ASDA 1

THE EFFECT OF SUPPLY CHAIN MANAGEMENT

PROCESSES ON COMPETITIVE ADVANTAGE
AND ORGANIZATIONAL PERFORMANCE
of
ASDA
Submitted by

In partial fulfillment of

To

College/University Name

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Abstract

Cloudy world economic condition is a massive challenge for every actor in global
economy from countries, Multinational Corporation, and even small local firm in a country. In
company level, whether MNC or local firm, having good management in order to provide good
quality of goods and services in very competitive prices is a must to gain more customers and
keep the old customers still loyal. Almost all types of company in all level faced the same
challenge nowadays and this challenge also has made fierce competition in the market. Retail
business or retail industry is one of the economic sectors that face challenging economic
conditions in 2014. Global economic conditions has led to the decreasing of consumers buying
power, thus, consumers now become more selective on spending their money. Retail business
that is connected directly with the end user should be more creative to attract consumer buying
their goods or services. One of the retail stores magnet to attract people to spend their money one
them are the prices. Retail store which offers lowest prices to their customer will have more
customers that its competitors.

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Contents
Abstract

Chapter 1

Introduction

Problem Definition

Research Objective

Conclusion

10

Chapter 2

Literature Review

11

Supply Chain Management

11
Retail Industry
18
Organizational Performance
22
Competitive Advantage
28
Theoretical Framework
29
Chapter 3
30

Research Methodology

Chapter 4

Research Findings

31

Chapter 5

Conclusion

32

Chapter 6

Recommendations

33

Chapter 7

Personal Learning

34

References

35

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Chapter 1

Introduction:
The condition of global economy in 2013 and also for 2014 is quite slow, gradually
progressing and trying to defy the effects of recession; the worst post WW ii crisis. This tough
economic condition is a challenge for all the actors in global economy such as countries,
multinational corporations, and even local companies. Euro zone crisis is still not resolved and
the economic condition of United States is still not fully recovered. The economic condition is
getting more challenging with the economic stagnancy in China and Indonesia as new worlds
economic power (Soros, 2014).
Brilliant and effective management thus plays very significant role to determine life and
success of the company nowadays. The buying abilities of most of people in the world are in
decreasing trend so they are looking for goods and services with the best quality but in rational
prices. Less efficient management will lead to inefficiency in producing goods and services that
will also lead to low competitive ability in market. As the result of this inefficient condition,
those firms are very likely to be lost their customers both their old customers and their potential
customers to their competitors.
Retail business or retail industry is one type of industry that still has a bright future in this
challenging condition. No matter how bad global economic condition is nowadays, people still

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need basic goods and services such as food and clothes. Retail stores which sell various products
from food to automotive goods certainly are the best places for people to buy their daily needs.
Even though retail industry as whole has bright future, but a retail firm should work hard to
remain success on the market because it bright prospect has attract many new players to join in
fierce competition in retail industry.
Even though retail industry face difficult phase nowadays, there are increasing trend of
this kind of business. Retail business has become very popular around the globe since it is one of
business type that connecting directly between the producer, distributor and end consumers.
While Wal-Mart still one of the most popular brand worlds retail industry, another retail
business from the other part of the world like Russia and Indonesia have begun their way. But
according to World Retail Congress (WRC) in Paris this year, Britains retail industry is leading
the world (Ruddick, 2013).
Researcher uses UK retail industry as the main topic of this research. WRC this year
conclude UK as the king of retail industry in the world, an academic inquiry that rises to know
more and to deepening understanding of UK retail industry especially in the lens of supply chain
management analysis. UK has less population than other economic giants like US and Russia but
apparently UK retail industry has the best way to maintain its retail industry performance so they
remain on top of the world. As population means customers in retail industry, what UK has done
is just brilliant and in the same time is an interesting topic to be more explored.
While UK retail industry covers wide areas from the population to retail firms; researcher
will be more easily focusing on analysis of one UK largest retail company, ASDA. ASDA is the
perfect example of a UK retail firm which has passed through all obstacles to remain on top

