Busines Strategy

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1. PESTEL and Porter's five forces analysis to find out opportunities and threats.....................1
2. Capability analysis of the company........................................................................................4
3. To analyse internal environment conduct SWOT analysis.....................................................5
PART 2............................................................................................................................................6
1. Evaluate different types of strategic directions available to the companies...........................6
2. Justify and recommended the most appropriate growth strategy for organisation.................7
3. Produce a strategic management plan.....................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategy refers to those plans of action which are devised and formulated by the
management of the company to deal with the business issues and problems. It can be those
strategies that are formulated by the management of the company to operate its business in
competitive sector to gain rivals' benefits (Boyd and et. al., 2017). This assignment is based on
ASDA which is a British supermarket retailer which operate its business in different nations with
the help of its different products like grocery, general merchandise and financial services etc.
This written document will discuss about the impact and influence of macro environment and
assess the internal environment and capabilities. Further, will explain about Porter's five force
analysis to evaluate competitive force. Different models, concepts and theories will also define to
devise strategic planning for the company.
PART 1
1. PESTEL and Porter's five forces analysis to find out opportunities and threats
PESTEL analysis
It is a tool and framework which is used by the company7 to analyse and determine
macro environment factors that affect and influence the business of a company (PESTEL
Analysis. 2016). To analyse and evaluate the impact of these factors, management of ASDA can
use this analysis and description of it is as below:
Political- This factor consist government policy, political stability, corruption, trade
restrictions, foreign trade policy, taxation policy and others. In context of ASDA, European
Union has presented an effective growth option for respective firm because the company can
make expansion of its business in EU markets cause of most of trade barriers have been
removed. In UK, change are occurred in taxation policies so it affect the business of ASDA in
unfavourable manner.
Economical- It include exchange rate, economic growth, inflation rate, interest rate,
unemployment rate and others. This factor play and effective role in growth and failure of ASDA
when economic condition of UK affect due to recession (Chen, Eshleman and Soileau, 2017). In
UK people are preferring online shopping due to which employment is increased and
maximisation also increase in sales which positively affect the company in term its economic
condition. Corona virus negatively affect the economic condition of the nation in term of
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economic slowdown. Because due to this, people are not coming out from their home and do not
prefer to shopping form stores like ASDA as comparison to normal previous time. Due to which
the economic condition of different nations affect in negative manner.
Social- This factor involve culture, beliefs, living standards, needs, wants, taste &
preferences etc. In UK, people prefer online shopping because most the population of this nation
is working. So this factor positively affect ASDA because the comp nay also use online way to
deliver its product to its customers (Grayson and Hodges, 2017). Change in consumer demand is
a factor which affect the business of respective firm. There is an increased demand for organic
food because people are more health conscious so this factor influence ASDA in unfavourable
manner. Corona Virus also create negative impact in social term and unfavourably affect the
business of company like ASDA because business people and employees are not coming outside
and prefer to meet customers which negatively affect the business of retail companies.
Technological- It indicates to level of innovation. Technology incentives, automation,
advance technology, use of artificial intelligence and research & development etc. ASDA use
and adopt different technologies its business like online retailing and e-marketing so this factor
favourably affect organisation. Because by using these kind of techniques, firm offer its products
to its potential customer in amended way.
Environmental- This component consist ecological and environmental components like
climate change, weather, environmental offset and environmental act that are development by the
national authorities like environmental act, pollution act and others. In order to assure that ASDA
has positive effect because the firm usage recyclable materials in different substitutions alike in
packaging of the products. This favourably affect the company because it effectively follow
environmental act.
Legal- It is the last factor of PESETL analysis and it consider those laws and legislations
which are developed by the government of the country for the effective or legal business
operations of organisations. This component consist employment act, discrimination act, heath
and safety law and others. In UK, ASDA does not pay nay employee less than the minimum
wage so this factor positively affect the business of the firm.
Porter's Five Force Analysis
It is a business management model that determine the strength and weakness of an
industry. Also, it enhance the level of competition and profitability of a company in order to gain
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competitive advantage. It is used to measure the intensity of competition and attractiveness that
play an important role in shaping the market (Iamratanakul, 2018). The manager of ASDA
identify the strength and grab the opportunities but combat threats and weaknesses to increase
the goodwill within the market. Porter five force help to identify the power and autonomy lies in
a business so as to makes decisions accordingly by analysing various factors. The manager of
ASDA has applied porter's five force model to ascertain its positioning within the confine of
retail industry. It consist of various elements that includes threat of new entrants and substitutes
and bargaining power of suppliers and buyers. The same is described as follows:
Threats of new entrants: the extent of this force in retail industry is acknowledged to be
low due to the reason of high capital requirements which provide opportunities to existing firms
to ensure its growth (Kitsios and Kamariotou, 2019). In the context of ASDA, there are various
strict government regulations in UK which creates difficult for new entrants to gain access into
retail industry. Therefore, it is difficult to achieve the economies of scale which makes
production costlier for new entrants and it become challenging to maintain a position in the
market.
