The model which we will use in this essay is called a stakeholder model and it helps us to identify the external influences on a business and analyse their effects on the behaviour of the business. When considering the Asda-Wal-Mart environment and the way in which they influence each other, it is very useful to have a model which is a simplified picture of the context in which events are taking place.
Matrix diagram for classifying STAKEHOLDERS:
Sam Walton Shareholders
Lee Scott Chambers of Commerce
HIGH Archie Norman
Wal-Mart was founded by Sam Walton in 1962, in Arkansas USA, with one self-service store. He was a category D stakeholder with high power and interest. He improved on all the previous systems of payment by introducing central billing.
The company expanded in its home territory until the 1980s, but outside the immediate area it had a low profile.
To the Chamber of Commerce, a Stakeholder category C with high power and low interest, Wal-Mart was a job creator and regenerator, which kept them satisfied.
Competitors, category A, usually smaller businesses, with no interest in the company and little or no power over Wal-Mart, were driven out of business by Wal-Mart??™s capacity to undercut prices.
The global growth of the company was achieved by the use of a combination of buy-outs and joint ventures.
Asda was founded in 1965 as supermarket chain in the UK. In 1989 it found itself overstressed, as it was trying to sell too broad a product-range and twice had to ask shareholders for money to stave of insolvency. Shareholders, stakeholders category C, are in a position to affect the future of a company, but generally have very little interest in the company, and that which they do have is solely concerned with the repayment of their shares.
On 26 July 1999, Asda joined the Wal-Mart family. Archie Norman, the new CEO stakeholder category D, restored Asda??™s fortune by concentrating on building its market share on the back of low prices. He was not influenced by his major competitors and did not follow their loyalty schemes.
There was a good fit between the two companies, as they both have the same strategy-focus on low prices. In 2001, Asda introduced a range of over 400 so-called???smart price food products. Asda became the most affordable supermarket and was supported by rollback campaign by Wal-Mart. Other competitors were getting far behind, as the Asda strategy was to increase the non-food sales area. Asda??™s sales growth rose by 25%.
Asda still has an influence on huge numbers of other sellers and competitors. Despite the fact that they were trying to stock non-food products, in 2005 it became the second biggest supermarket chain in the UK. On the other hand, the growth of Asda has not been entirely rosy, as with food price deflation
in the UK running at 1-2%, the market share of the company fell, with its annual growth of 2% running behind industry.
The last-mentioned stakeholder, Andy Bond, Asdas CEO category D, admitted that the company had become complacent and had missed some new business opportunities. It appears that what worked for Wal-Mart has not been an automatic key to success everywhere.
To conclude, this case study demonstrates that there have been a variety of influences on Asda. Skilled employees, mostly in leading positions, competitors and Chambers of Commerce have all had a significant effect on the development of the company and cannot be ignored.