Impact of External Factors on ASDA: PESTEL Analysis, Leadership Styles, CSR, Brexit and Covid-19 Effects

This report discusses the impact of external factors on ASDA, including PESTEL analysis, leadership styles, corporate social responsibility, and the effects of Brexit and Covid-19 pandemic. It provides insights on the strategies used by ASDA to gain competitive advantage.

SSHE Projects
Task 1

Contents
INTRODUCTION...........................................................................................................................1
MAIN Body.....................................................................................................................................1
Impact of external environmental factors on business organisation by using PESTEL analysis
................................................................................................................................................1
Several Leadership Styles and recommendation....................................................................2
Corporate social responsibility on business organisation.......................................................4
Effect of Brexit and Covid-19 pandemic on business organisation.......................................7
CONCLUSION................................................................................................................................8
References:.......................................................................................................................................9

INTRODUCTION
The business organisation employs number of strategies for gaining competitive advantage
over the competitors. The ability of the leadership influences the business strategy and response.
Business strategy is long term approach of implementing firm’s business plan for attaining
business objectives. The effective leadership in the business benefits in making effective
decision along with direction is provided to employees (Arnold, and Bowie, 2019). For the
present report ASDA is consider which is British supermarket chain that is headquartered in
Leeds, England. The company was founded in 1949 dealing in the products of Grocery, general
merchandise, financial services etc. The report covers the impact of externa environment factors
by using PESTEL analysis along with suitable leadership style is recommended that will help in
attaining the business objectives. In addition, corporate social responsibility is important for
organisation which consider the environmental and social impact of business decisions. Further,
the effect of Brexit & Covid-19 pandemic is considered on the business organisation.
MAIN Body
Impact of external environmental factors on business organisation by using PESTEL analysis
PESTLE Analysis of ASDA
Retail industry play a crucial role on global scale when determining nation's GDP during
having an immense potential for the future growth. PESTLE analysis is used in different
scenarios and also guide the organisations in strategic decision making. Therefore, in context of
the ASDA that is a retail organisation, impact of the PESTLE analysis is discussed below:
 Political factors- This element impact the organisations in term of the political unrest,
unstable government, education policies, taxation policies and so on (Al-Dawood, 2020).
Therefore, it has been identified that taxation polices formulated by the government has
major impact on the ASDA. This is because, respective firm has to pay a high tax rates. It
has a direct impact on the organisational profitability and also reduce their ability to
maintain the low pricing strategy.
 Economic factors- Every nation have different economic policies that influence taste
regimes, ROI and inflations. In relation to ASDA, respective firm is facing issue of high
interest rates, recession and demand for the online shopping. It has been identified that
recession lead to drop in organisational sales, that cause a decline in ASDA's profit.
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Along with this inflation impact the company's product price. It lowers its business as
customers may not have a strong purchasing power for expensive service or products.
 Social factors- It has been identified that society is changing continually. Fashions and
tastes are great examples of this change. Organisations get impacted by the element in
term of the trends, tastes and demographic components. In context of ASDA, changing
lifestyle of the customer’s ah greatly influence the customer preference due to which,
respective organisation have keep updated itself.
 Technological factors- Technology and digitalisation has become key components in
business operation (Bentham, 2018). Organisations uses it to with the motive to increase
their internal business operations, communication, advertising and e-marketing. Through
technology, companies can devise latest business model which help them in meeting
needs of the technology user. Therefore, in relation to the ASDA, respective organisation
has decided to operating its clothing business via online platforms. Hence, in order to
remain relevant and make the business operations more effective and efficient, ASDA is
using innovative technology properly.
 Legal factors- There are various types of the law and regulations which dictate terms of
operating business such as regulations related to the employment and other tax policies.
In case of ASDA, it has to obey and follow every law doing business formulated by the
government otherwise it may lead to a hefty fine which in turn reduce organisational
revenue. It may also damage reputation of the company within marketplace.
 Environmental factors- Nowadays society has become more concerned towards the
environmental sustainability practices (Gunasekare, 2018). Therefore, in order to gain
competitive edge, organisations are becoming responsible to the nature or environment
within they operate. In context of the ASDA, it has formulated numerous strategies
through which it ensures the eco-friendly practices. For instance, respective organisation
has adopted use of the recyclable products or material for packaging.
Several Leadership Styles and recommendation
Leadership style is a techniques of leaders to motivate people, implementing plans, and
providing directions. Leaders focuses on setting goals, monitoring efforts, rewarding employees,
and correct the employees if require. A leader should have tactical as well as technical
knowledge. With the engagement to their employees leaders use leadership styles. It is
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determining factors of leaders to develop their strategy, plan implementation, and development
of strategies (Achmad, 2022). Well being of team members and meeting expectations of team
members is also include in leadership. The best leaders are efficient to understand strength and
weakness of their employees as well as themselves.
