BUSINESS STRATEGY
[An analysis of key factors that drive globalization and to decide the
complexities connected with operating in a global environment, besides that
evaluating how it operating in global market and it influences an organization’s
structure, culture and functions. In addition critically evaluating the influences
of globalization on an organization’s decision making and strategy for
restructuring the Strategic Plan of “ASDA”, the retailer-UK]
2019
BUSINESS STRATEGY
[Re-Structured Strategic Plan Of ASDA]
Submitted
By
Student Name
Student ID
1/1/2019
[An analysis of key factors that drive globalization and to decide the complexities connected
with operating in a global environment, besides that evaluating how it operating in global
market and it influences an organization’s structure, culture and functions. In addition
critically evaluating the influences of globalization on an organization’s decision making and
strategy for restructuring the Strategic Plan of “ASDA”, the retailer-UK]
Submitted
To
Lecturer…
Page |2
SECTION -1-------------------------------------------------------------------------------------------------------------------------------- 7
INTRODUCTION-------------------------------------------------------------------------------------------------------------------------- 7
TASK-1 – AN ANALYSIS SHOWS HOW THE INTERNAL AND EXTERNAL ENVIRONMENTS IMPACTS ON ASDA’S
STRATEGY.--------------------------------------------------------------------------------------------------------------------------------- 8
LO1------------------------------------------------------------------------------------------------------------------------------------------ 8
2.1 DEMOGRAPHY----------------------------------------------------------------------------------------------------------------------- 9
2.2 ECONOMY-------------------------------------------------------------------------------------------------------------------------- 10
2.3 SOCIO-CULTURE-------------------------------------------------------------------------------------------------------------------- 10
2.4 TECHNOLOGY----------------------------------------------------------------------------------------------------------------------- 10
2.5 ECOLOGY--------------------------------------------------------------------------------------------------------------------------- 10
2.6 POLITICAL FORCES----------------------------------------------------------------------------------------------------------------- 11
5. AN ANALYSIS OF HOW ASDA’S MACRO ENVIRONMENT RESOLVE AND UPDATE STRATEGIC MANAGEMENT
DECISIONS.------------------------------------------------------------------------------------------------------------------------------ 16
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6.4 MARKET STANDING---------------------------------------------------------------------------------------------------------------- 20
6.5 PRODUCT DEVELOPMENT---------------------------------------------------------------------------------------------------------- 22
6.5 POTENTIAL------------------------------------------------------------------------------------------------------------------------- 23
LO2--------------------------------------------------------------------------------------------------------------------------------------- 23
SECTION-2-------------------------------------------------------------------------------------------------------------------------------- 28
4.1 INTRODUCTION--------------------------------------------------------------------------------------------------------------------- 28
4.2 SITUATIONAL ANALYSIS SUMMARY------------------------------------------------------------------------------------------------ 29
4.2.1 SWOT Analysis------------------------------------------------------------------------------------------------------------ 29
4.2.3 PESTLE Analysis---------------------------------------------------------------------------------------------------------- 29
4.2.4 Competitors--------------------------------------------------------------------------------------------------------------- 29
4.6 STRATEGIC OBJECTIVES------------------------------------------------------------------------------------------------------------ 29
4.6.1 The mission of ASDA---------------------------------------------------------------------------------------------------- 30
4.6.2 The Purpose of ASDA---------------------------------------------------------------------------------------------------- 30
4.6.3 The value statement of ASDA-----------------------------------------------------------------------------------------30
4.7 CHOSEN STRATEGIC OPTION------------------------------------------------------------------------------------------------------ 30
4.8 BUDGETS--------------------------------------------------------------------------------------------------------------------------- 30
4.11 CONCLUSION--------------------------------------------------------------------------------------------------------------------- 32
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TASK-5 - STRATEGIC PLAN FOR ASDA----------------------------------------------------------------------------------32
5.2 APPLICATION OF PORTER’S FIVE FORCES MODEL FOR EVALUATES THE COMPETITIVE FORCES OF ASDA’S
RETAIL MARKET SECTOR.------------------------------------------------------------------------------------------------------------- 33
CONCLUSION------------------------------------------------------------------------------------------------------------------------ 35
LIST OF TABLES-------------------------------------------------------------------------------------------------------------------- 36
TABLE OF FIGURES--------------------------------------------------------------------------------------------------------------- 36
BIBLIOGRAPHY-------------------------------------------------------------------------------------------------------------------------- 37
REFERENCE BOOKS-------------------------------------------------------------------------------------------------------------------- 37
URL – Visited--------------------------------------------------------------------------------------------------------------------------- 37
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Section -1
INTRODUCTION
““Strategy is about making choices, trade-offs; it’s about deliberately choosing to be
different.”” Michael Porter.
