully treated and doesn't want anyone of any age, sex/sexuality, race etc to be discriminated. Also, as everyone works in a different department around the store, this also acts as teamwork, as people are working in numbers and this helps to get jobs done. (For more on this, see task C2).
E5 Communications
Communications in every business has developed and changed over the years. The most common forms of communication are:
* Phone (internal and external)
* Memo (internal only)
* E-Mail (internal and external)
* Fax (internal and external)
* Pager (external only)
* Letter (external only)
All forms of communication have 2 uses. Internal and external form of communication.
* An internal use means it can only be used inside the business e.g. memo
* An external use means it can only be used outside the business e.g. letter
ICT on the other hand can be used everywhere. ICT has changed the ways of communicating in a business.
* E-Mail now replaces letters, faxes and phone calls
* Networked databases now replace traditional filing systems
* Computers now replace the way some businesses interact with their customers i.e. customers can now use on-line mailing systems, registering an order, requesting orders from stores etc
* Using an internet website to communicate within the organisation and its global market. ASDA use full advantage of the internet. By using the internet ASDA have developed a larger amount of new customers. The service that ASDA provides over the internet is called Home Shopping. Customers can shop on the internet and pay via debit/credit card and their shopping is delivered the next day. (www.asda.com). ASDA's home shopping figure is very big with 48,512 users (source: ASDA store Slough, Personnel department).
* Digital methods of communicating. This involves faster communications, clear sound, clear vision and smooth connections - i.e. the use of broadband. ASDA use broadband to connect to the internet faster and use broadband telephone networks to receive a clear signal when speaking to ASDA House and/or WAL-MART HQ.
These are the latest developments of ICT in a business.
ASDA use the traditional methods of communications - i.e. ASDA still use letters, memo, phones etc. However, with the expanding use of ICT is now being deployed in order to help ASDA stores communicate with their suppliers, ASDA House and WAL-MART head office.
ASDA also use ICT hand held equipment to help them control stock. They use an electric hand held scanner called a Telxon, which allows them to count their stock levels, help them to do wastage, reduce items and also help them do stock take. All this information is taken from this gun and is then transmitted to a computer (via infra-red signal) and is then compiled into data for the supervisors, managers and Admin workers to look at. The collected information is then transferred to ASDA House, so they can see how well the ASDA stores are doing.
With the help of ICT, productivity has increased by over 40% from the year 1998 (to present) and the use of ICT is expensive, but at the same time helps ASDA in communication (see above) and jobs that involve staff using computers (e.g. Admin staff). This was measured from store evaluations the Admin staff had to do. They had to find out how the use of computers and the use of the telxon gun had helped the stores and staff and what they benefited from. I got this source of information from the Personnel department.
Home Shopping (or e-shopping) has also increased due to the help of ICT being put into ASDA stores. Home shopping has proved to be a popular and successful customer service and the customer figures/numbers have increased over the years. It was launched in 1999 and the service has always attracted high customer figures. More on the Home Shopping service can be found in task C1.
E6 Quality Assurance and Quality Control
Consumers nowadays are sometimes fussy about what they want. They mostly look for quality rather than value. Value is only added by creating quality standards required by the consumers.
The diagram below shows quality standards from a consumer's point of view.
Consumer Creating
standards involve customer satisfaction
Exceeding Delighting
consumer expectations the consumer
ASDA's role in supplying on want customers want are based on a supply and demand procedure. The customers of ASDA always look for what they want and ASDA have to do their best to find out what they (the customers) want. To find out additional requests from the customers, the customer services department in both ASDA stores and HQ are always open or available to hear what new products they (the customers) would like to see in the store.
There are 3 stages of quality development:
* Quality Control (QC)
* Quality Assurance (QA)
* Total quality management (TQM)
Quality Control (QC) looks at the flow of production. They have to look and see what falls below standards. Quality Control is carried out by quality control inspectors. Inspection and testing are common ways of doing quality control.
Quality Assurance (QA) is concerned with making sure there are no faults before and after the production flow. Quality Assurance also have to make sure all products that are produced are up to standards and have "zero defects". Quality Assurance are responsible for a workforce, working in teams rather than an inspector.