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nowadays. ASDA maybe not the largest retail firms in UK now (it is in second position), but its
long history is a proof how ASDA is able to manage its business in efficient way from time to
time. Retail Week describes:
Asda owned by Walmart - is the UKs second largest retailer and grocery superstore
operator with a 17.3% share of the market in October 2011. In late-2011 there were 525 stores,
comprising 303 superstores, 29 large supercentres, approaching 170 supermarkets and 27
Living stores.(nd)
ASDAs decision to concentrate in food products in order to overcome managing various
products difficulties has made ASDA gain competitive advantages as well as organizational
performances then its rivals. The result was the cheaper goods prices than its rivals that had
attracted people buy on ASDA stores. That was the result on ASDAs decision in marketing
strategy to focus on prices rather than customers loyalty (Corporate Watch UK, 2004). ASDA is
also copying Wal-Marts strategy to attract potential customers with low cost goods.
Copying Wal-Mart strategy has built close relationship between ASDA and Wal-Mart.
When Wal-Mart decided to expand its market to Europe especially UK, similarities between
ASDA and Wal-Mart has made ASDA become first choice for Wal-Mart as its local firms in UK.
In 1999, ASDA officially was bought by Wal-Mart for $10.8 billion. This acquisition was
running smooth due to the same business strategy from ASDA and Wal-Mart and result on
millions new customers of ASDA Wal-Mart. One obstacle in this strategy is the laws in UK that
it is very hard for ASDA Wal-Mart to open superstores like Wal-Mart did in US. ASDA looks for
the best possible strategy to enter a new foreign market using any means and methods (Corporate
Watch UK, 2004).

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Problem Definition
This research will analyze how SCM practices affects organizational performance and
competitive advantage in retail industry. This research will focus on UK retail industry as one of
the largest retail industry in the world. To be more specific, ASDA or also known as Wal-Mart
UK will be the main topic of this research in order to analyze how SCM practices affects
organizational performance and competitive advantage.
One of the most important things managing a company, not only for retail industry, is
having good supply chain management. Supply chain management is become important
ultimately in retail industry because providing various goods in large quantities is not an easy job
and it is required excellent management. Managing flows of goods from various supplier and
manufacturer in most efficient way will decrease production cost of a retail firm so it can offers
low prices to attract customers. Managing retail firm with a lot of outlets will require more
complex supply chain system to maintain the goods prices and make sure that every outlet will
not be oversupplied or undersupplied.
Supply chain management is a complex multidiscipline concept, for some people it may
be confusing since there are a lot of different and sometimes overlapping definitions about SCM.
In general supply chains can be defined as an interconnected groups or people who contribute in
the flow of goods or services to from first supplier to end user consumer (Lu 2011). Managing a

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supply chains or SCM then can be understood as a process of managing the flow of goods or/and
services from the first suppliers to end users in the most effective ways and to pass feedback
information from end user to first supplier (investopedia, nd).
A good supply chain management at least will effect to two attributes of a retail firm, its
organizational performances and its competitive advantages. In organizational performances,
supply chain management will determine firms efforts to achieve their goals whether it ended up
in success or failure. In competitive advantages side, better supply chain management will make
a firm to be more competitive compared to its rivals and getting bigger market cookies will come
as the result.
Research Objective
This research is designed to provide proper explanations based in deep understanding
about the relations of supply chain management to the organizational performance and
comparative advantage of Britain retail industry organizations. The popularity of supply chain
management is growing rapidly in this changing nature of global economy and many business
players and scholars discussed about it. A good understanding about how supply chain
management affects the organizational performance and competitive advantage of business
organizations is very important not only for academic matters but also for business organizations
who applied supply chain management in their management.
This research highlights specifically the British retail industry and ASDA Wal-Mart as
example; since UK still remains the best retail industry in the world according to World Retail
Congress (WRC) (Ruddick 2013). It is important to understand how SCM affects in British retail