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The business strategy in simple terms is a documented action plan on how to achieve the
business goals, further more it explained how on deal with competitors, handle the needs
and expectations of their customers. In addition handles the long term growth and
sustainability of the organization. The strategy is vital due to its power of recognition of
organizations performance, capabilities and helpfulness to growth. But all businesses are not
in right way, because of different organizational reasons and here is strategy tries to address
those weaknesses and organizations can avoid the impact greatly and strategy can focus and
reduce those obstacles.
The reason why strategy is more important, because it reveals the performance of the
business internally and performance against competitors and address the future needs to
stay relevant into the future. The strategy can recognize future trends and opportunities and
it possible to examine the wider changes in market like political, social and technological
changes, besides consumer changes and it helps to create tactics, so it resulted to modify
and develop business for future changes.
The business strategy formulate not only a vision but also a direction to the entire
organization and it dynamic to all human resource within the organization with clear goals
and direction or mission, more over it provide vision and stop them from losing
organization’s aim. In addition, the organization can create a competitive advantage along
with strategy and it reveals more about the organization and the path where the
organization going. (evolve, 2018)1
To crystal clear that the restructuring of ASDA’S business strategy aims to increase
profitability, gain more market share, increase approval ratings or boost customer
satisfaction or complete a project under budget, then after the process follows through a
Series of process likewise internal and external environment identify strategic options and
evaluation and selection of best option. (mindtools, 2018)2
1
evolve, 2018. https://evolve.ie. [Online] Available at: https://evolve.ie/q-and-a/business-strategy-important/
[Accessed 10 November 2018].
2
mindtools, 2018. mindtools. [Online] Available at: https://www.mindtools.com[Accessed 10 November 2018].
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TASK-1 – An Analysis shows how the Internal and External
Environments impacts on ASDA’S strategy.
LO1
The external or macro environment forces are demography, economy, and physical, socio-
cultural, political, legal and technological. The internal or micro environment forces are
consumers, competitors, suppliers, dealers, distributors, investors and common public.
The micro and macro environment have important role to recognize the vision, strategies
and objectives of the business organization, meanwhile those also have influence on shaping
marketing policies, programs and campaigns. The MACRO environment connected with
commercial operations due to its broader concept. It is the basic index on overall market
conditions, such as nature and kind of people, society, culture and life style, role of
government, economical conditions and technology. (marketing 91, 2018)3
3
marketing 91, 2018. https://www.marketing91.com. [Online] Available at:
https://www.marketing91.com/what-is-macro-environment/[Accessed 16 November 2018].
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2. The Importance of Environment Audit (PESTLE Analysis)
The requirement of environment audit of an organization firstly to know the resources,
liabilities, capabilities, strengths and weaknesses. Secondly to analyze the present
environment for forecast where the operations going smooth or not and good opportunities
existing thereto pursue. Thirdly to analyze customers and stakeholders because the strategy
aims to show how it brings success means how to satisfy the customers meanwhile
shareholders too happy, therefore required to address customers needs and to identify
stakeholders along with market, market mix and cost efficiency. Finally requires analysis of
competitors, because for-profit organizations comparing price and products with
competitors for to understand the competencies and how easy to enter their products in
market place and what alternatives have in market place. These are required to proof the
success of strategy and various tools to be used to address these problems.4
2.1 Demography
Demography has a broad implication on physical attributes of the population of focused
region such as size, age, gender, occupation, density, growth rate, immigration trends like
inter-migration or intra-migration, changes in demographic structure, nature and
characteristics of communities. An overall idea about the characteristics and inter
connection of classified demography provides a clear formula to solve the right identification
problems of viable customer group within the targeted region.