Total Quality Management (TQM) goes beyond Quality Assurance. TQM is designed to make every employee delight a customer. Customers are at the centre of the production process. (Source of reference: Heinemann AVCE Advanced Business 2000 edition - Dave Needham & Rob Dransfield). TQM is a form of operations management. TQM is associated with every worker in a work place and tries to persuade them to consider quality in everything they do. All the employees aim to please customers, as the customers are one of the most important resources they have.
ASDA have been running these steps (QC, QA and TQM) by making sure every product they make in store (e.g. rotisserie chickens, bakery breads etc) are fit to sell and there is nothing wrong with the finished product.
If something was to go wrong (e.g. say a knife was found in a bakery bread loaf), ASDA's QC and QA team would have to investigate the problem and find out:
* How the problem happened
* How it could have been prevented
* How future incidents like this can be prevented
They (QC and QA) would have to look at the stages of how the bread was made (i.e. the ingredients were mixed, the mix was kneaded into dough, dough was put into tins, then it was put into ovens, then put onto a conveyer belt, bread is cooled down, sliced, into bags ready for the shop floor) and see what checks were made before the bread was sold i.e. did the bread go through a metal detector to see if any metal was found in the bread? QC and QA would also have to examine the knife and see what type of knife it is and where did it come from i.e. is it from the bakery or did a customer get a knife from home and purposely put it there? And also carry out a bakery investigation i.e. how done it, why did they do it etc. If however, the metal detector didn't scan the knife in the bread, QC and QA would then have to see if the metal detector isn't faulty. QC and QA would also have to check the machines matinence records. Health and Safety and Food Standards Agency rules also apply to the above example.
ASDA add value to its products and services by constantly updating them and by also, by applying their advert phrase - tapping their back pockets twice to show they always "rollback" (or lower) prices forever. Rollback also sends out a message that it is better value for money. (it is also negotiating prices down).
ASDA also make their employees meet, greet and farewell their customers. This customer service is designed to let their customers feel welcome and appreciated for shopping in their store.
C1 How ASDA meets its objectives
As I mentioned in the previous task E2, ASDA has objectives to meet if it wants to be successful and beat its rivals. Listed below are ASDA's objectives:
* To be Britain's best value for money retailer
* Provide its customers with value for money food, drinks and clothing
* Make its customer service legendary
* Keeping prices low forever
ASDA has achieved its first objective of being Britain's best value for money retailer. The Guardian newspaper named ASDA Britain's best retailer. Due to ASDA's high market share they went from 3rd to 2nd in the top three retailers of Britain. ASDA also compare itself and its prices to rival stores such as Tesco. Also, customer service satisfaction plays an important role. ASDA also aim to be a "one stop shop" for all its customers.
ASDA has achieved its second objective of providing customers with value for money food, drinks and clothing by again satisfying their customer needs. ASDA have provided their customers with low prices in food, drinks and clothing by keeping up to date with their rivals pricing schemes. ASDA also "Ad-Match" prices. This is when ASDA compare their advertisements to rival advertisements and see who has the lowest priced and better quality goods.
ASDA's third objective is to make its customer service legendary. This is done through a customer service known as SMILES.
S = Smile to the customer
M = Maintain a friendly attitude to them
I = Interest the customers in your products
L = Let them take their time
E = Eye contact is essential
S = Say "anything else?" and give a parting comment e.g. "goodbye"
Every 4 weeks there is a "Mystery Shopper". This is done through Trading Standards. The mystery shopper shops in ASDA and monitors the employees and checks if they are working to their objectives in customer service.
ASDA's last objective is keeping prices low forever. This is done through a pricing scheme known as "ROLLBACK". Rollback is when ASDA get several products and lower their prices at the same time. This is usually done when new products are introduced but, at the same time maintains customer interest in its old products. This incentive has proved to be better than discounts as a research conducted by ASDA stores showed, that customers would rather have high quality goods at an affordable price instead of discounts on their basic shopping.
ASDA are keeping a good score on its objectives as every 4 weeks (and through the mystery shopper) each store receives a lot of other ASDA stores and this shows how well they have ranked. ASDA also inform customers and the general public about how successful "rollback" is doing as they tell them through TV adverts and posters across their stores.
