Introduction
The aim and structure of the assignment are to analyze and evaluate the current organizational structure of an organization, Asda Stores and find innovative solutions and methods to improve its structure and performance. An organization, in connection with others, can be represented by some suitable system that may culminate in a physical replica, chart, flow diagram, series of equations, simulation model, or just a concept. The survival and growth of organizations are largely determined by the effectiveness of flows and communications. Marketing systems contain “flows” of products, services, finances, and equipment through channels and communications to and from the marketplace.
Asda stores
Asda Stores is a subsidiary of one of the United Kingdom’s largest supermarket retailers, Asda Group plc, which also operates Allied Maples Carpet and Furnishing Stores and Gazeley Properties, a commercial property development company. The company also retains a 25% stake in MFI, a furniture retailer, resulting from a management buy-out of the company back from Asda in 1987 after an unsuccessful merger. Asda Stores led in the development of the superstore concept in the United Kingdom.
The basic concept of the Asda superstore is a free-standing unit with a large, generally, over 25,000 ft2 or 2,323 m2 sales area, operating away from conventional shopping areas and offering free parking and low-price petrol as additional customer incentives. Asda stores carry a large selection of food and related nonfood products, toys, clothing, and footwear. The stores currently stock 30,000 product lines, considerably more than its competitors (e.g., J. Sainsbury stocks approximately 14,000 product lines and Tesco markets 18,000 lines). Private label products account for approximately 32% of Asda’s grocery lines compared to 55% at J. Sainsbury.
Asda’s mission is “to become the UK’s leading value for money grocer with an exceptional range of fresh foods together with those of clothing, home, and leisure products that meet the everyday needs of our target customers” (Asda Home Page 2008). These target customers are ordinary working people and their families whose weekly shopping needs Asda is trying to meet. The reestablishment of Asda’s reputation on price is at the heart of its strategy.
Product ranges and prices will be matched to the needs of the people in the communities surrounding each store. Asda. will take a “back to basics” approach to pricing, with prices at its new Dales store reported to be set at 3% to 4% below the competition (Mitchell 1992). In its move toward a better price position, Asda must also cut back its own label and nonfood space to allow for more promotion of national brands (Asda Home Page 2008).
Asda was originally established by a group of farmers north of England seeking wholesale and retail outlets for their milk. By 1960 a chain of small shops had been established, but they soon became affected by the growth of multiple chains in the grocery business.
In 1965 the company joined with a local butcher to form a stores division (Associated Dairies) and expanded into the more profitable grocery sectors. Soon after, Asda acquired the Parkview-GEM discount stores, which provided the company with larger stores (average floor-space of 58,000 ft2 or 5,357 m2) compared to an average of 4,000 ft2 (372 m2) of floor-space during that period. These new stores also provided Asda with the opportunity to gain experience in volume trading (Asda Home Page 2008).
During the 1970s Asda made great strides in U. K. retailing. There was no centralized warehousing and their larger stores allowed them to creatively warehouse merchandise and experiment with various space allocation techniques. By moving to vertical stacking in warehouse areas with a higher ceiling and using caging and pallets on the sales floor, they were able to reduce the ratio of warehouse space to sales space from 50:50 in 1974 to 20:80 in 1979.
Also, the uniformity of the stores facilitated standard pricing, which saved management resources while providing promotional advantages. Constraints on growth in their established market during the late 1970s led to Asda’s expansion into other areas of retailing and the acquisition of Allied Carpet Stores. As the 1980s came to a close, considerable changes were underway for Asda. Additional acquisitions included the purchase of sixty Gateway stores in 1989, raising the total number of Asda stores to almost two hundred by 1990. Also, in 1989 the company signed an agreement with the George Davies Partnership, run by the former CEO of a major U.K. clothing retailer, to merchandise its clothing products. The first “George” collection was launched in 1990 to a favourable consumer response (Asda Home Page 2008).
Organizational Structure
Asda stores have the structure of a system. The system’s structure is used for effective decision making, for the utilization of models in marketing, and for the application of computer technology. Systems analysis is a managerial breakthrough, somewhat akin to breakthroughs in various sciences, and has given rise to powerful concepts and tools of analysis. The systems approach is based on the work of Von Bertalanffy, who is credited with coining the phrase “general systems theory.” He conceived of a set of objects, their interrelationships, and their attributes as systems. The objects were merely components of a system.
