Ask a question from expert

Swot Analysis and Pestle Analysis of ASDA Marketing Strategy

Published - 2023-01-10

What is SWOT Analysis?

SWOT analysis is a framework that is used by companies to evaluate the current and future potential and competition. SWOT stands for strengths, weaknesses, opportunities, and threats that a business might face. The main goal of this analysis is to help businesses in whatever capacity, to fully understand the factors that go on in choosing a course of action.

From now on, as a business, if you decide to take any decision or action in regard to your company like investigating new projects, updating internal policies, assessing possibilities to pivot, or changing a plan midway through its implementation; do consider conducting a SWOT analysis first.

Use your SWOT analysis to come up with suggestions and strategies, with an emphasis on exploiting strengths and opportunities to overcome weaknesses and threats.

What is ASDA?

ASDA is a supermarket chain and brand with headquarters in the UK that sells both food and non-food items under its own name as well as other well-known products. Established its headquarters in Leeds, West Yorkshire, after being founded in 1949.

ASDA is a lifestyle and retail supermarket network with approximately 630 locations. To give the customer what they want, the company has teamed with international companies. Asda is also focusing on how its business practices, such as the products they sell and the suppliers that manufacture them, affect the environment.

SWOT Analysis of ASDA:

A simple technique called a SWOT analysis of ASDA can assist a business in analyzing what it does best right now and developing a successful future plan. It reveals the regions where people are holding back or the potential profit margins for rivals. It is crucial for companies like Asda to assess the business environment given the growing neck-and-neck competition in membership warehouses.

Let's start with the company's strengths as determined by ASDA's SWOT analysis.

1. Strengths of ASDA

The best aspects of each company's operations that can provide it an edge over rivals are referred to as its strengths. The benefits of Asda include the following:

Product Variety: Asda offers a huge selection of goods, and it has successfully spread throughout the UK. Offerings of financial services are also included. It is renowned for its incredible marketing tactics that display the satisfaction of its clients.
Strong Market Presence: Asda's presence throughout a number of regions makes its marketing approach advantageous for both its target market and its organization. They are a really powerful dealer company that does more than just advertise

2. Weaknesses of ASDA

Weaknesses are areas where a company or brand needs to make improvements. The following are some of Asda's major flaws:

Research and development on innovation and technology: Despite Asda's efforts, they are still unable to compete with the sector's top companies. Regarding innovation, Asda also has to make investments in cutting-edge technology. Asda's decision-making processes are to time- and money-consuming, even when offering new products to customers.
Weak Merchandise: Asda has strengths and weaknesses in equal measure. Some detractors contend that Asda products aren't as appealing as those of Waitrose and other similar companies, including Sainsbury's.
Expensive products: Some customers find it to be pricey, and it isn't as cheap as stores like Aldi and Lidl. Many clients no longer find this to be persuasive.
Often Debt-ridden: Asda is said to owe almost £3.5 billion in debt, according to other reports. This is a sizable amount that affects the company's financial health.
Disputes & Criticism: In 2007, Asda and a few other shops admitted to using price-fixing techniques on dairy products. They have encountered numerous conflicts and detractors. For example, in addition to their notoriety, for their false advertising.

3. Opportunities for ASDA

Opportunities are those openings in the environment that the firm operates in that it can take advantage of to boost its profits. Opportunities include, among others:

Increasing Employee Satisfaction: Business organizations have also worked on their potential markets to make their workplaces better and safer for their staff members, employees, and loyal customers.
Boost Online Presence: As more and more consumers shop online and attention is drawn to it, there is a huge possibility for domain expansion. As a result, the web presence is rapidly expanding into additional nations including China, India, and many others. This will ensure that the brand receives enough views.
Economic Change: The company is experiencing an economic upswing and customer predominance. More and more viewers are shifting to Asda's services as their option. Additionally, Asda transformed its five to six primary DIY stores into practical supermarkets.
Global Expansion: It's worthwhile to look outside of the UK for prospects! Although the CMA (The Competition and Markets Authority) rejected Asda's bid to merge with Sainsbury, it is prepared for other situations as well.
E-commerce: Asda has a fantastic potential to make use of the advantages of having an online presence. They have benefited from using their official website and other social media, and are now closer to becoming well-known.

4. Threats of ASDA

Threats are environmental elements that have the potential to harm a company's expansion. Several of the dangers include:

Legal setback: Legal standards and new laws have caused a significant setback for Asda. The corporation may also have suffered from the shift in regulatory frameworks and the introduction of regulations to the organizations. According to several national policies, liability laws in various states must have put Asda's goods and services in jeopardy.
Race Against Competitors: Asda has numerous rivals in the UK. Tesco is the market leader, and Asda's main opponent is Sainsbury. Morrisons, Waitrose, Aldi, Asda, and Co-op are further participants in the competition.
Currency fluctuations: Asda has access to other nations, which leads to further currency swings that follow global markets. The company's lack of cultural intelligence is made worse by the multiplicity of cultures brought on by globalization.
Breaking the Law: It's important to note that the emergence of independent online shops poses a risk. The same can happen with Asda as well as with legal actions. It has broken some restrictions before, which different authorities have been aware of numerous times.