Customer shopping habits also help ASDA to meet their objectives. An average shopper spends £4,000 per year on shopping. Through an additional service, known as "Home Shopping" customer numbers/figures have risen over the years.
999 - 10,000 users Home Shopping figures
2000 - 18,200 users over the past 4 years to
2001 - 23,400 users present. 2002 - 30,200 users
2003 - 48,512 users
Due to Home Shopping being a successful customer service, Home Shopping figures (see above) have always been at a healthy number. It was launched in 1999 and over the years the numbers have risen (see above).
I have also looked at trends that have affected ASDA over the past 3 years. The recent trends that have occurred are:
* In 2001 ASDA's shares went by 11p, making each share go to 205p
* In 2003, sales raised to 9.6%
* In 2003 ASDA's market share went 16.9% from 14.0%
* Shareholder* numbers increased from 100,266 to 116,101 in 2003
* Profits have gone up at 14.7% compared to 12.7% in 2002
* Turnover in 2002 went up to £10.1 Billion from £9.3 Billion
*= As WAL-MART own ASDA, the share holders of ASDA WAL-MART are the staff. ASDA WAL-MART employees can choose to buy shares in ASDA WAL-MART when they turn 18. The share scheme works out as; they register to the share scheme via Human Resources and by signing a share scheme registration document. When the employee gets his/hers wages, 7% of their wages goes to the share scheme. A dividend is paid every April, as this is the start of the new fiscal year. At the start of April, the share holders can choose to sell, buy or float their shares. Since WAL-MART bought ASDA there has been a change in to what the share holders buy i.e. they don't buy shares in ASDA, they buy shares in WAL-MART. This is because WAL-MART owns all of ASDA's shares so; the shareholders buy some of WAL-MART and not ASDA.
These are the latest trends in ASDA. These have all helped ASDA grow bigger as sales have helped shares go up, Rollback have helped sales grow, market share has grown, the number of shareholders grew due to more people working with ASDA.
C2 How the organisation structure, culture & management help
ASDA meet its objectives
The organisational structure for ASDA is known as a hierarchy structure. In task E4, I showed an example of an ASDA hierarchy structure and what a hierarchy structure does to a business.
A hierarchy structure helps a business improve its communications flow; the different departments can communicate and respond quickly.
If ASDA's organisational structure were to change to a flat structure the communication flow, culture and management would all change.
Communication would change as a flat structure shows no assistants or subordinates. A flat structure just shows in charge and what departments there are in the organisation and who works in the departments. In a flat structure the departments just flow along the line, unlike a hierarchy, which shows all the communication flow lines (the direction of how the communication flows). A hierarchy structure communication flow also helps ASDA achieve its objectives as the departments can communicate with each other and this helps each other by; swapping ideas, covering each other on breaks, being trained on each others departments etc.
ASDA's culture is the "Task" culture. The task culture is designed to make everyone in an organisation feel respected, work against any form of discrimination (e.g. racism), make everyone feel respected, work as a team and help the organisation maintain a good image. If ASDA was to loose its task culture another culture would have to replace it. The culture that is close to task culture is "Role" culture. Role cultures are only put into organisations that have a hierarchy structure. This is because Role cultures only deal with offices with a hierarchy structure i.e. they only deal with various functions of a hierarchy structure, such as Personnel/HR, Finance etc.
At the moment the present structure and culture of ASDA are best suited to them as, their present structure allows communication to flow easily and helps them to solve problems that occur in the business or problems that occur in customer service (an example of this can be found in task E6).
The present culture in ASDA is the Task culture. If this were to change, then there would be a lot of problems in the business. This is simply due to ASDA offering equal opportunities and doesn't tolerate any form of discrimination. The task culture is designed to help everyone in the business feel respected, feel valued and work in teams. If this were to change to Role, which only focuses on the different departments, then all the above would be eliminated from ASDA.
AT the moment, everything in ASDA - the current structure and culture - helps both ASDA and the workers. If anything changed then ASDA wouldn't have achieved its status as Britain's best retailer, join WAL-MART, become 2nd in the top three retailers of Britain and achieve a high market share.