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industry; in their organizational performance and competitive advantages and maintaining the
position of the best retail industry in the world.
The result of this research then can be a reference of the applications of SCM in British
retail industry. This research also can be a comparative reference to retail industry in other
countries and event the entire global retail industry. It should serve to increase their supply chain
management application quality related organizational performance and comparative advantage.
This research is also expected to be a reliable academic source for people who willing to
study about the effects of supply chain management on organizational performance and
comparative advantage.
In order to analyze research problem, two types of data will be used. First is primary data
or raw data which is data that is collected mainly from first resources. Primary is needed to be
analyzed before ready to use in research analysis. In order to get primary data relevant to this
research, online survey method will be used to get detail descriptions and understanding about
the researchs topic. Second is secondary data that is data which has been analyzed before by
another researcher. Secondary data is useful to supporting the argument of the primary data.
Online survey will be focused at retail industry players in Britain to get deep descriptions
and understanding about their organizational performance and competitive advantage in applying
SCM. The respondents will not be just retail companies but also suppliers and customers. Due to
massive populations of the respondents, proportional sampling method will be used. This
research will also use interview method for the experts both practitioners and scholars
In order to analyze the effect of SCM to retail industry organization in Britain, researcher
will use two general perimeters, comparative advantage and organizational performance. This

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research will seek an explanation of how SCM affects retail industry organizations in their
competitive advantage and their organizational performance.

Conclusion:
The objective of this research thesis is to explore the retail industry which is a major part of the
business industry. The retail industry is playing a major role in providing people with quality
products at reduced costs. The SCM is a much emphasized aspect and every business gives it a
detailed outline. ASDA is a colossal retail giant and in the worlds top retail market the UK it has
created its place. This paper endeavors to understand how SCM affects British retail industry; in
their organizational performance and creating competitive advantages and maintaining the
position of the best retail industry in the world.

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Chapter 2
Literature Review
This chapter will explore more about related concepts and theories related to this
research. This dissertation is focusing on the importance of supply chain management to ASDA
competitive advantage and organizational performance. This chapter generally will be discussing
about four major concepts relevant to this research which are: supply chain management,
competitive advantage, organizational performance, and retail business industry. In the end of
this chapter a theoretical framework will be made as theoretical guideline for researcher to
analyze research topic in order to answer and explain the research question.

2.1

Supply Chain Management (SCM)

Supply chain management is a popular term in business administration nowadays. It basically is

a management of goods and/or services flow. Supply chain management covers almost every
aspect of management of goods flow from raw materials, production, marketing, and feedback
about the goods. Supply chain management then is a very complex goods flow management
process that allows the company to have control over all the supply chain (Lu 2011). The eight

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supply chain management processes identified by the Global Supply Chain Forum and shown in
Figure 1 are:
Figure1. Eight supply chain management processes

(Lambert, 2008)
The importance of a good supply chain management has made it researched widely by scholars
and applied in multi level firms from global level to local. Supply chain management also
applied by many small companies around the world. For small companies supply chain
management maybe harder to operate if compared to the large ones, but it is one of key success
to survive in fierce business competition nowadays (University of San Francisco, n.d).
In simple sense, it is not difficult to see supply chain management as management of supply
chain. In order to get the full picture of supply chain management, it is important to understand

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first about supply chain. McGarvey and Hannon argue that supply chain is set of supply from
start to finish (2004: 200). Moreover, they also stated:
The physical structure from procurement of raw materials to delivery of finished products to
the paying customer.
The demand structure that covers the gathering of demand information and the creation of
orders from that information.
The logical structure that covers information flow and decision making throughout the supply
chain.
The financial structure that covers paying suppliers, gathering revenue from customers, and
other financial activities(McGarvey & Hannon, 2004: 200).
Managing an effective supply chain which co-ordinate the supply chain from suppliers to
vendors and to the customers is important for a firm. Without good coordination every party will
act in its own interest to maximize profit which is not efficient in vendor perspective (Chan &
Lee, 2005: 2). In realty, designing an effective supply chain management could not be based
from single lens perspective as all parties have its own rationale and looking for the most
profitable options. To overcome the problem, an integrated supply chain management which
accommodates the interest of all parties is required (Chan & Lee, 2005: 4, 5).
According to Lu (2011), supply chain is a stream or flow of goods and/or services from different
firms as an interconnected chain from raw materials into fixed goods/services to end-user.
Based on this supply chain definition, it is clear that supply chain is formed if there are more
than one firm contributing to the production process, those firms are legally owned by different