Marketing systems are collections of entities that form coherent groups. Channels of distribution that coordinate the activities of wholesalers, retailers, and manufacturers, or physical distribution activities resulting from the integration of warehousing, storage, transportation, handling, and inventory activities, are examples of marketing systems. The fact that entities or activities are capable of being understood as a coherent group, rather than as a collection of parts, makes them a system. This conceptual insight has led to the development of new disciplines such as industrial dynamics and systems engineering (Armstrong, 2003).
In marketing, the systems approach turns on the central theme that marketing reality occurs in systems. The systems approach utilizes one type of model — a systems model. This model recognizes a total marketing system that must be supported and reinforced so that the company can survive, adjust, change, and function efficiently. While stressing coordination, it also recognizes conflict and competition among units, the necessity for subsystem concessions, and the fact that resources must be used to maintain the system itself as well as to attain goals. Marketing managers have the major responsibility of recognizing the relationships among the elements of the systems.
They must comprehend their potential combinations, and coordinate and integrate business factors so that goals are achieved effectively (Bateman and Snell 2004). To a large extent, the adoption of a systems perspective depends on the individual manager and his perception of the factors of variability in the system, the interaction of inputs, and the predictions of outputs resulting from the inputs (Armstrong and Baron 1996).
For Asda, the development of cohesive groups, however, does not mean that all conflicts are eliminated or that the objectives of all components of the system coincide. Nevertheless, it is the extent to which objectives are common that lends cohesiveness to systems components. This cohesiveness is more readily achieved among different functions within a firm than among firms. As firms become conglomerates of companies, this distinction tends to disappear. Although the systems-perspective direction tends to prevent suboptimization, it does not preclude the analysis of subsystems. Since management cannot analyze everything at the same time, it must digest smaller pieces (Aaker, 1992).
Systems theory facilitates the conceptual uncoupling and detailed analysis of components of a whole system as well as the investigation of the behaviour of the total system based on an analysis of relevant variables. The former generates models, whereas behavioural theory deals with the investigation of the behaviour of a system as a function of changes in its structural elements. This ability to join and uncouple components conceptually, to conceive of them as smaller and larger systems, and to consider synthetically the effects of various changes in propensity and flow, is most helpful for problem-solving.
For physical systems, the complementary variables have been defined operationally, and numerical values can be assigned to them-for example, volts and amps. In marketing, this level of analysis and operational definition has not yet been achieved. Conceptually, however, it is useful to think of an advertising or sales system in terms of dollars/viewer, or dollars/customer contact, as the propensity variable, and viewers/sale or customer contacts/sale as the flow. The use of such analogies and the application of mathematical systems analysis, hold much promise for improving the effectiveness of marketing systems. Systems are often classified as large or small (Beardwell et al 2004).
In order to remain competitive, Asda must maintain its strategy in light of international social, political, and economic developments. Like most U.K. retailers. Asda’s foreign growth has been conservative (Robinson and Clarke-Hill 1990). A recent analysis of the U.K. retail industry notes that the U. K. grocery market is set to become increasingly more competitive throughout the 1990s (Asda Home Page 2008).
Diversification is expected to become an important element in strategy formulation, given the changes presently occurring in the European Economic Community. Asda must position itself to take advantage of any opportunities that may present itself. These opportunities may come in the form of a global expansion of some part of its format to countries with cultural proximity or a joint venture with a foreign multinational (Beardwell et al 2004).
The major characteristics of marketing systems are as follows: Variable and Complex. Marketing systems are variable in two ways. First, the range of variability among their elements is great. Second, the physical and spatial dimensions of the system are heterogeneous. Consider the many methods of selling, distributing, and advertising goods, the number of activities performed, the possible combinations of marketing inputs, and the variety of approaches to similar marketing problems. Infinite gradations of components and elements create complex systems of interrelationships, and the vastness of marketing systems is evidenced in the volume of physical goods handled, the types of functions performed, the number of people employed, and marketing costs (Beardwell et al 2004).
Marketing systems are probabilistic, so their elements are not precisely ordered and sequenced, nor do they interact in set ways. Not definite, rigid, highly specified, completely known, or deterministic, they contain great indecision and uncertainty; chance and probability count heavily in their analysis.
