Analisis Caso Asda

ASDA (B) – Working to Improve

Archie Norman faced several issues when he arrived at ASDA. The firm was in high debt, was not making profit, and also was facing difficulty in motivating the employees. Despite the difficult times, the management and the entire corporate structure were in chaos. Information flow between the top and low employees were not efficient, and many did not even knowthat ASDA was in such a harsh status. Along with the financial crisis and the inefficient corporate structure, the firm lost its true identity of being a “low-priced” retail bringing the traditional consumers to leave. Its plan for acquiring new high-segment consumers also came to a failure, unable to appeal to the new targets due to the strong positions of the competitors.
Norman had three mainissues that he needed to resolve in order to maintain ASDA from declaring bankruptcy and collapse. He needed to stop the unnecessary loss of financial means derived from excessive investments previously made in order to start paying of its high debt. The next step that he needed to touch on was the corporate culture. Since the structure and culture both were restraints from ASDA to resolve thecurrent chaos, it was inevitable for Norman to find a solution to fix up the entire hierarchy and system. Once these issues are resolved, he also has the homework of clearly defining ASDA’s business entity to strive for profit for the long-term profit generation.
Solving the Financial Situation
Although ASDA had raised a large amount of cash through the first rights issue before Archie Norman enteredthe firm, it still was in extreme financial burden. Looking at such difficult financial situation, Norma put forth effort to enhance the financial position of ASDA through different tactics and strategies.
Resolving inefficient cash flow and unnecessary investments
The first step he took was to stop the inefficient cash flow of ASDA. He stopped the investment towards Allied-Maples that was oneof the main reasons of continuous unnecessary expenditures. This included costs related to the new-store development program and the refurbishment of the store interiors.
The next step Norman took to improve the financial situation of ASDA was by selling non-essential assets such as undeveloped store sites that were planning to be developed and the remaining interest in MFI. Through this action,Norman was able to raise more cash for ASDA. Along with the selling and the halt of investments, the last step that Norman took was to promote the second rights issue that helped ASDA to reduce debt by raising a large amount of cash from the financial market. Such actions took by Norman eventually allowed ASDA to redeem the rest of the debt around 700 million pounds, while providing efficientusage of capital for other profitable potentials.
Norman’s leadership enables resolution of financial status
The strong leadership of Norman was the prevailing enabler for a “better” ASDA along with other aspects. First, the financial situation of ASDA can be said that it played a big role in influencing Norman to take such actions. The difficult financial position allowed Norman to have enough“free space for action;” Norman focused in reducing debt and costs rather than investing in other aspects to expand the business. The ASDA employees would have well aware of such difficulty of finance, which brought them to welcome the many actions of Norman to raise cash through selling assets and halting investments. In other words, there was no space for the current employees to go against theactions of Norman.
Support of the employees in resolving the financial issues
In addition to the difficult financial situation, the employees had a sense of missing the original culture of ASDA with low cost and low prices. This also played an important role for the employees accepting the cutting expenditures scheme of Norman, which was a step to go to the original corporate culture.
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