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owner, and those firms are committed on certain production process of goods and/or services
(Lu, 2011: 8).
The supplier relationship management process has both strategic and operational elements.
Croxton, Lambert, Rogers, and Garcia-Dastague (2001) have divided the process into two parts,
the strategic process in which the firm establishes and strategically manages the process, and the
operational process which is the actualization of the process once it has been established. Figure
3 graphically represents these sub-processes.
Figure 2 Supplier relationship management

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(Croxton et al, 2001)

Supply chain management then could be understood as a business management which focusing
on supply chain (Lu, 2011: 13). The concept of supply chain management develops from time to
time. Early empirical SCM research was only focus on developing instrument to measure SCM
practices (Karimi & Rafee, 2014: 1). Recently, empirical researches on SCM have move
forwards to analyze the relations between SCM practices to organizational performances (Karimi
& Rafee, 2014: 1). Karimi and Rafee later argue that recent researches on SCM have been
generating three different categories in organizational performances, which are:

First, resource performance reflects value addition in the form of achieving efficiency. Second,
output performance reflects value addition as the firms ability to provide high levels of customer
service. Last, flexibility performance reflects value addition as the firms ability to respond.
(Karimi & Rafee, 2014: 1).
Li et. al. argue that supply chain management practices are set of activities by a firm to promote
effective management of its supply chain (2004). Definition of supply chain management could
be different from one scholar to another as Li et al. argue that many scholars and researchers are
looking supply chain management from various perspectives (2004). Those definitions are lead
into one purpose of how a firm could manage their supply chain practices in it most efficient
way. Li et al. (2004) then argue that SCM practices could be conceptualized into five
dimensional construct. There are: strategic supplier partnership, customer relationship, level of
information sharing, quality of information sharing, and postponement.

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Strategic supplier partnership is long time partnership between organizations and their suppliers
(Li et al., 2004). Using strategic supplier partnership will allow organizations to create a long
time SCM strategy with their suppliers. Strategic supplier partnership also allows suppliers to be
more involved in designing long term strategy with the main organizations in order to achieve
more benefit from long term relationship (Li et al., 2004). In SCM perspective, strategic supplier
partnership will also bring more benefit to both parties (organizations and suppliers) because it
would not be exist if there is high trust level between them and strategic supplier partnership will
sustain that trust for the sake of both parties.
Customer relationship is another important aspect in effective SCM practices. According to Li et
al., customer relationship comprises the entire array of practices that are employed for the
purpose of managing customer complaints, building long-term relationships with customers, and
improving customer satisfaction (2004). Building good relationship with customer is important
for business organization since it will create customers loyalty which will generate into more
sustainable profit.
Level of information sharing is next aspect of a good and effective SCM practices. Level of
information sharing comprise to aspects which are quality of information and quantity of
information (Li et al., 2004). Good flow of information between organizations and suppliers are
important thing in managing effective SCM practices because it will make sure that every party
in supply chain working in the same value, the same understanding, and based on the same
information. Li et al. suggest that undistorted information sharing and keep them up to date
between parties in an SCM is the key for making seamless supply chain (Li et., 2004). Providing
suppliers with detailed information will allows them to fully understand the situation in hope to
convert it into positive response in supply chain process.

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While detailed information is important thing in SCM practices, the quality of information
sharing is also essential part of SCM practices. Given the suppliers as many as possible
information without pay attention to the credibility and relevancy of the information will only get
the suppliers confusedly interpret the information. Li et al., argue: Quality of information
sharing includes such aspects as the accuracy, timeliness, adequacy, and credibility of
information exchanged (2004).
The use of postponement in SCM practices will benefit the organizations and its suppliers
in fund efficiency and time efficiency. Postponement could be simply defined as the practice of
moving forward one or more operations or activities (making, sourcing and delivering) to a much
later point in the supply chain (Li et al., 2004). Postponement allows the organizations to order
the suppliers to provide them several materials or even half complete goods to be modified latter
in order to meet customers order. Postponement will greatly increase the time efficiency and
funds efficiency in producing goods because the organizations or manufacturers will only have to
modify or customized the goods to meet customers demands.
An effective SCM practices will benefit two aspects of a company, organizational
performance and competitive advantages. Effective SCM practices will enhance a companys
organizational performance in various aspects, especially market performance and financial
performance (Li et al., 2004). This could be understood as that SCM practices affected in better
marketing since the goods and /or services are good in quality and efficient in quantity while
efficient production will give better profit margin to the company. Related to how SCM practices
affect organizational performance, it also increases companys competitive advantage. Li et al.
argue that efficient SCM practices will affect to five aspects of companys competitive
advantages which are: Price/cost due to efficient production, quality of goods and/or services,