There are five types of leadership styles:
 Autocratic leadership style:
This leadership style focuses on top members, only managers can take decision in this leadership
style. It is also known as authoritarian leadership style. By this style they can reduce stress of
employees by direct, quick, and clear decision making. After taking decisions they assign task to
members of their group (Cahyadi, Poór and Szabó, 2022). This leadership believe in power in
one hand they do not involve advice or suggestion of their their subordinates in decision making
process. Leader has complete control on their employees, group or organisations. Managers and
leaders are highly motivated and task orientated, it facilitate quick decision making. ASDA
follow this leadership style as they will not believe in delegation of authority.
 Democratic leadership style:
For the effective and efficient decision making leaders or managers required to involve
employees in decision making process by this it is also known as participative leadership style.
They are good listeners and delegate authority to their subordinates, they are preparing their
employees for senior positions (Carvalho, Alves and Leitão, 2022). This leadership style can be
used by large as well as small groups. In this style of leadership manager first listen the ideas of
their employees then they move forward towards decision making process. If employees ideas
are good then they are taken ahead.
 Laissez faire/delegation style of leadership:
Leaders and managers delegate power to their subordinates and guide them. They have trust on
their employees so they give responsibility to take decision. They provide direction at the
beginning but authorise them responsibility to complete it within the given time period. Without
micromanagement project cannot be completed so leaders should not feel much confidence.
Growth and development is encouraged by this leadership style (Dhar, Harymawan and Sarkar,
2022). Organisations make groups and assign responsibility to take decision their own. By this
all the group members can become leaders.
 Transactional leadership style:
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In this leadership style administrative realise on encouragement, rewards, and punishment for the
achievement of desired output from their subordinates. Ideas are clearly defined to their
subordinates, so they are well known about the expectations of leaders from them. Apparently
defined goals are easy to achieve, and employees also feel productive. Excellent leaders are
transactional motivators, with the structures implement by them. In this leadership style
creativity and innovation is not being focused. ASDA do not used this leadership style
(Ehrnström-Fuentes and Böhm, 2022).
 Transformational leadership style:
This leadership style focuses on positive change in individual and social system, their main aim
is to develop followers into leaders. There are four elements of transformational style are
idealized influence, inspirational motivation, intellectual stimulation, and individual
consideration (Fatima and Elbanna, 2022). It inspires employees to have great vision and strive
beyond expectations. Transformational leaders work to implement change with their employees.
 Hierarchical leadership style:
It refers to the style of leadership which define the chain of command from low level to highest
level in the organisation. In this style of leadership employees are divided into several groups
and each group reports have to reports to their manager, and the manager will report to the chief
executive officer of the organisation (Lee, 2022). The company has many levels, as lowest level
members has lowest power and highest level members has highest powers.
Justification: Autocratic style of leadership used by ASDA, as it motivate all the
employees to work according to task assign to them, which developed the performance of ASDA
in the dynamic business environment. Decision is taken by higher management authority and the
members who has more experience of the company those are specially trained for the same. They
focus on the teamwork necessities and open communication among staff members. ASDA
focuses on learning and developing coaching skills of leaders so that they will efficiently coach
daily tasks of the organisation (Mashele and Alagidede, 2022).
Corporate social responsibility on business organisation
It refers to the responsibilities of management in which companies integrate environmental
as well as social concerns in the operations of their business. It helps to enhance the access to
market and capital, enhance profit and sales, improve quality and productivity, build reputation
and goodwill, increase loyalty towards customers, manage risk, effective decision making and
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minimizing cost. To ensure the authenticity of CSR, organisations need to focus on mission,
values, core issues of the business and determine best initiative align with the goals and culture
of the business. CSR improves perception of brand, it attracts and retain employees and increase
the investment for the organisation (Nguyen, Van, and Tuyet, 2022). Examples of CSR are
giving to non-profit groups l8ike local; food banks, by monetary donations and supplying goods,
offer job training programs to inefficient employees, pledging to provide workforce diversity,
improve supply chain efficiency by focusing on shrinking carbon footprints of company.
There are four types of Corporate Social Responsibility:
 Philanthropic: It refers to organisational goal to make the society and world as best
place. Organisation can practice CSR by donating product and money to the non-profit
organisations and social cause. Big companies have wide range of resources that can
provide benefit to charities and local community programs. When companies like to
engage in CSR activities they can reach to non-profit organisations and ask them about
their needs like money, product or and other things they require (Niinihuhta, and
Häggman‐Laitila, 2022).
 Environmental Responsibility: Each business organisation need to use environmental
friendly methods of production. It is most common type of CSR. They focuse on
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reduction of greenhouse gas emission, use of single use plastics, pollution waste and
water consumption. They need to increase use of sustainable resource3s, recycled
material and renewable sources of energy. They should plant more and more trees, make
donations on social cause and spend on research.