As I mentioned in task E2, I said when WAL-MART bought ASDA in 1999, new jobs were introduced and one of these new jobs was the PIMS manager. PIMS stands for; Profit Impact of Marketing Strategies. The PIMS manager has to analyse the marketing factors that have the biggest influence on profits. The PIMS mangers job role is mainly associated with Marketing. The PIMS manager looks at ASDA's market share, looks if ASDA has a large level of output, whether ASDA would benefit from larger production runs and see when any unit costs are reduced. The PIMS studies would show and tell if ASDA's best competitive strategy to beat its rivals would be to increase its market share.
Certain changes were made to launch Home Sopping. ASDA stores had to make room for an office for Home Shopping so they could receive orders form the customers via the internet and the warehouse manager had to get permission from the GSM to extend/expand the warehouse so that the Home Shopping delivery vans could park and load up the customers shopping into the vans. As the "pickers" (or people that shop on the shop floor for home shopping) had to use totes (or baskets) to carry the customers shopping the store had to extend/expand the store so that the customers still had free flow of the store and the pickers wouldn't get in the way of the customers. Also, ASDA advertised on TV and radio and stores about Home Shopping so the public would generate interest in the new customer service.
ASDA was also in the bid for buying Safeways when it was up for bid. Sadly, ASDA didn't get to but Safeways due to ASDA had a high market share and had a lot of shareholders. By buying Safeways, ASDA would have become Britain's number 1 retailer due to their market share becoming even bigger than Tesco's, more staff, more ASDA stores around Britain. If Safeways did become part of ASDA, Safeways could keep its name or it could change it to something like ASDA Safeways. This would happen as ASDA would have owned all of Safeways shares. Safeways would have also become part of WAL-MART as well.
C3 How ICT has impacted the speed of communications
In task E5, I mentioned all the modes of communications in ASDA and stated if they were either external or internal or both.
ICT has been able to reduce the time taken to carry out objectives, increase speed to complete tasks and it's easy to access and operate.
An example of how ICT can reduce the amount of time spent on work is the use of the Telxon gun. The gun helps to do jobs by:
* Transport information via infra-red signal from any where around the store
* Fast, reliable
* Reduces paperwork - see below
* Has greater advantages over paperwork
The Telxon gun reduces paperwork by doing everything electronically. An example of how the Telxon can reduce paperwork is by doing stock take. Stock take is done at the beginning and end of every month so that the different departments can monitor how much stock they have at the beginning and end of every month. The old way of doing stock take was by getting a pad full of labels and counting how many items there were of a product and count them and then record it in the pad. This process would have taken up to more than half an hour to complete. The Telxon gun makes it quicker to do stock take. The gun scans the barcode of a product; details will appear on the Telxon monitors, you then enter the quantity of the product and then press enter on the Telxon. The information is sent to the Admin department where the Admin staff looks at it and is then entered into the database.
ICT has proved to help ASDA as productivity has risen by 40% (source of information - Admin department of ASDA store, Slough). ICT also reduces the use of paperwork; messages are sent to ASDA House and/or WAL-MART quicker and helps ASDA stores receive feedback form ASDA house and WAL-MART.
Without the use of ICT, things will be done slowly. Doing paperwork is a lot stressful and messages would have taken longer to receive. ICT frees up management time to strategise.
ICT helps speed up communication. Without it, things will be at a slow pace.
An example of this is, the job of stock take being done before and after the use of the Telxon gun - a use of ICT.
Scenario - I work on the shop floor doing stock take and now I have to count how Heinz beans tins at 200g there are.
Before ICT:
Find item - 3/4 minutes
Paper pad - leaf through pad for Heinz beans at 200g - 4/5 minutes
Count tins - 3 minutes
Write down quantity onto pad - 3 seconds
Time taken to do stock take - 9/10 minutes
After ICT:
Find item - 3/4 minutes
Scan barcode of product - 1 second
Count tins - 3 minutes
Key in quantity of product - 3 seconds
Press enter to clarify stock take of product - 1 second
Time taken to do stock take - 4/5 minutes
This is typical example of how ICT has reduced the amount of time taken or spent on paperwork.