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delivery dependability due to flow of the materials, product innovation, and time to market due
to the principle of postponement (2004).
The concept of SCM is important for every company in producing their products, this
concept will be even more important in retail industry companies. A retailer company sold their
various products in large quantity, so make sure that all those products are proportionally
available in its stores is important to ensure customers satisfaction when they come to the stores.
Building an efficient SCM practices for a retail company will not only ensure the goods
availability in the stores but also allows it to spend less money in their arranging the goods flow
which can be converted into low cost prices to attract more customers.
2.2

Retail Industry

Retail industry is a type of industry which combines various products from various companies to
be sold to end users. Supply chain in retail industry consist various parties from producers,
manufacturers, suppliers and retailers and customers even though several scholars argue that
customer is not part of retail supply chain. Various parties participated in retail supply chain
makes the network patterns of retail industry become complicated.
According to North American Industry Classification System of NAICS in Alberta (2013) there
are at least two types of retailers. First type of retailers is store retailers which have stores to
display their products and the customers are able to buy directly the products from those stores.
Second type of retailers is non-store retailers which reach the customers through different
method than store method i.e. infomercials, direct response advertising, traditional and electronic
catalogue, in-home demonstration, and vending machine (Aberta, 2013: 1). In fact, this
differentiation does not strictly categorizes retailers into two separated types since there are many

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retailers have are into main stream brick and mortar retailing and also are key players of on line
retail industry.

Supermarket has been a part of modern life for over five decades. It is started in latter half of 20 th
century in North America and America before become the global trend nowadays (Anand &
Nambiar, 2007: 1). Furthermore, Anand and Nambiar argue that the supermarket trend is started
with the needs for car ownership to find a convenience store for foods and for other needs. Busy
life style has pushed the car owners to find some stores which are convenient, providing various
goods, and good atmosphere which all of those criteria are matched with supermarket (Anand &
Nambiar, 2007: 1). Retail stores then become more significant as a part of modern life, the
demands for convenience retail stores has growing rapidly. Today, various types of retail stores
from various retailers exist in almost every part of earth.
Even though the retail industry has growing massively over this half century, but there is no
significant changes in world retail industry. USs Wal-Mart is now the leading retail company in
the world with its business concentration is not only limited in US but also in various countries
(Anand & Nambiar, 2007: 1). Wal-Mart event has branches in UK which is according to World

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Retail Congress 2013 is the leading country in retail industry (Ruddick, 2013). Internet
technology now plays important roles in retail industry as people now are able to do shopping
online via internet. Internet is also a savior for retail industry in worsening condition of world
economic in late 2000s (Anand & Nambiar, 2007: 1).
Open-Market regimes in world economic has allows foreign companies to do direct investment
in certain countries in different part of the world. This condition is also brings massive impact on
world retail industry as now local retailers are directly competing with larger foreign retailers.
The data about world retail industry in 2003 shows that world big retail industry players like
Wal-Mart, Carrefour, Tesco and so on are have stores beyond its countries origin (Deloitte in
Anand & Nambiar, 2007: 4). One of the most phenomenal case related to branches of a retail
company overseas is when Wal-Mart open its UK market with acquisition one of biggest and the
oldest retail stores company, ASDA.
Retail industry has come a long way before valued $7 trillion in 2003 (Anand & Nambiar, 2007:
The main causes of the massive growth in retail industry are people ability to spend their money
on buying retail goods and the willingness of people to do more shopping to retail stores due to
modern lifestyle (Anand & Nambiar, 2007: 2). This assumption is based on strong fact that from
1980 to 2003, world households consumption has raised by 68% (Ananad & Nambiar, 2007: 2).
Europe and North American are still the leading regions in retail industry, but the Asian
Economic Miracle is also given important contribution to the world retail industry by
contributing consistent growth 6% per year by 2005-07 (Ananad & Nambiar, 2007: 2).