2.2 Economy
The economy refers to the whole economic scenario of the specific region, it may be mixed
or equal share with government or may capitalist economy where government hasn’t any
control over the market or the organization except law and order or taxation where
organizations can enjoy a wider edge, besides that the particular region’s GDP, GNP, PCI and
4
mindtools, 2018. mindtools. [Online] Available at: https://www.mindtools.com[Accessed 10 November 2018].
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standard of living, purchase power and pattern of target group also influence decision of
price.
2.3 Socio-Culture
The social structure of a geographical area provides the dominant culture and
psychographics of the specific targeted audience; it may be mixed community or mixed
population. The most metropolitan cities have a major share of local population.
2.4 Technology
The technology is an important criterion to consider before investing in a particular targeted
area. It is vital to know the technology penetration and user technology interfaces of the
targeted area and use of technology for campaigns and communication, because if the
products used by customers are technology based, they can use technology a tool for their
product. In common technological awareness not only necessary to reach customers but
also it is essential to customers for avail and use of technology based products.
2.5 Ecology
Ecology is a vital aspect of macro environment, such as its physical setting likewise
geographical location, presence of ecology and biodiversity, weather, temperature, climate
and predominant seasons and through recognition of these features provides a market
setters where to sell and what type of products to sell, for instance, heaters and electric
blankets not need in equatorial and tropical regions, these are the highly populated area in
the world. Air conditioners and coolers not appeal in western countries in those living in the
temperature zone. In short when launching, it is necessary to understand the needs and
wants of the inhabitants of the region.
5
marketing 91, 2018. https://www.marketing91.com. [Online] Available at:
https://www.marketing91.com/what-is-macro-environment/[Accessed 16 November 2018].
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Source- Anon., 2018. bussiness-to-you.com. [Online] 6
(Porter, 2008)
6
Anon., 2018. bussiness-to-you.ccom. [Online] Available at: https://www.business-to-
you.com/scanning-the-environment-pestel-analysis/[Accessed 18 Novemmber 2018].
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Figure 4 - Porter’s FIVEFORCE
The five forces decides the level of competition and when stronger competitive forces
caused less profit and if industry with low barriers to enter and having less buyers and
suppliers with more substitute products and also with competitors will treated as very
competitive and it is not attractive due to low profitability. 7
7
Porter, M., 2008. The Five Competitive Forces That Shape Strategy. [Online]
Available at: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/
[Accessed 19 November 2018].
8
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
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Source:- (Ovidijus Jurevicius , 2013)
The high threat of new entrants is exists when the following facts exist:-
9
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
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4.2 Bargaining power of suppliers
The strong bargaining power permits suppliers to sell high price or low quality raw materials
to buyers and it reflects negatively buying firm’s profits due to higher price of materials
bought and when the following reasons remains can say the suppliers have strong bargaining
power.
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1. If there exists many rivalries
In addition scholars added one more force that affects industry such as “compliments” and it
increases not only demand of the primary product but also increases firms and industries
profitability, for example, iTunes created for iPod as compliment and resulted increased
value for both and achieved Apple good profit.10
The analysis of Five Force Analysis concludes that all external aspects are against the ASDA and
should seriously address in strategic restructure plan.
11
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
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5 .7 Summary of Environment Analysis of ASDA
There are above size and below size competitors exists in the industry and operating in low
growth , besides that the rivalry between the existing organizations are strong and it is hard
to achieve economies of scale in the market, therefore to pursue cost leadership strategy
and product development strategy should be used due to due to slow market growth.