What is PESTLE Analysis?

PESTLE analysis is a straightforward and practical framework for scanning the environment that makes it easier to comprehend the larger business environment. In order to avoid or lessen the negative influence on business operations, it urges organizational management to think strategically and move fast in response to changes in the external environment.

Additionally, it motivates management to consider the external business environment from a variety of angles.

PESTLE Analysis of ASDA

PESTLE stands for Political, Economic, Social, Technological, Environmental, and Legal Analysis. The primary purpose of this environment scanning tool is to comprehend how external macroeconomic factors affect the market, a specific industry, a corporation, and its product and service offerings. Since a corporation cannot control these environmental variables, they are regarded as external forces. However, a thorough PESTLE examination of ASDA can improve the companies' capacity to respond to changing environmental conditions. Let’s see how -

1. Political Factors
The first PESTLE component that has a significant impact on the business is "political considerations," which also determine the long-term viability of the company. Throughout the year, governments have the power to levy taxes and impose trade restrictions, which may have an effect on the state of the economy as a whole. A significant international presence makes ASDA more susceptible to political, structural, and systemic concerns.

The following political considerations must be taken into account by ASDA to increase its ability to adapt to shifting political environment dynamics and maintain its long-term survival:

Uncertainty: The frequency of changes to government policies and laws is referred to as uncertainty in the political environment. The continual ambiguity and frequent policy changes affect company performance and make decisions more difficult. ASDA needs to actively monitor the political landscape to ensure prompt adjustment to shifting policies and adjust the strategic priorities as necessary.
System of government: Since democracy is the foundation of the existing government structure, ASDA may operate in an environment that is favorable to business. ASDA can profit from the financial liberty provided by the democratic governance structure, which encourages initiative and free trade.
Pressure groups in the government: Pressure organizations can influence the business climate by securing powerful media friends. By planning protests and organizing marketing efforts, these groups exert pressure on the organizations. As these pressure groups have the power to modify government policy, which could ultimately have an impact on the general business climate, ASDA needs to keep an eye on its actions. ASDA should work closely with these groups to earn their trust and should make investments in moral and charitable causes to forge stronger relationships with society.
Consistency: Business organizations need political stability because it affects investor and customer trust, which has a significant impact on the economy. High levels of political unrest have a detrimental effect on consumer spending, company investment, and economic growth. Political instability is currently present in the region where ASDA has an active presence as a result of internal and external conflicts. The corporation may be unable to meet its growth goals if management cannot comprehend and manage the current political upheaval, and it may be reluctant to spend additional funds.

2. Economic Factors

Economic factors are the second element of the PESTEL framework and are made up of complex variables that have a direct impact on how well organizations can reach their financial goals. To forecast both short-term and long-term business growth in the selected sector, ASDA needs to develop a thorough understanding of these aspects. Following are a few economic factors -

Inflation: Since rising inflation reduces the purchasing power of money and deters consumers from spending on goods and services, it may have a detrimental effect on ASDA's revenue growth.
Inadequate financial markets: High financial market efficiency facilitates capital accumulation and the production of goods and services by sharing a strong positive relationship with overall economic growth. As a result, in order to easily amass financial and human capital, ASDA must select nations with highly efficient financial markets. ASDA can successfully stay one step ahead of the competition by monitoring the effectiveness of the financial market.
Rate of economic growth: When deciding whether to expand internationally, ASDA should consider the economic growth rates of the various nations. High levels of political unrest have a detrimental effect on consumer spending, company investment, and economic growth. Consumer spending becomes more cautious when the economy is growing slowly, which has a direct impact on ASDA's revenue growth.
Exchange and interest rates: Exchange rate fluctuations can have an impact on a company's profitability. In order to accurately predict exchange rate swings and avoid unintended trade and company performance repercussions, ASDA should do this research. As a result of paying high-interest rates, ASDA will ultimately pay more for the loans it has taken out.

3. Social Factors

Social aspects in the PESTLE framework represent the main social norms, values, and practices of the society in which business companies operate. As many very successful corporate organizations have failed due to a failure to adapt to the socio-cultural context, ASDA must carefully manage the social variables.

