Introduction ASDA is a top UK retailer currently controlling around 16% of the grocery retail industry in UK (Nevile, 2013). The retailer operates on a low priced offering strategy priding itself as Britain’s lowest priced supermarket. The supermarket retails mostly food, clothing and general merchandise. The ASDA is a wholly owned subsidiary of the US based Wal-Mart (ASDA, 2013). The company has had an impressive progress to its current market position from its founding in 1949 (ASDA, 2013). The company is planning to open operations in Cyprus where it has yet to make inroads.
Cyprus is an island nation with a population of around one million people but the population may vary at any given time given the country is a major tourist destination in the Mediterranean. The country has a strong diversified economy with GDP per capita soaring above $20, 000 as of 2012 but the euro zone crisis largely affected the economy (CIA, 2013). The political situation is conducive for business but mild hostility exists between the de facto north inhabited Turkish Cypriots and south comprising of the rest including Greek Cypriots (IBP USA Staff, 2009; European Union, 2013).
The situation then presents a mixture of opportunities and risks meaning an exhaustive analysis of the ASDA strengths and weaknesses, industry, country and region situation are vital to advising an appropriate entry strategy for ASDA into Cyprus; this is the main objective of the report which will be achieved under appropriate subheadings. ASDA AnalysisTo succeed in a new market, a company needs to be in favorable situation to ensure success. The most appropriate way to determine this is through a SWOT analysis.
Strengths ASDA has a long experience in running successful retail ventures; this means that the company has overtime accumulated technical expertise and industry knowledge that will help it operate a successful venture in Cyprus. ASDA runs over 500 ASDA stores. The stores offer more than 40, 000 products ranging from food, clothing, household goods and electronics. Most of the stores are actually supercentres while some are supermarkets being rebranded after the acquisition of Netto in 2010 (ASDA, 2013). Over time ASDA has been associated with cheap prices for UK consumers.
Some competitors may therefore have a hard time convincing consumers otherwise (ASDA, 2013). ASDA is able to achieve cheap prices by leveraging on economies of scale due to the huge nature of its operations. Its private labels also help lower prices for consumers at its stores (Dalic, 2004). Apart from operational advantage, ASDA has adequate financial backing from Wal-Mart and is thus able to compete effectively through mergers and acquisitions (Nevile, 2013). Weaknesses A large product offering may reduce the company’s flexibility towards focusing on high margin products and also delivering value to consumers.
The huge operations too mean a high number of employees thus increasing costs and reducing quality of service delivered at ASDA stores. It is important to note that ASDA’s experience is limited to UK only; different countries have different factors which ASDA has not experienced yet. This may pose a challenge for the supermarket as it positions itself to enter the Cypriot market.