Organizational systems must constantly adjust to meet changes in the marketplace. A major requirement of an effective organizational structure is the existence of complex intelligence networks, including multiple forecast and feedback loops. Forecast loops may be viewed as providing information about the future derived through predictive processes. Feedback is received as a result of organizational structure research, sales-management reports, and distribution cost-accounting data that supply management with information about past events. Both types of information are imperative for guiding and directing this system. organizational structure systems do not lend themselves to automatic guidance and controls.
Externally Oriented systems are input-output systems, with outside factors greatly influencing their operation. The organizational structure inputs can be adjusted by management to achieve desired results within broad ranges. The integration of organizational structure inputs takes place within the framework of the organizational structure plans and results in the development of the organizational structure mix (Becker, 1993).
Organizational structures are challenged relentlessly by rational competitors that try to destroy, limit, and hinder their effectiveness. As a result, a system constantly changes and continuously adjusts its direction and elements. Conflicts, strains, and tensions are inherent in marketing systems. For example, what is best for manufacturers’ policy need not be for wholesalers’ or retailers’ policy (Beardwell et al 2004).
Recommendations for Asda’s Organizational Structure
Productivity improvements will be concentrated in the areas of personnel, logistics, and information technology. These are wise choices, given that industry analysts speculate that the greatest performance improvements are likely to come from the tightening of internal operating procedures through the development of technology. Over one thousand positions were eliminated at Asda in 1991 and a wage freeze is in place (Asda Home Page 2008).
Greater productivity gains are likely to result from Asda’s utilization of technology such as electronic point of sale to improve customer service and control wage cost (Asda Home Page 2008). Asda also operates a centralized distribution system consisting of eight depots. Technological advances on the order of multi-temperate distribution depots and vehicles have helped increase productivity by facilitating frequent deliveries of varied products, assuring freshness and availability (Boehnke and Bontis 2003).
For Asda, opportunity, planning and programming, and the organization and control of marketing must be undertaken to develop and manage the microsystem. The actual system is depicted by the combination and integration of marketing inputs into a product and service mix, a distribution mix, and a communications mix that form a cohesive whole — an organizational structure mix. This mix is designed to meet the requirements of specific marketing segments or to develop a customer-prospect mix. Favourable purchasing reaction helps to achieve company goals (Campbell and Goold, 1987).
Two concepts, coordinate and linkages, are fundamental to the integrated characteristics of the systems viewpoint. The first of these reflects the joining of organizational structure elements and marketing subsystems into a total system. It is internally focused and concerned with the integration of component parts-the interfaces at terminals. Coordinate is applied directly to the implementation of the marketing mix where advertising, personal selling, product development, physical distribution, channels, pricing, sales promotion, and other marketing factors are integrated to achieve the desired impact on the marketplace (Campbell, 1997).
Linkages are externally focused, and refer to the joining together of two or more major systems that can and do function as separate, distinct, and independent middle-range or large systems. For example, independent business systems sometimes join together to create a more effective supra system. Here, the organizational structure system is comprised of combinations or groupings of individually functioning systems, as involuntary chains. This concept is also important in the implementation of a total organizational structure -management concept where linkages of manufacturers, wholesalers, retailers, agencies, and consumers must be achieved (Beardwell et al 2004).
There are two linkage levels in organizational structure. The first level links marketing to the external business, environment, often with the aid of many agencies existing outside the firm, such as organizational structure research agencies, advertising agencies, transportation agencies, and financial institutions. The second link organizational structure to the other functional activities within the firm, such as finance, production, personnel, purchasing, and accounting. Systems focus attention on broader issues than those usually contained in any one organizational structure subgroup such as sales or product development.
By so doing they add greatly to the formulation of overall corporate and organizational structure strategy and objectives. Under the systems, approach business is seen as an integrated production process — a coordinated whole. organizational structure is coordinated with, rather than confronted with, manufacturing or finance (Robertson et al 1992).
Systems thinking stresses adaptive to change and adjustment. It emphasizes the dynamic impact of market environments and the need for corporate adjustment. A decision hierarchy is established, and decisions made at the level of the total system are more important than those at any subsystem level. Thus conflicts and tradeoffs among subsystems are considered. What is best for the whole system need not be for anyone department or particular element. For example, decisions about the total marketing budget could be unfavourable to any one department, such as advertising or marketing research (Beardwell et al 2004).
For Asda, the systems approach also focuses on man-machine relationships. It encourages the development of integrated man-machine systems working together to achieve predetermined goals (this falls in the realm of cybernetics) (Beardwell et al 2004). The approach also recognizes that resources must be allocated to maintain the system itself. For example, resources must be spent on planning, research, and organizational analysis to maintain organizational structure, as well as on tools to achieve goals directly.
