Critical evaluation

Aggressive reasons include opening up new markets, increasing profitability, obtain products for the company’s home market, and suit the desire to expand. Defensive reasons include protecting markets at home, securing foreign markets, guarantee raw materials supply, technology and management expertise acquisition, and political stability. These among other reasons triggered Wal-Mart’s takeover over of Asda to acquire UK market presence. However, the focus of this paper is to evaluate the cost and benefits of Wal-Mart over of Asda. Wal-Mart’s vision was guided by an aggressive vision coupled with courage and commitment.When Wal-Mart took over Asda, Asda had about 229 chains. After the takeover in 1999, Asda-Wal-Mart supercenters were opened adding the number of stores to 259 with 19 stores by 2004 and operating under the US model. In addition, the takeover introduced new marketing approaches to Asda including Asda Price Campaign and smiling face “rollback” campaign. This campaign borrowed heavily from Wal-Mart’s business strategy. As a result, Asda gained recognition as one of the UK’s most affordable supermarkets. In terms of grocery, Asda benefited heavily as evidenced it increased market share from 13 to 16%. This increase was tremendous given that Asda did not engage in any acquisition and translated Asda’s position as the second-largest UK supermarket chain. Further, the takeover introduced the strategy of increasing sales space as practiced by Wal-Mart stores. The strategy successfully saw the company reducing its backroom areas while committing such space to areas of sales for now-foods2. One of the non-foods heavily invested in was George’s line of clothing. With time, the non-food sales grew by 25% mostly due to joint sourcing with Wal-Mart and non-matched prices within the UK market. Today, Asda’s strategy to invest in non-food areas include ‘Specialty Division’ that focuses more on hotel, holidays, photographic andpharmacy services, and car rentals.