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    Introduction of Business Environment | Value Chain Analysis | ASDA Ltd

    Question :

    This assessment will cover the following questions:

    • Describe the value chain model with the help of the theory in the context of ASDA company.
    • ASDA is a UK based retailer. Use the value chain model in order to examine the internal environment of the organisation.
    • How the value chain model helps in understanding the working of the ADSA organisation.

     

    Answer :

    INTRODUCTION

    Business environment reflect the internal and external working of the business which helps in undertaking various strategies to retain the position in market. Present report is based upon the ASDA Ltd trading company which is the largest supermarket retailer in UK. The company was founded in 1949, with customer services. This report will cover the concept of value chain analysis which is help to analysis the internal business environment. This will also include the internal working of the company in relation to achieving goals. At the end of report will highlight the reflective analysis in respect of applying the value chain analysis model in undertaking the aspects of ASDA.

    MAIN BODY

    Value chain Analysis

    Value Chain Analysis is the business management concept which is the collection of the different activity that are performed in the organization with the sole motive of creating a good value for the customer of the organization. Value creation is the process which used to add the value to the organization product which help them in getting the competitive advantages in the market (Value Chain analysis, 2016).

    Porter's Value chain analysis is one of the most popular value chain analysed which was developed by Michael Porters in his book “Competitive Advantages” in the year 1985. Porter's Value chain analysis used to focus customer as the central principle which used to drive the value creation as compare to the other value creation model which used to look at the department and accounting as a principle factor (Shukla,  Mishra and Singh, 2017). Porter's Value chain analysis is consists of a number of the activity in the organization that is primary and secondary activity. Some activity of the porters Value chain analysis are as follows:

    Primary Activity

    Inbound Logistics: This activity is the activity which look at the receiving, warehousing and inventory control of the raw material in the organization for the purpose of developing the product with the help of the same to be offered to the customer.

    Production: Production is the activity in which the raw material which are procured in the inbound logistic are given a shape of the semi finished or the finished product (Howieson, Lawley and Hastings, 2016).

    Outbound Logistic: These activities of the business looks at the network or the technique through which the product of the company will be delivered to the customer for the purpose of the consumption.

    Marketing and Sales: Marketing and sales activity of the organization looks at putting the product of the company in front of the market and managing the relationship with the customer to sell the product of the company.

    Services: These activities includes the management of all the activity related to the product or services to be offered to customer as soon as the relationship developed with them.

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    Secondary Activity

    Procurement: This activity looks at acquisition of different input and the resources for the purpose of carrying out different activity.

    Human resource Management: These activities look at hiring and retaining the employee for the longer period in the organization.

    Infrastructure: Infrastructure of the organization used to cover the support system and the function of the organization which looks at maintaining the operation in the organization.

    Technological development: These activities used to look at designing and developing manufacturing technique and automating process.

    ASDA

    Asda is a British supermarket retailer, Headquartered in Leads, West Yorkshire. The company was founded in the year 1949 by the founder Peter Asquith, Fred Asquith and Noel Stockdale (Havice and Campling, 2017). Asda has build the good product line to be offered to the consumer in the market. The product line of the Asda includes Product of food and beverage, clothing as well as the technological product. Asda has shown the good amount of the growth in the recent past as Asda is able to regain the second place back in the domestic retailer super market. Asda is now only behind of the Tesco and ahead of the Sainsbury's.

    Asda used to operate in the global market. As Asda used to offer the services in more than 10 countries in the global market. There are in total of approx of 1000 store which are owned and managed in the Name of the Asda. There are more than 165000 employees which are hired by the Asda to carry out the different operational activity of the Asda (Muloi and et.al., 2018). Asda used to follow the strong Store format to carry out the operation of the business. Store formate of the Asda includes the Asda super centres, This is the type of the store which are bigger and used to include all the services of the company at one place. Asda superstore, This is smaller than compare to the super centres but used to offer variety of the services at location. Services include petrol filling, cafe and restaurants. Asda supermarket, Asda living and Asda store are other some example of their Store chain.

    Besides the core super mart, the company also used to offer the other services as well which includes financial services and a mobile phone provider that uses the existing EE network.

    Internal environment

    Primary Activity

    Inbound Logistic: Inbound logistic of Asda is very complex to understand as they used to supply the hundred of the product categories to the Asda store across the globe. The reason behind the same is that Asda used to offer the variety of the product in their store. Economics of the scale is the major source of the value creation for the Asda as the level of the operation. At same time Asda also used to make the regular investment to increase the capacity of logistic it eventually helps them in exploiting the economics of scale (Deng and et.al., 2016).