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Britain is one of the leading countries in retail industry and has acknowledged by 2013 World
Retail Congress (WRC) as the leading country in retail sector (Ruddick, 2013). According to UK
Trade and Investment (UKTI), UKs retail sector covers all type of retail industry from large
chain of department stores, independent and local stores, and online stores. UK retail industry
absorbs about 10% of UKs total workforce and given 17.5 billion pounds taxes or equivalent
with 30% UKs tax income (UKTI, 2013: 1). UK retail industry also gives large contribution by
providing investment on training by 12% by UK total investment on training (UKTI, 2013: 1).
Retail industry is one of the most complicated industries in the world. Retail industry is a type of
industry which is linking various chain of goods or/and services supply from the producers or
suppliers to end users. It is indeed require long supply chain from suppliers which have their own
supply chain, into fix product before retail stores sell it to end user (Lu 2011). Retail industry can

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be seen as hub point between end user and suppliers both in the flow of goods or/and services
and flow of feedback information from the end user. That is means that retailers take profit from
the margin between the goods prices from suppliers and the prices for customers.
The changing condition in modern life has make people have less time to buy their daily needs in
traditional market, thus supermarket become the best answer for this need. While the offline or
real world retail stores keep increasing in both quantity and quality, the new type of retail stores
has been come in to existence, online retail stores. Basically there are various types of retail
industry from traditional market where buyers and sellers meet directly in one place to online
market place when supply and demand meet virtually online. In the modern world today, big
retail company has given significant place in retail industry itself. They create a large market
place so the end user have various choice of goods and services to buy and they manage certain
standards to the goods or/and services from the suppliers (Ruddick 2013).
The relations between SCM practices and retail industry is obvious, that retail industry as the last
part of supply chain before end-user will have to exercise efficient SCM to manage its previous
supply chain members (suppliers, manufacturer, distributor, and so on). A good company in retail
industry always has a great SCM process so it never loses its suppliers and customers. It is
adaptive to market conditions, attractive to suppliers and able to satisfy their customer with
converting customers feedback into real actions. Wal-Mart is an example of how a well applied
SCM can help a retail company to grow bigger and outperform its competitors (University of
San Francisco n.d.).

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2.3

Organizational Performance

Organizational performance can be defined simply as a comparison between what an

organization have achieved and the target it wants to get. A good organizational performance is
when the real output of the organizations is match or even over the expectations. Many
organizations are using balanced scorecard method to measure its performance (Divandri and
Yousefi 2011). Beside that method, there are many other methods to measure organizational
performances in business organization.
Organizational performance is an important concept to understand the performance of a
business organization in order to improve the performances. Scholars and practitioners have been
involved in various discussions about organizational performances to understand the drivers and
measures of organizational performances (Epstein, 2005: 3). Those discussions are part of the
quest for an effective superior organizational performance.
Organizational performance is not only measured by the facts of what the firms have got
e. g. consistent market profit, healthy financial status and so on. There are also the characteristic
of an effective organization which result in those explicit facts. According to Bhalla et al., there
are 14 characteristics of people and organization which determine the performance. Those 14
characteristics are grouped into five broad dimensions (2011: 3).
First dimension is leadership. Leadership plays important function to determine the
direction of an organization. In a high performance organization, strong leadership will grows
teams spirit and give them direction to achieve the target. The leadership dimension of an
organization is not only located in its highest leader e. g. CEO, but also locate in its middle
managers who are required to transform the energy of highest leader to the employees. There is

