Analysis of Macro Environment and Internal Capabilities of ASDA

This report analyzes the impact of macro environment on ASDA and evaluates its internal environment and capabilities. It also uses Porter's Five Forces model to assess competitive forces. The report concludes with strategies for growth and sustainability.

Business strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Analysis the impact of macro environment............................................................................3
Analysis internal environment and capabilities of organization............................................5
Porter five force model to evaluate competitive force...........................................................7
Theories, concept and models, strategic planning..................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy play a crucial role in success of the business firm because it assist firm
in taking different actions and paths by using which problem can be solved in proper manner.
Business firms time to time evaluate business operations and accordingly take steps to handle
conditions. ASDA was founded in 1949 at London. Mentioned firm in the current time period
have totally 165000 employees and is operating its business from 633 locations (About ASDA,
2020). The report will apply framework for analysing impact and influences of macro
environment and their impact on business and its strategies. This will analysis internal
environment and capabilities of company for perform task. This will analysis competitive
advantage of company by using Porter five force model. At the end, report will cover strategies
and plan for introducing new strategy to increase growth and sustainability of business in
effective manner.
TASK 1
Analysis the impact of macro environment.
ASDA is the British super market chain of UK which operates at several locations. The
company offers different kinds and types of product and services to their customer for satisfying
needs of customers. Company is follows Hierarchical functional organizational structure for
providing guidance for completing work (About ASDA, 2020). This also will allow managing
director at the top of this chart to make the biggest decision to complete business task in effective
manner. ASDA has mission, vision and objectives which are discussed as follows: Vision: Main vision of the ASDA is to provide goods and services at cheaper price to the
general public so as to support them. Mission: Main mission of ASDA is to become one of the best retailer and exceeding
customers’ expectations in terms of availability of goods at the workplace.
 Objective: is to reducing packaging and considers every option to achieve their goals in
proper manner.
Business strategy provide effective opportunity to ASDA for get success at market place
(Evans and et.al., 2017). Firm is operating in the industry in which already there are well
established players like Tesco and Aldi etc. There is tough price competition in the market and it
became very important for the ASDA to prepare competitive price strategy. Micro and macro
environment need to be considered before preparing any strategy in the business because these

factors heavily affect firm business. For analysis the macro environment affects to business, here
is select PESTLE analysis and stakeholder analysis:
PESTLE analysis
Political factor: Political factor greatly affect any business performance. Political
environment basically refers to the political party’s business policies. In some nations party in
power have clear majority or less majority. In case party have less majority, it cannot take big
decisions easily. In the UK ruling and opposition parties both are business friendly and due to
this reason ASDA on this front do not have any problem.
Economical factor: Economic environment refers to the economic condition of the
nation and global economy. In the current time period global economy is not in good condition
and is still striving to recover from economic jerks. Domestic economy is also not doing well and
on this front UK is facing serious problems. GDP growth is very low and inflation is also very
low(PESTLE analysis of ASDA, 2019). Hence, due to less demand ASDA is facing lots of
problem in increasing its profit in the business. Moreover, cost cutting is very difficult task as
firm already take lots of steps of cost control. Hence, on this front firm is facing lots of problems
and it need to take lots of steps to improve its condition.
Social factor: The social factor is also affected to company and its growth factors which
is consisted with taste and preferences of customers that are changed as per current trends. For
example: as the customers become a more informed, there is increase demand of organic food
which can give negative impact on company, if ASDA is not provided organic food to
customers. On the other side, if ASDA is provided organic food to customers who are keen on
organic foods are created various benefits for company (Buckley, 2020). this impact to strategies
of company because management have to make decision for new planning of food.
Technological factors: Nowadays technology is more advanced, which affect to ASDA
because their various customers are uses advanced technology to reach out customers. For
example: company is not adopted e-marketing for fast shopping. In this case customers are
moved to another company because customers are like to shop online. On the other side, if
company use e-marketing and online shopping apps then customers easily booked their orders
and increase sales which is beneficial for company. This can give negative impact on company
strategy because add this technology in their strategy for meet the needs of company.