    Outbound Logistic: When seeing at the out bound logistic it has been find out that cost-effectiveness and Flexibility are the two type of value creation source for the Asda. As Asda used to offer the service of the home delivery and also used to offer the services of the online purchase for the customer. Also, as Asda used to offer the service of unlimited free delivery pan it also used to create value for services.

    Marketing and Sales: “Save money. Live better” is the marketing communication message which is used by the Asda to promote the company product in front of the customer in the market. Asda marketing strategy also used to pursue the aim of restoring trust toward the brand address and the stakeholder of the company. This used to help the company in building the good value for the organization.

    Service: As there are many competitors used to operate in the market and customer in the market are getting a good sort of option, the average spending of the Asda customer on the Asda store has decline (Al-Shammari and Al-Faqir, 2017). Also, as Asda used to follow the cost leadership business strategy in the organization it is getting difficult for the company to offer the good customer service to the customer. So it is getting difficult for the company to add the value for the services which has been offered.

    Production: Asda in the past does not use to produce the good of the company in their name but in the recent past with the help of the market research they used to produce the good in the name of the Asda. In the Market research the company used to analysis the opportunity and on the basis of the same used to produce the product with standard quality. Quality of product help the organization in creating the value for the organization.

    Secondary Activity

    Human Resource Management: It is one of the best way through which Asda used to create the value as they used to provide good wages and salary to the human resource in the organization. Also, used to give them training at the time of joining the job so that they feel comfortable in performing the different activity of organization (Utomo and et.al., 2018).

    Procurement: Asda Procurement activity also used to create the value for them as they used to procure the resources from the variety of the supplier. This help them in offering the different variety of the product to attract the customer for the organization.

    Infrastructure: Asda used to operate in the market with the help of the chain of store such as super-centre, supermarket, superstore. This help the Asda in creating the value for the customer as they can reach Asda comfortably and also can avail the different service of Asda under one roof.

    Technology Development: This activity of the Asda does not used to create that value for the organization as it was found that Asda do not used to invest that heavily in procuring different technology in the organization.

    Reflection

    Value chain analysis has helped me in many ways in understanding the internal environment of the business that easily. The biggest importance which is brought by the value chan analysis is that it has helped me in understanding the impact which used to brought by the different activity on the operation of the business. As Value chain analysis used to differentiate the activity on the basis of primary and secondary activity it was easier to understand the impact which is brought by the different activity on the performance of the business.

    Another importance which is there of using value chain analysis for the purpose of analysing the internal business environment is that it used to understand the different aspect of the operation together. For example other internal environment tool used to look at the aspect briefly but value chain analysis has helped me in understanding the different aspect in detail such as Logistic activity was understood in both the aspect inward and outward.

    Another benefit which has been seen by me in the process of using value chain analysis as internal environment analysis tool was that this tool used to centre the customer at every process or the activity of the organization. As customer are the on the basis of which whole the operation of the business used to take place in the organization. Value chain analysis has helped me in understanding the information related to the operation of the business in better way (da Silva Guabiroba and et.al., 2017). Any other analysis tool not used to centralize the customer they rather used to centralize the important department, which sometime not used to give the correct outcome as expected.

    Value chain analysis has helped me in understanding the area which was not performing up to the mark in the organization. The reason behind the same is that value chain analysis used to differentiate the primary and supporting activity of the organization separately. This has eventually helped me in understanding the real issue which is faced by the Asda in the internal environment. As the internal environment shows that organization primary activity is performing well but the service activity is not that up to the mark as compare to the other activity. Same is with the secondary activity as all the secondary activity are performing well but technology development is not giving the result which are expected.

    Value chain analysis has also helped me in linking the performance of the primary activity with the secondary activity of the organization which has helped me in building the understanding in better as compare to the other internal environment analysis tool (Mudambi and Puck, 2016).

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    CONCLUSION

    After going through the above report it has been summarized that Porter's Value chain analysis used to centre the customer in creating the value for them. After that the report has summarized that Asda is second largest supermarket retailer in the UK and used to operate in the form of different store formate in the nation. After that the report has summarized that all the primary activity of the organization is performing well expect service activity of the organization. Also, supporting activity is giving a good sort of the result for the organization but technology development activity is lacking behind in some aspect. In the end the report summarized the reflection of using Value chain analysis as an internal environment analysis tool.

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