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also clear direction in structured process to train future manager to have abilities required in the
future; this process will prevent the organization from lack of leadership condition in the future
(Bhalla et. al, 2011: 4).
Second dimension is design. An effective design of an organization will help to improve
its plan execution and to achieve goals. Interplay between its key elements has to be coordinated
and strongly linked to the companys strategy and its source of competitive advantages (Bhalla,
et. al, 2011: 6). According to Bhalla (2011), there are three things that should be concerned by
the organization about the design. First, structure and resource allocation reflect strategic tradeoff
which means that organizations should be carefully analyze the importance of every market
element in order to be more focused in certain element based on future prospect. Second, simple
layer between CEO and the frontline workers will allows the more fluid communication between
them and wide spans control will encourage the managers to show their best in managerial skills
(Bhalla, 2011: 6). The last point of design is putting the right men in the right position which
means put certain person with adequate capabilities in position which require the same
capabilities (Bhalla, 2011: 7).
Third dimension is about people, a company with a good organizational performances has
human resource (HR) department which act of identifying, attracting, training, and retaining the
right people in right capabilities (Bhalla, 2011: 8). Employees are the most valuable assets for
high performance organization, thus it attracts people to join with its reputation, selecting the
right people for the right position, training its employees to become more capable in various
roles, rotates its employees and keeps them motivated, and gives incentive as appreciation for the
employees achievement (Bhalla, 2011: 8). Critical roles and key talents are clearly identified
and treated with care and respect even though some roles and talents will not be in top of

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organization structure but critical roles and capabilities is crucial for the organization (Bhalla,
2011: 8). A leading organization recognize that managing people are not least important then
managing the business itself, HR department thus should be able to translated the business
strategy into people objectives and convert business priorities into people initiatives (Bhalla
2011: 8).
Forth dimension of a high performances organization is managing the change. Business
environment as well as people is constantly changing over time making a business organization
should be able to translate changing environment into bright prospect. There are two important
things that should be analyzed carefully by an organization: first, an organization should know
and understands which are is possible to be changed and which isnt, this is important to avoid
failure in organization changing attempt. Second, a high performances organization realizes that
changing is necessary to remain on top, so it is changing evolutionary as the market trends
changing (Bhalla, 2011: 10).
The final dimension of a high performance organization is culture and engagement which
are the combination from 12 other aspects and four other dimensions. Bhalla et al. argue that
culture could be simply understood as the way things get done in an organization (Bhalla, 2011:
10). Culture in an organization is the secret sauce that gives different atmosphere to people
inside, bringing the strategy dead or life (Bhalla, 2011:10). Like culture in broader sense, culture
in an organization is not static and continues to change without losing its uniqueness which will
be related to employees engagement. Employee engagement is willingness for employees to
give more for the organization not merely for extra financial reason but because they are
understand that the organization is important for them both personally and professionally (Bhalla
2011: 10).

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The tool to measures organizational performance is various and complicated, there are several
different arguments from the researchers about this. Richard et al (2009) argues that there are
three areas of an organization output to measure overall organizational performance of a firm.
First is financial performance, a firm with an effective organizational performance will be able to
measure the flow of money to be in most efficient ways. The result of efficient flows of money
will lead to financial profit. Second, product market performance which is the sales performance
of firm product in the market, whether the goods are sold well or not. The last measurement is
shareholder return, this measurements is firms ability to manage the funds from its shareholders
to generate financial profit to the shareholders.
Li et al. argue that the purpose of organizational performance refer to fulfill its market share
goals and financial goals (Li et al., 2004). In this sense, SCM will help organization to improve
productivity and efficiency in producing goods and/or services in short term. In longer term,
SCM will help organization to get bigger market share thus will be able share bigger profits to all
members in its supply chain (Li et al., 2004). The ability for organization to share more profit
with its supplier in its supply chain will not only give financial benefit but also will create sense
of loyalty between its suppliers so they will be more committed to give their best in order to
create better products with better affiance.
Koh et al. (2007) argue that SCM in benefit organizational performance in various ways (108).
First, the use of good SCM practices will obviously increase efficiency in producing goods and
services which means that an organization will require less money, less materials, to product a
better quality product in the same time. Better products both quality and quality certainly will
attract more potential buyers to come and the organization will be ready with their faster