Bargaining Power of Suppliers: In the context of ASDA, the bargaining power of
suppliers is regarded to be low as there are large number of suppliers that have less control over
the prices. The products that these suppliers provide are less differentiated and they have low
switching cost. ASDA should purchase raw materials from those vendors at low cost to increase
the bargaining power. Also, the respective firm can develop close relationship with suppliers that
provide greater advantage of purchasing raw materials in a cheaper rates.
Bargaining power of Buyers: The magnitude of this force acknowledged to be low. This
is due to the reason that buyers are less sensitive to the prices as quality is more important to
them. As compared to its competitors that are Tesco, Oscado, Morrisons etc. ASDA is providing
good quality offerings at an affordable prices. ASDA could focus on innovation and product
differentiation to gain large access of customers as buyers are not able to switch easily to other
products. Thus, they enjoy large economy of scale that increases the productivity of organisation.
Threat of Substitutes: The threats of substitutes are regarded to be low because the
alternatives that are available are of good quality which makes the products expensive. ASDA
provides products of standard quality and less costly as compared to its competitors as buyers
could not easily switch to other retail companies (Lawton, 2017). Thus, it gain large access to
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customers and goodwill in the market which increase the efficiency of an enterprise. ASDA
should focus on market research so that it provides unique products to meet the needs of
customers and remain competitive in the market.
Competitive Rivalry: The competitive rivalry in the context of ASDA is regarded to be
low. Although the competitors of ASDA are several such as Dixons Carphone, M&S and Argos,
Iceland Foods and so on but they provides products of high cost. In this relation, the respective
firm develop products which incur less cost and of standard quality. The offerings produced
within retail industry are unique that provide satisfaction to a customer which ensure growth and
sustainability. This provide growth opportunities to a firm which ensure success within the
market (Leischnig and et. al., 2017). The strategies prepared by firm are diverse and also the
fixed cost are high that allows company to reduce their prices when demand slackens. As ASDA
is one of the leading retail industry that focuses on new customers rather just winning only
existing customers.
2. Capability analysis of the company
To analyse the capability of an organisation to analyse the future growth and
development of it, management of companies conduct capability analysis. The administration of
ASDA can use VRIO framework to determine the capability of the firm. The brief description of
this analysis is described as beneath:
VRIO Analysis
It is a strategic analysis tool and technique which is designed to assist companies uncover
and provide protection the resource and capabilities that provide them a long them competitive
benefits (VRIO Framework. 2020). VRIO analysis of ASDA is as follows:
Resources Valuable Rare Inimitable Orgnaisable
Brand image Yes No No No
Financial
capability
Yes Yes No No
Technological
resources
Yes Yes Yes No
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Human
resources
Yes Yes Yes Yes
Form the preceding explain information it can be monitor that Brand image of ASDA plc
is valuable to organisation because it familiar customers with the company and its products and
services which is offered by it. It is crucial for firm because it assist in expanding its business
and maximising its profit margins (Leonidou and et. al., 2017). Financial resource is valuable
and rare to the company because it help in running the business in competitive environment. This
resource is rare because every firm invest finance in its business as per their capability for
business expansion. Techniques that are used by ASDA are rare, valuable and inimitable because
each company implement different technology in their business in term of production
distribution and promotion etc. the respective company use online retailing and e-marketing
which is valuable for the company because with the use of them they deliver their products to
their customers. It is imitable because it is not too easy to copy everyone. Human resource is
valuable, rare, inimitable and organisational to ASDA because employees are important resource
to operate business activities and this resource is rare because each person has different skills and
competencies that can not be copy by others (Linder and Williander, 2017). By formulating
effective plan of actions and policies employees can be mange and organise by the management
of respective firm.
3. To analyse internal environment conduct SWOT analysis
SWOT Analysis of ASDA
It is a planning tool that help the firm to identify the positives and negatives of an
industry to achieve the goal of an organisation effectively and efficiently. In other words, it is a
framework that provides strategic planning to gain a position in the market. The business
environment in which company carry out its operation is regarded as dynamic (SWOT Analysis
of Asda. 2020). It provide vast growth opportunities to a business by analysing the various
factors in a internal environment while strength and weakness are internal factors and threats and
opportunities are external factors. ASDA is one of the leading retailer in UK which provide
wide range of services like groceries, clothing, insurances and many more (ASDA SWOT
Analysis, 2020). The SWOT analysis in context of ASDA are presented below:
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Strength Weakness
 ASDA has high skilled workforce as it
invest huge financial resources on
providing effective training to their
subordinates.
 It provide new and innovative products
to gain large access of customers.
 ASDA has strong cash flows that help
the company to expand into new
projects.
 The concerned firm has not been able to
compete with the leading players in the
market in terms of uniqueness in
products (Madhushree, Kumar and
Aithal, 2018).
 The firm need to invest more on latest
technologies to expand the scale of
operations within the confine sector of
UK.
