ASDA Business Strategy: PESTLE, SWOT, VRIO and Porter's Five Forces Analysis

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
LO.1 A brief about the ASDA and critically analysis the macro environment ..........................4
LO.2 Organization’s internal environment and capabilities-.......................................................6
LO 3. Porter’s Five Forces model analysis-...............................................................................10
LO4. Models, theories and concepts which assist and provide understanding and interpretation
of strategic directions to ASDA.................................................................................................12
CONCLUSION..............................................................................................................................22
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is merger of every decision taken in an organization and activity
perform by a business to achieve their goals or objective and secure a position in competitive
market. In simple words business strategy is direct set of actions, plans and goals which
highlights that how an organization will compete in a market with the number of services and
products (Henry., 2021). There are three levels in business strategy they are corporate level,
business level and functional level. Corporate level strategy is developed by top management
whereas business level strategy is formulated by managers (general manager) and functional
level strategy is formulated by supervisor or first line managers. ASDA PLC is deal in retail
industry and it is supermarket chain, headquartered in Leeds, England. Company provide
products at very low price and it is the key of success for ASDA. Company have extensive
distribution network that is 25 distribution base across UK.
This report will cover the brief introduction about the company and critically analyses the
macro environment through PESTLE analysis. Company internal environment and their
capabilities by critically analysis the strengths and weaknesses of the organization. This report
also highlights the porter's five force model and how this model evaluates the competition in the
industry, by which an organization can improve their marketing position and competitive edge.
This report also includes concepts, models and theories to interpretation and for derive a good
strategic planning for organization. Critically analysis external and internal environment factor to
make a valid strategic direction, action and objective of the organization.

MAIN BODY
LO.1 A brief about the ASDA and critically analysis the macro environment
ASDA is one of leading retailers in UK, headquarter located in England. They serve
customers by their stores and online service such as living store, supercentre, supermarket,
superstores across the United Kingdom. Company was listed on London stock exchange, in 1999
it was acquired by Walmart. It was the second largest super market in the UK. ASDA is public
limited company. Company offer George and non-food products, such as George home, general
merchandize and fashion to their customers (Hans., 2018). Their key of success is low price by
which customer attract towards them. They target almost all segments of society however their
general target are women of age group 20 to 30, because they buy day to day products which is
use by them and their family member. Company offer household essential at very low price.
ASDA mission is to become the best retailer along with satisfy customers needs. Their objective
is to provide services and products at reasonable price so customer afford easily. And vision is to
become highly valued organization by satisfying customers needs and loyalty with both
customers as well as shareholders. Their objective is provided quality products, at low price, they
also focus on sourcing from local and free of hassles and offer good range of products to
customer at low price under one roof.
PESTLE analysis is used to know the macro environment of an industry, it stands for Political,
Economic, Social, Technological, Legal and Environmental factors that affect organization. It
provides environment information about the organization direction, growth targets, brand
positioning and productivity. It also helps in identifying the new product development and
changes in existing products. PESTEL analysis is important for business strategic planning
moreover this is used for analyse the macro factors which affect a business (Shtal, and et.al.,
2018).
Political factor: Includes laws, regulation and decision which take by government. A stable
political environment is beneficial for ASDA. Political factors have major impact on retail
industry like taxes, international and national regulation, customer rights, legislation etc. it gives
impact on organization decision-making (Stack., 2021). ASDA follow all these laws to stand in
the industry however if government increase tax rate so it affects ASDA profitability and
problem in maintain or provide the products at low price. With this ASDA as well as industry

face issue like recession, low GDP and inflation. Political decision also affect economic
environment. Economic factor: Involve unemployment, economy growth/decline, interest rate,
working hours, inflation rate, cost of living etc. these economic factor have impact on pricing
strategies of the ASDA, like in lock-down many individual lost their jobs it impacts on decrease
the shopping activity. ASDA is getting the advantage of growing GDP of UK due to covid 19 the
unemployment rate is increase which affect ASDA sales (decrease), this issue is face by all
business as well. High cost of living affect business in general sales. Government increases the
interest rate than it is very difficult for business to take loan (due to high interest rate).
Social factor: Such as culture norms, population growth, expectation, age distribution, income
statistics, health and safety (Tien., Phu, and Chi., 2019). Due to change in preference and trends,
ASDA has benefits of these changes like now people spend more money so it improves sales of
the organization. The demand for vegan, organic and vegetarian food and fashion is growing fast
in UK also so it easy for ASDA to sell their products. The youth population has spent more
which help this industry to grow. Majority of population in UK is young so its beneficial for
ASDA because they are the target segment of organization. Due to fast changing in preferences
of individual its very difficult to survive in the market. For this organization must be innovative
that is make changes in existing product or develop new products.
Technological factor: The technological factor are the new equipment and practices which
affect business. The technology change very fast and it affects many organizations badly.
Government of UK make technology updated in order to make great consumer life beneficial.
For retail industry its necessary to use the latest technology. ASDA follow this and implemented
the updated technology which helps them in many ways. It also has some drawbacks like for
advance technology business need to keep more fund. Now all supermarkets are working on how
they effectively use technology in favour. It helps in making money and opportunities for
innovation to grow in the economy.
Legal factor: Are the rules and regulation of the country. Every business has to obey rules and
regulation of the country. ASDA is following all rules of the UK. All the documents of the
company is in legal format. If any organization is not pay wages fair then it gives negative
impact on the business operation so there should be fair wages. Company must follow legal
structure like proper audit, bookkeeping of all records etc. In retail industry many business are

export or import products so it compulsory to follow the rules of the country. In other words by
knowing legal factor every business understand what they can or cannot do.
Environmental factor: Concerns with waste and pollution, climate change, economy growth
and overall environment protection. Every organization must operate in environmentally friendly
manner. ASDA ensure that their products packaging not affect environment and can be recycled.
By putting extra efforts in this particular factor company has to invest in CSR and sustainability,
which has unfavourable impact on finance of the company.
For making strategic decision an individual should analyse macro environment, for these
they can use PESTLE analysis (Alanzi, S., 2018). The goal of analysis environment is to create a
great understanding of external environment, where a company operates. By this organization
know the market widely. Company must follow all political policies, economic trends, social
culture (rules and regulation), use the latest technology, legal structure and produce products
which are environmental friendly. By analysis this factor organization make a good business
strategy plan and help in growth. Political and legal factor have policies, rules and regulation
which must be followed by company and if they not follow than there may be chances of bad
brand image (Bai., Cordeiro, and Sarkis., 2020). Technological factor helps in growth of
organization if they are not using the latest technology than there is always limitation. Social and
economical factor help in strategic decision like GDP, population, age distribution etc. by this
factor company target there customer and make strategies accordingly.
LO.2 Organization’s internal environment and capabilities-
The internal environment analysis of the organization is much important for the
companies to know as this will help them in making improvements if required in the products
and services of the company (JATMIKO and et.al., 2021). The internal environment of the
company can be evaluated through the SWOT analysis of the organization. Asda company's
capabilities can be evaluated by using the SWOT analysis.
SWOT Analysis-
SWOT analysis is the tool or the method which is used by the businesses to identify as
well as to analyse the internal strengths, weaknesses, external opportunities as well as the threats