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6.1 The Size of the business – ASDA
The size of the business determines by mainly six factors such as size of capital, number of
employees, volume of sales, level of technology, raw-materials used and legal form of
ownership.
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6.2 Growth of ASDA
Refers to ASDA “as on 15th November 2018, achieved 13.8% growth in online grocery sales
and launched a new Free From range with 113 new lines and increased a chilled range by
42% also increased grocery range by 21%. “(ASDA, 2018)12
Refers to The Guardian (THE GUARDIAN, 2018), ASDA’S profit falls down 10% after price cuts
in the year 2017. The pre-tax profits fell down from GBP- 791.7 m in 2016 to gbp-712.6 m in
2017 and sales increased by 2.6% to GBP- 22.2 BN.
“”Asda’s chief executive, Roger Burnley, said: “Our 2017 accounts reflect a solid performance
and a strong, well-managed business. During the year, momentum returned, driven by a
series of planned investments in lowering prices, further improving quality and innovation in
our own-brand ranges and providing an even better shopping experience whether in store or
online.”” (THE GUARDIAN, 2018)13
12
Ovidijus Jurevicius , 2013. Strategic Management Insight. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html
[Accessed 20 November 2018].
13
THE GUARDIAN, 2018. theguardian.com. [Online]
Available at: https://www.theguardian.com/business/2018/may/31/asda-profits-fell-by-10-in-2017
[Accessed 19 November 2018].
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Source: (corporate.asda.com, 2018)
The 2017 ASDA’s financial statements showing sales increased by 0.5% and operating profit
GBP-735.4 m decrease of 13% from last year and cash flow from operating activities of GBP-
1289.3 m and net cash flow of GBP-309.0 m and continued strength of balance sheet and
146,000 sq ft of new space opened. (ASDA, 2018) .The market share of ASDA shows decrease
in 2018 and remains in third position behind TESCO and Sainsbury’s. (statista.com, 2018)14
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Months Feb.2018 April 2018 June 2018 August 2018 October 2018
15
Nelson, A. C., 2005. The Power of Private Label. [Online] Available at:
http://users.ugent.be/~xgellync/Rob/PrivateLabel_RMS.pdf [Accessed 20 November 2018].
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Source- Nelson, A. C., 2005. The Power of Private Label
6.5 Potential
Service marketing is the potential of ASDA and it measures through its people oriented
service marketing. ASDA have physical evidence of facilities, equipments, uniforms, livery
and artifacts, signage and symbols. ASDA focused to service design, standardization,
customization and operational efficiency, besides those promotions like internal marketing,
direct website marketing sales, advertising and other promotional methods.
In addition, in case of products ASDA have total service of product, core product
supplementary services, facilitating services and supporting services. In pricing strategy
ASDA have cost based, demand based, operational based, competition based and
relationship based pricing strategies. Furthermore ASDA have delivery services, electronic
delivery, delivery locations and particular accessing areas.
Finally ASDA maintains connections with people, customers, employees, social interactions,
roles and scripts and relationships. (MSG Management Study Guide, 2018)16
16
MSG Management Study Guide, 2018. managementstudyguide.com. [Online]
Available at: https://www.managementstudyguide.com/seven-p-of-services-marketing.htm
[Accessed 21 November 2018].
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TASK-2 – Identifying Strategic Options
LO2
“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be
different.” Michael Porter
1.2.1 Customers
Customers include an individual, households. Service recipient, companies to industries and
factors. They have power to boost the trading or ruin it. The option of customers is high,
therefore hold them is better.
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1.2.2 Competitors
The direct and indirect competitors are threat for the existence, when many competitors the
customers go for more attractive offers or competitive price and quality. Therefore adoption
of new strategy or re-building the strategies for to overcome techniques and tactics of
competitors
1.2.3 Suppliers
The suppliers are important due to control the manufacturing cost; price and brand image
and to maintain the customers in any circumstances.