 Economic Responsibility: It refers to the firms practice of backing up of all decisions
related to finance. The business must use the material which is sustainable in nature even
if they involve high cost. Customer like to buy the products which produced by
environmental friendly methods as they also like to save the natural resource4s which are
scares in nature. The companies who produces, product by keeping environment in mind
have more revenue (Pütz, Schell and Werner, 2022).
 Ethical Responsibility: It is concerned that organisation must operate in ethical and fair
manner. The organisations who embrace ethical responsibility likely to achieve equitable
treatment of all investors, customers, suppliers and stakeholders. Examples of ethical
responsibility are guaranteeing that all the material is ethically sourced, setting higher
minimum wage and ensuring that each employee get fair treatment as well as
comprehensive benefits and treated with respect by everyone.
Benefits of CSR
 By CSR company can enhance its brand image. When clients or customers look that
business is responsible socially, they like to respond positively.
 Employees morale also improved by following CSR. Morale of companies is high who
invest resources and efforts into various social and ethical behaviour.
 Employees like to choose various purpose 0driven and environmental friendly methods.
ASDA follow CSR by supporting sustainability and make products at more affordable price
for their customers, and also use the environmental friendly methods of production. ASDA give
incentive to those customers who agreed to use reusable bag instead of supporting the proposals
of government to charge for carrier bags. The stores of ASDA remove the new carrier bags from
all the branches and introduce 'bags for life' to save the environment. ASDA also support charity
called 'tickled pink' and have various days of fundraising to collect money for breast cancer.
They also announced in all the branches that for some days all the colleagues have to wear pink
dress to show support and enhance goodwill (Ta, Kim and Gausdal, 2022). The company who
follow CSR have more profitability and goodwill in the minds of the customer. They like to buy
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the products who follow CSR because customer want best product at reasonable price and
produced by maintaining the environment friendly. ASDA follow CSR and produce the product
by optimum utilization of limited resources in most effective manner. They also engage in many
social activities which enhance their goodwill in the competitive business environment. Business
exist in dynamic environment so they need to deal with competition to take competitive
advantage organisations most involve in Corporate social responsibilities.
Effect of Brexit and Covid-19 pandemic on business organisation
The Brexit and Covid-19 impacted on the UK retail industry as retailers are now becoming
innovative when adopting policies to deal with social distancing and better hygiene protocols.
Due to Brexit the ASDA faced fall in sales and shortage of delivery drives on mix of BrexIt
which affect the rights of European drivers to work in UK. Whereas Covid-19 restricted cross-
border travel and sent many drivers home for the extended periods of lockdown. There was rise
in prices of fuel sales with lower margins, soft demand for high margin general merchandise &
price cuts specifically in own label cuts. With the pandemic growth in food was partially offset
by weaker demand for clothing along with facing the incremental costs in relation to the
Pandemic such as staff bonuses and safety equipment. The pandemic affected the impact on
business performance and its profitability (Cano, and Jones, 2020). There is a negative impact of
Brexit on ASDA's growth because after brexit most of the European customers of ASDA went
back to European countries and purchase their grocery products from other companies. It is also
analyzed that most of the employees of ASDA who are basically from Europe, they left the
company as well as UK to live at their home country (Gerwe, 2021). This will impact negative
because most of the talented and skilled employees get off to the job. COVID pandemic also
have negative impact upon ASDA because due to this pandemic most of the countries including
UK impose curfews and lock-down which means people are not supposed to move out of their
home. People are investing more to health-care facilities and avoid to purchase non- essential
goods. this decline their sales and hence decline their revenue too. They supposed to use high
quality of tools and machines to maintain their effective communication with their customers and
this incur cost. In particular, the retail industry has been impacted by the imposition of lockdown
restrictions and social distancing, which have led to changes in the goods and services in context
to ASDA (Correspondent, 2020). The ASDA gain success after facing the situation of pandemic
by indulging in the E-commerce in order to provide the customer products online which they not
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require to visit in stores. This trend provided convenience along with helped in minimizing the
health concerns. The company also started offering touchless experience in store for completing
the buying process. The Brexit has brought several friendly initiatives in the retail industry such
as return on duty free shopping. The company should capitalize on the country economic and
labour market for having talented employees that helps in protecting the brand. the mobility of
talent will help business to fill vacancies in retail industry.
CONCLUSION
From the above report it is concluded that for business it becomes very essential for
conducting the PESTLE analysis in order to know the impact on external environmental factors
with its positive & negative aspects. This helps the organisation in improving its performance.
With this there are several leadership styles such as autocratic, democratic, transformational,
transactional and many more leadership style which helps in providing direction and motivating
people for accomplishing the objectives of business. The practice of CSR in the company foster
more productive and positive work environment for employees. It is important for enhancing the
positive relationship and sustainability in organisation. The special attention is provided towards
CSR by carrying out several activities such as reducing carbon footprints etc. The effect of
pandemic and Brexit on the business organisation is negative which affects the functioning and
performance.
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References:
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Cano, M.C. and Jones, A., 2020. Companies Struggle to Prepare for Post-Brexit Tax
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