Demographics: When ASDA primarily targets young consumers with its products/services, two favorable demographic indicators are high population growth and an increasing proportion of the young population group. Additionally, it is crucial for ASDA to research how the host nation views immigration because a friendly attitude toward immigrants from various cultural origins highlights the value of embracing effective diversity.
Consumption patterns: Consumption patterns and economic issues are closely related. Consumers who have more disposable income and are willing to spend more on goods and services to improve their quality of life present ASDA with exciting growth opportunities because doing business with them makes it simpler to introduce new goods and services, and the likelihood of revenue growth also increases.
Social justice: Respect for hierarchy and social class stratification are two significant social characteristics that might affect ASDA's commercial, marketing, and human resource management tactics. When entering nations with a high power distance, ASDA does best with a hierarchical organization and formal work culture.
Social and cultural norms: Each country has its own unique cultural norms, values, and traditions, which have an impact on how people behave as customers. Lack of adaptability to change product/service offerings in line with local cultural practices could have a negative impact on the business. ASDA must perform in-depth research to learn about local consumers.

4. Technological factors

In the contemporary corporate world, where business organizations are substantially investing in developing technologies to keep ahead of the competition, it is imperative for ASDA to investigate and anticipate both present and future technological developments.

Technology infrastructure: ASDA should favor nations with developed technical infrastructure since it makes it simpler for businesses to meet their goals of cost reduction, innovation, and value creation.
Technological development: The rate and direction of innovation in this field can have an effect on the market and industry as a whole. ASDA will be able to comprehend the rate of new product creation, the length of the product life cycle, and the innovative characteristics that are most liked by consumers by researching the burgeoning technological innovation trends.
Research and Development: The research and development trend in the chosen industry or region demonstrates how forward-thinking companies are in delivering cutting-edge solutions to meet customer needs. ASDA must improve its comprehension of how new technological advancements can help the company in addition to offering customers value.

5. Legal Factors

In contrast to political considerations, which provide a wider perspective, legal considerations provide more specific information about numerous rules and regulations, particularly on employment laws, health and safety laws, intellectual property laws, and consumer protection laws. Asda may incur expensive legal fees if it violates the laws of the host countries.

Law governing intellectual property: Because their patents are safeguarded from imitation by strict adherence to intellectual property regulations, businesses like ASDA may operate in a more secure environment and gain a durable competitive edge.
Employment laws: The term "employment law" refers to a large group of laws that safeguard employees' rights, including those to a fair wage, equality, equity, inclusion, fairness, and their bodily and emotional safety. In some countries, employment laws are not effectively enforced, while in others, breaching any of the outlined employee rights is punishable by heavy fines.
Regulations to protect consumers: In many countries, there are numerous federal and state laws in place to protect consumers from potential economic exploitation. In the era of information technology, laws have become considerably stricter to safeguard consumer privacy.

6. Environmental Factors

The importance of environmental analysis in the contemporary corporate environment has increased significantly. ASDA must be fully aware of environmental regulations in order to avoid legal problems and harm to its brand in the marketplace. The ramifications of a number of key environmental factors are covered in the discussion that follows.

Expanding the use of renewable energy: A major trend in many industries is the development of renewable technology to reduce dependency on natural resources. To take advantage of this environmental trend, ASDA should assess how well a nation's technology infrastructure supports the adoption of renewable technologies.
Restrictions on the environment: Businesses are under pressure to lessen environmental harm due to strict environmental legislation in many different countries. In response, ASDA should implement ethical production methods, promote ethical consumption among its target market, and work to enhance its reputation as a sustainable brand.
Weather: Weather conditions must be taken into account because they can have a significant impact on operating costs, personnel productivity, and efficiency. Consumer behavior is also influenced by the weather, therefore ASDA must incorporate flexibility into its supply chain management.

Examples of Pestle Analysis of the different companies;

PESTLE Analysis of Primark
PESTLE analysis of ZARA
Pestle Analysis of Kinder Chocolate
Pestle Analysis of River Island
PESTLE Analysis of Zara
PESTLE analysis of the British Petroleum Company
PESTLE Analysis of Jaguar Land Rover Cars
PESTLE Analysis of the Hospitality Industry
Pestle Analysis of Virgin Media
Pestle Analysis of Iceland
Pestle Analysis of Caffe Nero
PESTLE Analysis of Ulster University UK
PESTLE Analysis of COCA Vietnam
Pestle Analysis of Compass Group Plc
Pestle Analysis of British Telecom
PESTLE Analysis of EE Company
Pestle Analysis of Netflix
Pestle Analysis of Proton
Pestle Analysis of Wireless Chargers for Electric Vehicles
Pestle Analysis of Morrison Plc
Pestle analysis of Coca-Cola Company
PESTLE Analysis for UK Telecommunication Market
Pestle Analysis of Burberry
Pestle Analysis of Gucci
PESTLE analysis of the House of Fraser
PESTEL Analysis of KFC
PESTEL Analysis of Pepsi Co
Pestle Analysis of TESCO

To Sum Up:

Because of its cutting-edge tactics and commitment to its clients, Asda distinguishes out from other store brands. The reason behind this is that it is accessible and digitally friendly. Emphasizing Asda's digital marketing effort, they are presenting a unique image to both in-person and online customers. They are getting closer to the range of objectives for digital marketing.

Get more study resources material related to SWOT and PESTLE Analysis of the different companies;