I got the information on stock take duration from someone that has had experience of doing stock take by hand and by using the Telxon gun.
A1 How the organisational structure, culture and management style interrelate ASDA
The structure, culture and management style of ASDA interrelate (or become dependant) ASDA by working with each other.
The organisational structure that best suits ASDA is the hierarchy structure. The reason to why I have said the hierarchy structure best suits ASDA is because; ASDA is a big company/organisation and has loads of different departments. Communication flow is very important in a big company and by using a structure like the hierarchy structure can show the flow of communications and this helps a business improve business performance.
As I mentioned in task E4, the ideal management style that best suits ASDA is the consultative management style. The reason to why I have said this is the best management is because, this sort of management style would like to hear other peoples opinions/views before a crucial decision is made when a new idea is thought up and is going to be put through.
The culture that best suits ASDA is the Task culture. A task culture is designed to make a business work together in teams (i.e. the amount of people that work in a department is designed to make them work in a team), respect individuals and the company they work for, have strong rules against any form of discrimination (e.g. disability discrimination, sex discrimination etc), make everyone feel valued and work make the company operate as an equal opportunist. As ASDA is a big company, the task culture fits in well with it.
The hierarchy structure, consultative management style and task culture all fit into ASDA as again, ASDA is a big company (nationwide and worldwide including the WAL-MART ownership), aim to bring out the best in everyone who work for them and consult everyone on any decisions.
ICT has had a big impact on ASDA as a whole. ASDA's production has risen by 40% (see tasks E5 and C3), jobs can be done a lot quicker (see tasks E5 and C3), paper work is reduced (see tasks E5 and C3) and help speed up communications (see task C3). ICT is a very important part of ASDA and without it, ASDA would probably have an decrease in; production, job development, paper work reduction and increase the communications flow.
SWOT analysis of ASDA...
Here I' am doing a SWOT analysis of ASDA. A SWOT analysis shows the strengths, weaknesses, opportunities and threats of and to ASDA.
Strengths...
* ASDA have a lot of shareholders
* Britain's 2nd biggest supermarket chain
* Part of a big and successful American retailer - WAL-MART
* Britain's best value for money retailer for 6 years running (source The Guardian newspaper)
* Britain's best employer (source: The Guardian newspaper)
* Continually produce high profits
Weaknesses...
* Not as big as Tesco - Britain's 1st biggest supermarket chain
* Tend to sell more ASDA brand products rather than big named products e.g. Nestle, Cadbury etc
* Mainly depend on George clothing sales for high profits
* Not as many local stores such as Tesco Extra or Sainsburys Local - local stores have proved to be popular *
Opportunities...
* Offer Gorge clothing stores in Leeds and Croydon'
* Offer job development i.e. offer training to become a supervisor or a manager or supervisor in an ASDA store or Head office
* Equal opportunist
Threats...
* The takeover of Safeways by Morrisons would make Morrisons a big retailer and would provide Morrisons a higher market growth which could make it one of ASDA's prime competitors/rivals
* Shareholder numbers could decrease at any time
* The ownership of ASDA is settled, but WAL-MART could choose to sell them at any time.
* ASDA HQ could choose at any time to get rid of the George clothing range.
*= If ASDA were to open more ASDA FRESH local stores, the structure of the stores would be a flat structure, as there won't be a lot of communication flow, there would be a different management style, based on the number of staff, type of stock and the size of the shop and stock levels would be kept to a minimum as some departments would be cut from the local stores.
'= As there are George clothing stores in Croydon and Leeds, the structure, culture and management styles would change as, the clothing stores are completely different compared to the ASDA stores. The George clothing stores would have a flat structure as there would be minimum of departments (i.e. the clothing stores would mainly have the HR department, Accounts department, Checkout department, Warehouse department, Admin department, certain number of managers and supervisors and workers), the management style would change as it would be different managers working in the clothing stores. The culture would stay the same, as the clothing store has strong links to ASDA, so the task culture would still apply to the clothing stores. The use of ICT will change in some ways. The Telxon gun would still remain in the clothing stores as stock take would need to be done in the clothing stores, clothing reduction would be done by hand as there would be a different type of reduction label on the clothing. In the ASDA stores, they use "whoops" labels, which is done through the Telxon gun and printer. But in the clothing stores they would have to scan the barcode of the clothing product via the Telxon gun and send a message via infra-red to the EPOS system to tell the system the product is reduced in price. The reduction label that would be used would be a label displaying the "was" price (the old price) and the "now" price (the new price).