 The company is not been able to handle
challenges as this results in loss of
market share.
Opportunities Threats
 The free trade agreement provided by
government create an opportunity to
enter into a new emerging market.
 The new taxation policy can open new
opportunity to ASDA to increase the
profits.
 In a dynamic environment, there are
new trends of customer behaviour
which provide opportunities to ASDA.
 There are currency fluctuations as
ASDA is operating in numerous
countries which possesses the threats.
 There is high demand of products
during peak season and any unlikely
event could impact on the profitability
of a firm (Moseley III, 2017).
 Also, increase in the prices of raw
materials posses a threat to the ASDA
profitability.
PART 2
1. Evaluate different types of strategic directions available to the companies
For the success and growth of the company the management of the organisations adopt
different kind of strategic directions. These strategic directions also known as growth strategies
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that adopt by firm to make development in their business. In context of ASDA, the
administration can adopt Ansoff Matrix to make development in the business of company. The
brief description of this concept in context of respective organisation is as below:
Ansoff Matrix
This model is developed by Igor Ansoff to provide a strategic direction to a company so
that it can operate its business in particular sector. This analysis is also beneficial for strategic
marketing planning of a company (Nagy and et. al, 2018). This models consist four growth
strategies, they are as under:
Market penetration- In this approach, the company make focus on maximising sells by
by selling its existing products in existing market. If the management of the company adopt this
strategic direction then, there is less risk because the offer its current products in known market
(Peng, 2017). By adopting this strategy, make changes in its pricing strategies and use different
promotion tools so that thy can make development in their business.
Product development- In this strategy, new products are selling in to existing market to
acquire a rival's product and capture a wide market to maximise market share and revenue. This
strategic direction can be adopt by ASDA and the firm can offer new products to same people or
customer of a same market. This approach is risky more than market penetration because it does
not sure that new goods are liked by existing customers.
Market development- Here, the management of company target new market to increase
sales and profitability. This strategic direction can be adopt by the administration of ASDA to
enter in to new market. For this, firm use different sales channels like online sales, direct
marketing and through agents or intermediaries. This strategy is risky more than product
development because the company enter in to new market with its existing product so it is not
clear that these goods and commodities are liked by new market or not.
Diversification- It is the last strategic direction of this analysis which is more risky
because in it the company enter in to new market with new products with the purpose of growth
so it is not sure that these products are adopted by new customers of a new marketplace.
2. Justify and recommended the most appropriate growth strategy for organisation
From the above information it can be recommended to ASDA that the management of the
company should adopt product development strategy for the growth of company. The
management of respective company can also offer clothing products in its business. It will help
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in maximising sales, profit and market share because clothing and apparel sector is a developing
industry (Shuen, 2018). This will also help in capturing large customer base because fashion and
trend change rapidly so customer also have need of trendy cloths.
3. Produce a strategic management plan
Strategic planning is an activity of making strategic or meaningful plan for the business
of the company to make growth and development. The planning procedure include information
about the success of firm by utilising product development strategy. It also consists vision,
mission, objectives and plan of actions that are developed for the growth of company.
Overview of ASDA- ASDA is a British supermarket retailer which is headquartered in West
Yorkshire, England. This firm was incorporated in 1949 by peter and Fred Asquith and Sir Noel
Stockdale (Yuliansyah, Gurd and Mohamed, 2017). It operate its business with the help of its
different products like grocery, general merchandise and financial services in different nations of
the world with the help of its number of stores.
Mission- The mission statement of the company is to become Britain's best value retailer by
fulfilling consumers requirement always by offering products as per their needs.
Vision- The vision of this company is to offer products and services to its potential clients at
more affordable prices.
Objectives- The business objectives of ASDA is as below:
 To increase sales of the company up to 5% within 1 year by offering new products of
clothing and apparel.
 To maximise profit of ASDA approx 10% in 2 years by offering quality products and
services.
Strategies- It refer to those plan of action and tactics that can use by the company to accomplish
its set business objectives and resolving issues inn its business. When the management of ASDA
offer its new product like clothing in market then it can adopt STP model and segmented product
as per their customer. It can offer its product to male and female, college students, professionals
and target middle and upper class people (Boyd and et. al., 2017). The firm can provide its
products both online and offline mode through retail store and company website or mobile
application etc. Apart form it they can use different promotional channels like social media, print
media, web advertisement etc. to provide information about its new products. They can use
competitive pricing strategies for their new products segmentation.
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CONCLUSION
From the above information, it has been summarised that business strategies like
PESTEL analysis and Porter's five force analysis is beneficial to the business to provide
information about the impact of external factors of business environment. VRIO and SWOT
analysis is effective to analyse the capability of resource and provide information about influence
of internal factor of business respectively. Ansoff Matrix is effective to provide strategic
direction and strategic marketing planning for the development and success of the firm.
REFERENCES
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Yuliansyah, Y., Gurd, B. and Mohamed, N., 2017. The significant of business strategy in
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