1.2.5 Investors
The prime asset of the organization are investors, if they invest more can channelize to with
different departments. Therefore investors should be satisfied and if they get ROI motivate
them for more capital investment, meanwhile customer satisfaction also vital.
17
Marketting 91, 2018. marketing91.co. [Online]
Available at: https://www.marketing91.com/what-is-micro-environment-in-business/
[Accessed 21 November 2018].
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Source:- (fernfortuniversity.com, 2018)
2. Ease of stable fund availability 2. Liability laws vary in different countries and ASDA to be
exposed to various liability claims given change in policies
in those markets.
3. fernfortuniversity.com,
18
New trends in consumer behavior provides new
2018. fernfortuniversity.com. 3. Absence
[Online] of well trained
Available at: HR in global markets
opportunities in market
http://fernfortuniversity.com/term-papers/swot/1433/1162-asda.php[Accessed 19 November 2018].
4. New environmental policies and technologies can 4. Any ante US thoughts reflect in sales
utilize
5. Government green drive also opens doors to state & 5. Highly profitable products sales are seasonal and
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federal govt. needs unlikely events affects revenue
6.Market expansion reduce threat from competitors 6. Rise of price of raw-materials affect the revenue
7. The takeover BY Wal-Mart make ASDA more stronger 7. Currency fluctuations affect the profitability
2. The core values of ASDA and its influence on strategic directions
Besides that, declared the future strategic intention that, remain focused on helping
customers to save money and live better through finding new ways to improve our offer in
store and online. Through the low cost operating model ASDA continue to generate cost
savings which enable us to invest further in price, quality and service to customers.
The organizational audit consists of reviewing the auditors financial statement with directors
strategic report, further examine the application of vision, mission and values statement and
a close watch on the factors like achieving goals, action plans, tasks, time tables, responsible
persons, development of HR hiring and training, achieving desired goals, continuous quality
improvement and service provided and products used. (organizationa leffectiveness group,
2018)19
19
organizationa leffectiveness group, 2018. organizationa leffectiveness group. [Online]
Availableat:http://www.organizationaleffectivenessgroup.com/Consulting%20Areas/Organizational
%20Audits.htm[Accessed 22 November 2018].
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Section-2
“There is only one winning strategy. It is to carefully define the target market and direct a
superior offering to that target market.” Philip Kotler”
The analysis of ASDA reveals that the competitors also in track with price war, market
development, diversification, market penetration and product development. The
advancement of technology, globalization, communication changing rapidly consumer
behavior, but good offers in price, discounts always an attraction to customers. So ASDA
need a new strategy simple to adopt and exceptional to others but transformational to ASDA
to Global Giant. (Explained in TASK-5)
4.1 Introduction
“Strategy is style of thinking, a conscious and deliberate process, an intensive
implementation system, the science of insuring future success.” Pete Johnson”
The strategy formulation or restructure existing strategy under the globalized business
environment should be generated increased profitability, gaining more market share,
increased customer satisfaction and completion of a project under budget. Therefore the
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strategy creation required to analyze not only the context where the organization operating,
but also identifying strategic options more over evaluation and selection of the appropriate
options.
4.2.4 Competitors
ASDA have third position in retail sector (Kantar World Panel, 2018) and competitora are
strong enough to conquer the market share with price war and latest technologies. The
expansio and change over to new technologies by competitors may make behind ASDA in
short future. So to measurable stebs in strategies required.
20
Kantar World Panel, 2018. kantarworldpanel.com. [Online] Available at:
https://www.kantarworldpanel.com/en/grocery-market-share/great-britain[Accessed 20 November 2018].
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4.6 Strategic Objectives
“Sound strategy starts with having the right goal.” Michael Porter”
The objective of ASDA is providing quality products for lowest prices and increase fresh
products and reducing packaging for sustainability.