Questions may be raised about the appropriate structural forms that organizational structures should adopt. Survival and systems effectiveness are the ultimate tests, and those elements and arrangements approved by the marketplace over time are best. It is evident that systems suitable at one period in a market may not be at another, and a posture of continuous adjustment should be taken by management (Pfeffer 1996).
The systems model does not attempt to predict or understand why individuals behave as they do. Emphasizing the components of organizational structure, such as households and firms, does not emphasize individual consumption behaviour, which is extremely important. This is a definite limitation of the systems approach. The systems model starts not with the goal, but with a total functioning system that is capable of achieving goals. It recognizes that multifunctional subsystems operate to achieve goals and that conflicting goals may be present. Conflict and intrasystem concessions are therefore anticipated, and the existence of a linear relationship between resources and output is not expected. Resources are employed to maintain and promote the system itself as well as to achieve the goals outlined (Porter 1985).
The systems perspective has had a profound influence on organizational structure. It is reflected in both the organizational structure concept and the marketing mix. Systems analysis has resulted in a managerial breakthrough. Marketing systems are collections of entities that form coherent groups. Macro and microsystems can be distinguished. The macrosystem relates internal company resources (often the resources of several companies) with external institutions and resources to achieve goals. The microsystem relates managerial activities and internal organizational structure inputs of a company to market segments to realize goals. Both systems are of course related, but the perspective is different (Campbell et al 1994).
Organizational system structures are variable and complex, open rather than closed, adaptive, externally oriented, and competitive. They contain dysfunctional elements. Systems may be classified on many bases including the domain being analyzed, their scale (small, medium, or large systems), and whether they are conceptual or physical systems. To understand them, one should comprehend such concepts as coordinate, linkages, regulation, maintenance, change, decline, and decay factors (Grant, 1991).
The marketing mix (which is the result of blending, compounding and mixing organizational structure factors into an integrated whole) comprises three sub-mixes: the product-and-service mix, the distribution mix, and the communications mix (Druker and White 1996). The product-and-service mix is concerned with all the elements and ingredients that make up the actual offering to the marketplace, such as pricing, branding, product development, product variety, product lines, packaging, and warrantees. The distribution mix includes both channels of distribution and physical distribution. The communications mix pertains to all elements used in communicating with the marketplace, particularly advertising and personal selling (Kay, 1993).
In addition, the increased use of communication technology reduces the costs of communication, since the technologies are frequently less time-consuming. Another aspect is the increased connection between people and machines, leading potentially to widespread access of information to people in organizations caused by the rise in communication bandwidth, with more information moving simultaneously to different people in a combination of text, voice and graphics. The integration of various computing technologies allows information to be stored so that organizational members can retrieve the information from the collective database (Lawton and Rose 1994).
The urgency of the task associated with communication is another important criterion in media choice. Urgent tasks are more likely to lead to a response with media that have a real-time, synchronous response capability. Electronic mail is an example of a medium that qualifies when an urgent response is required (Lynch, 1997).
The notion of critical mass is related to the degree of communication technology infrastructure maturity within organizations. Given that information or communication technology maturity evolves in stages, it is arguable that communication media choice is likely to vary along with it. The greater the extent to which communication technology has permeated the organization’s infrastructure and culture, the higher the impact on knowledge workers’ choice of these technologies.
This intuitive argument is consistent with current media choice theories, which argue that social norms of communication technology use develop over time, benefits associated with these technologies become more apparent over time and knowledge workers’ expertise in using communication technology increases. For example, knowledge workers prefer to use electronic mail to send messages to superiors rather than to subordinates. This could possibly be explained by two factors: access to superiors; and status differences within the organization. Superiors are not as accessible face-to-face as they are via an electronic mail system, but secretaries are accessible in both media. Therefore it follows that electronic mail will probably be used more frequently by lower organizational members to send messages to superiors (Reed 2001).
Conclusion
The task closure model suggests that knowledge workers are motivated to close a communication episode. This motivation influences the choice of media for task accomplishment. Task closure refers to the completion of the transmission of information to the recipient and depends on the type of medium selected. Face-to-face communication and telephone would probably be ranked lower on a task closure measure than electronic mail since both depend on the availability of the recipient; while electronic mail would be rated high on task closure,
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