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response. Second, SCM practice is not only increases efficiency in producing goods and/or
services but also better cost formulation to produce goods and/or services (Koh et al., 2007: 108).
Third benefit is SCM will increase coordination between departments through strategic planning
or good design of organization (Koh et al., 2007: 108). SCM will help organization designing
less barriers information flow between departments which allows more information sharing both
in quality and quantity. Forth benefit is SCM will increase coordination with suppliers which will
lead into more effective suppliers partnership. Closer relationship with suppliers will allows
organization to execute principle of postponement which will attract more potential buyers to
come, thus SCM in this case will also make better coordination with customers (Koh et al., 2007:
109).
Achieving high level of organizational performance is important for every business organization
nonetheless retail organization. Strong leadership, dedicated people, clever design of
organization will help retail organization to design and maintain effective supply chain which is
absolutely crucial for retail industry. Providing goods and/or services with exact amount and
quality to the market will determine between success and failure in retail industry. Most of retail
industrys giants have matches the criteria of a high performance organization with strong and
sustainable relationship with its suppliers. Thus it is important to analyze SCM related
organizational performance to fully understand the impact of SCM practices to retail
organization.

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2.4

Competitive advantage

Competitive advantage in its simplest definition could be understood as a term to define when a
company is more competitive in market than its competitors. Competitive advantage covers
several criteria: greater margins, generate better income, or gain more new customers.
Competitive advantage is related closely with SCM practices and organizational performance
since competitive advantage as like organizational performance is the impact of an efficient SCM
practices. Better management of the company include in managing its supply chain will result in
better competitive advantage. it is also important to sustain a competitive advantage since more
sustainable the competitive advantage of a company, it would be harder to its competitor to
overcome the advantage (investopedia n.d.).
Ehmke (2008) argues that competitive advantage is advantage gained over competitors with
offering customers greater value in various aspects whether it is cheaper prices, more quality
products, unique products, better customer services and so on. Those advantages will make
customers tend to choose products from certain company which has strong competitive
advantage in market. in relations to retail industry, retailers with strong competitive advantage
tend to offer cheaper prices, better quality goods and different stores concept to attract potential
customers.
In general, there are two types of competitive advantage related to SCM practices. First, efficient
SCM practices allows a company to have more time and more money in providing goods and/or
services due to efficient management of its supply chain. This condition allows the company to
balance its product in quality and quantity. Thus, the company will be able to provide high

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quality goods and/or services in larger quantity to the markets which tends to attract more
potential customers while keep the loyalty of the existing customers (investopedia, n. d).
Second type of competitive advantage is differential advantage; this is a companys ability to
differ its goods and/or services from its competitors. (investopedia n.d.).

2.5

Theoretical Framework
Theoretical framework is useful for researcher to building and theoretical frame in

analyzing research problem which in this case is how SCM affect organizational performance
and competitive advantage of a retail company, ASDA. Retail industry as one of the most fast
growing and complicated type of industry in the world require excellent SCM practices to
enhance its long and complex supply chain in order to keep the companys operation in
profitable condition. Researcher uses the argument from Li et al. (2004) that SCM practices will
affect an organization in two aspects, organizational performance and competitive advantages.
Using an efficient SCM practices to coordinate partnership between suppliers and retailer will
impact on better quality of organizational performance and competitive advantage which in the
end will result in gaining more profit from more customers in sustainable ways.

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Chapter 3:
Research methodology

(2000 words)

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Chapter 4:
Research Findings
(2500 words)

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Chapter 5:
Conclusion
(1500 words)

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Chapter 6:
Recommendations
(2000 words)

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Chapter 7
Personal learning

(500 words)

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References
Graham Ruddick (2013) 'Britain is still a world leader in one area - retail', The Telegraph, 10th October, p. Available at <
<www.telegraph.co.uk>[20thMay 2014]
Dr. Dawei Lu 2004 Fundamentals of Supply Chain Management, Ventus Publishing
A. Thatte, Vikas Agrawal, Shahnawaz Muhammed 2009 Linking Information Sharing And Supplier Network Responsiveness With Delivery
Dependability Of A Firm; The Journal of Applied Business Research 25, pp.337
Liu, E. R. and Kumar, A. (2003), Leveraging Information Sharing to Increase Supply Chain Configurability, Twenty Fourth International
Conference on Information Systems, pp. 523-537
Li, S., Rao, S. Subba, Ragu-Nathan, T. S., and Ragu-Nathan, B. (2005), Development and Validation of A Measurement Instrument for Studying
Supply Chain Management Practices, Journal of Operations Management, 23(6), pp. 618-641.
onlineretail1 & 2.jpg Available at
<http://www.retailresearch.org>[20thMay 2014]