4.8 Budgets
The determination and distribution of financial resources for the planned strategy
implementation program required detailed budgetary process from various functional
departments; therefore allow sanction to perform the micro budget process in functional
heads.
“”Successful leaders understand that if their organization is to grow in the long term, they
can't stick with a "business as usual" mindset, even when things are going well. They need to
find new ways to increase profits and reach new customers””. (Mind Tools , 2018)
The Ansoff Matrix provides (Fig.12) matrix to weigh the risks associated for a number of
strategic options. The market or product expansion grid, there is four strategies to use for
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grow and it helps to analyze the risk associated with each one, besides each time move in to
a quadrant either horizontally or vertically risk increases.21
New Market Strategy New product based natural like herbal teas- flower teas
and other natural resource from all over the world
21
Mind Tools , 2018. The Ansoff Matrix. [Online] Available at:
https://www.mindtools.com/pages/article/newTMC_90.htm[Accessed 22 November 2018].
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4.11 Conclusion
“Execution is the ability to mesh strategy with reality, align people with goals, and achieve
the promised results.” Larry Bossidy”
22
Pangarkar, A., 2015. Linkedin Slide share. [Online]
Available at: https://www.slideshare.net/AjayPangarkar/building-strategic-linkages-mapping-and-measuring-
your-learning-strategy
[Accessed 20 November 2018].
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5.2 Application of Porter’s Five Forces model for evaluates the competitive forces
of ASDA’S retail market sector.
The analysis of ASDA’S external environment shows a weak profile.
DOING THE RIGHT DOING THINGS RIGHT↓ INCREASE IN↓ (ROUTINE ACTIVITY) ↓
THINGS↓
3. Marketing→ FULL LIFE HALF PRICE Customer relation/ sales team 3. Finance
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5.4 Strategy and Objectives
“Execution is the ability to mesh strategy with reality, align people with goals, and achieve
the promised results.” Larry Bossidy”
STRATEGIC OBJECTIVES
PROVIDE PRICE INCREASE REDUCE
MISSION
(ALWAYS ) TO BE (FIRST) EXCEEDS
Always To be first in Britain’s Best Value and exceeds customer needs always
Retailer
PURPOSE
TO MAKE FOR
VALUES
Individuals Strive for Excellence Service to Customers
Open “FULL LIFE – HALF PRICE” Section or branches inside the existing premises and open in
populated areas new small outlets for only ““FULL LIFE – HALF PRICE” individually or with all
products.
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Fill with perishables, food products, new invented products, self branded products, products
from global sources and a selection of economically not hurt too much to company for
exactly half price.
Find raw- materials cheap, reduce production cost, find new ways to produce quality
products, allocate the loss to self branded unique products.
3. Conversion of customers from half priced to full priced is easy with excellence of service
Conclusion
To recapitulate, to compete for price war it is suggested to “FULL LIFE-HALF PRICE” long
term tactics suggested and the mission suggested from”” Britain’s Best Value Retailer and
exceeds customer needs always”” to “ Always To be first in Britain’s Best Value Retailer and
exceeds customer needs always”. The price war, technological advancement, diversification,
invention are all in common and practicing all the competitors in retail industry. Therefore
further runs with R&D, invention, development, unique products and patents to be focused
for “Always To be first in Britain’s Best Value Retailer and exceeds customer needs always”.
LIST OF TABLES
Table 1-Summary Report - Five Force Analysis................................................................................17
TABLE OF FIGURES
BIBLIOGRAPHY
Reference Books
1) Grant, R.M. (2010). Contemporary Strategy Analysis. 7th ed. John Wiley & Sons, p. 239-241
2) JOHNSON, G. et al (2014) Exploring Strategy Text and Cases. Harlow: Pearson.
4) KIM, W. C. and MAUBORGNE, R. (2015) Blue Ocean Strategy. Expanded Ed. Boston: Harvard
Business Review Press.
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5) ROTHAERMEL, F. (2014) Strategic Management. 2nd Ed. Maidenhead: McGraw-Hill.
URL – Visited
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