Communication would change as the structure would be a flat structure (see above). E-Shopping would change as the clothing stores would just offer clothing products so a new concept for a separate clothing website and website address, would need to be introduced so the customers can just shop for clothing products.
My findings in my SWOT analysis show the strengths, weaknesses, opportunities and threats of ASDA. ASDA has a few strengths but few weaknesses. The threats to ASDA are very strong so ASDA have to always keep up to date to what is happening in the tertiary sector and keep up to date with the latest trends (see task C1).
A2 An alternative to QC, QA and TQM and an Evaluation
As I mentioned in task E6, ASDA have to follow three stages of quality product development -QC - Quality Control QA - Quality Assurance and TQM - Total Quality Management.
Quality Control (QC) looks at the flow of production. They have to look and see what falls below standards. Quality Control is carried out by quality control inspectors. Inspection and testing are common ways of doing quality control.
Quality Assurance (QA) is concerned with making sure there are no faults before and after the production flow. Quality Assurance also have to make sure all products that are produced are up to standards and have "zero defects". Quality Assurance are responsible for a workforce, working in teams rather than an inspector.
Total Quality Management (TQM) goes beyond Quality Assurance. TQM is designed to make every employee delight a customer. Customers are at the centre of the production process. (Source of reference: Heinemann AVCE Advanced Business 2000 edition - Dave Needham & Rob Dransfield). TQM is a form of operations management. TQM is associated with every worker in a work place and tries to persuade them to consider quality in everything they do. All the employees aim to please customers, as the customers are one of the most important resources they have.
In this task I have to look at alternatives to QC and QA. As QC and QA are mainly based in ASDA's supplier's factories, ASDA stores don't really have a QC and QA team. ASDA have decided to use their Admin workers as their answer to QC and QA. The reason to why ASDA stores have used the Admin workers as QC and QA workers is because; the Admin workers have to deal with Trading Standards paper work. The Admin workers have to look at departments that produce food (e.g. rotisseries, bakeries etc) and check the food prep area and the standards of how the food was made and what the final outcome of the finished product was. It would be a big impact on ASDA stores as they would have to look at the matinence reports of machines that cook and produce ready to eat foods (e.g. rotisserie ovens for chickens) and cold storage systems (e.g. a fridge to store rotisserie chickens). If a fault was to happen the Admin workers who act as QC and QA would have to report it immediately so that something would be done to ensure a smooth working environment.
It would help ASDA achieve its objectives as one of ASDA's objectives is to produce good quality goods (see tasks E2 and C1) as when customers want good quality ready to eat products, the Admin QC and QA team would make sure the area that produce the foods would look tasty and hopefully persuade the customers to buy the products. Hopefully this would have a big impact on the ASDA store.
Evaluation...
In this coursework I have found out how ASDA works. I have found out what its objectives are, what they aim to do, how they communicate to other ASDA stores, ASDA HQ and WAL-MART Head Office, what their objectives are and how they fulfil them and how they aim to cater for the public.
I have found out that ASDA are a very strong company and are very successful and popular. I have found out that ASDA aim to do their best to beat their rivals, gain high market shares and do their best to satisfy their customers.
I have learnt how the latest developments have helped ASDA, especially in ICT and how they keep up to date with the latest trends in their business sector (the tertiary sector). I have also learnt ASDA aim to produce everything under one roof thus making ASDA a one stop shop and making products for everyone of every age and sex and always keep their prices low to attract more customers.
Overall I have found out that ASDA is a highly successful company and do their best to cater for the general public and provide everything for their customers and keep prices low so that they can generate high amounts of profits.
Ravi Ahluwalia