Legal factor: Legal factors are consists with various laws and regulations which affect
company and its growth. ASDA operates in UK, in that company have to ensure about various
regulations puts in place by UK government for not fine are imposed and company have proper
knowledge to working with that and take advantage of this. Like: employee is injured at time of
work than company have to provide compensation to employees against of their injuries. If
company is not provide this, than it can affect to business and strategies because company have
to take decision as per health and safety act for employees.
Environmental factor: Environmental factors also can affect to company and its growth
factors. Present day's wastage management and recycle material is happing (Banda and et.al.,
2019). For example: company can steps where it recycle products or it can gathered such kind of
product and send it to the firm that recycle such kind of waste. If company is not focused on
recycle then it reduces customers. For that company need to make focus on recycle products and
share some part of the profit in CSR.
Those factors are give impact and influences strategies of company in negative and
positive manner. For that here, is also used stakeholder analysis of company are as follows:
Employees are the major stakeholder of ASDA because they are main who are give hard
contribution within the company tom achieve goals and objectives of company (Brown, 2018).
Another important stakeholder are consumers, and they are interested in product and services
which ASDA provides. They are the strong stakeholder because if customers are not happy then
they are not purchase products and this affect to profits.
With the help of this company is able to know about their stakeholders which are important for
company for introducing new strategies for growth and sustainability as well as achieving
current strategies of ASDA.
Analysis internal environment and capabilities of organization
The internal analysis is composed with various elements like employees, management
and structure of company. This help to design employees behaviour and direction for achieving
mission and vision of company. For analysis the internal strength and weakness of company,
here is use SWOT analysis of company are as follows:
Strength:
The main strength of ASDA have wide network of the numerous stores through UK
which has ensured that company have strong brand name (Shiwakoti, Iqbal and Funnell, 2018).

In addition to that, the company have more than 136 retails stores which means that company
have economies benefits. ASDA have strong financial position which is created higher profit
advantage for company in effective and valuable manner.
Weakness:
The main weakness of ASDA is cheaper retailer which might at the time which the
company sells poor quality of products and services to customers (SWOT Analysis of Asda,
2019). Company have lack of proper financial planning, which is leading to certain
circumstances where there is not enough cash flow as required for unplanned borrowing.
Opportunity:
There are number of opportunities in the market that ASDA can explore to grow its
business at rapid pace. Technology development is another opportunity for ASDA because it will
benefit company a lot in beating its arch rivals. By using automation technology to great extent
cost can be reduced in the business.
Threats:
There are number of threats in the retail market in the UK and one of them is presence of
the large-scale retail chains like Tesco and Sainsbury etc (Brennan and Tennant, 2018). Also,
noted bargaining power of suppliers increased over the years by decreasing number of suppliers.
This means cost of inputs are increase.
In order to analysis, internal capabilities of ASDA company here is use VRIO analysis
model. This model is reflects complete capabilities and capacity of company to perform their
effective performances at market place.
VRIO analysis:
VRIO analysis is the analytical technique for evaluate the resources and thus competitive
advantage of company (Alpsahin Cullen and Archer-Brown, 2019). This framework helps in
analysing resources and capabilities of ASDA. Valuable: ASDA have a great financial resource which are highly valuable as these help
in investing into external opportunities which are arisen. The type of resources which are
of value to ASDA are employees, financial resources, cost structure, and research and
development department. The financial resources are valuable because without finance
no work can be done. R&D is a valuable resource because there are many changes in
environment ans this can be managed by R&D only.

 Rare: the financial resource of the company is also rare which is found through VRIO
analysis model (VRIO Analysis of ASDA, 2018). the rare resource of company are patent,
financial, cost structure. Patent are rare because these can used by other competitors as
well. Imitate: It refers to the situation where core competency of the firm can imitate by the
rival. In case of ASDA there is nothing that can not be imitated by the rivals like Tesco.
Firm business model is not so unique which other firms find it difficult to copy in their
business. Hence, within specific area firm should try to innovate its business operations
to maximum possible extent.
 Organization: Financial resources of ASDA are organized to capture value which is
identified by the VRIO analysis of ASDA. The resources which are properly organized
for effective use are distribution network, finance, cost, employees and research and
development. The finance and cost are most organized resources as if these will not be
organized then whole working of ASDA will be effective.
Porter five force model to evaluate competitive force.
Porter five force is the business analysis model which help to explain sustainability of
business at different level (Jansen, 2017). In respect of that company need to analysis
competitive forces. For that here is use porter five force analysis model are as follows:
Bargaining power of suppliers (LOW):
ASDA offer number of products to the customers and within single product line multiple
companies offer their products. Thus, it can be said that there is less bargaining power of the
suppliers in the market.
Threat of new entrants (LOW):
As per these customers are look for the differentiated products (ASDA Porter Five Forces
Analysis, 2018). The company have strong emphasis on advertisement and customers service.
Through that customers are easily moved towards company as per that threat of new entrants a
weak force within the industry.
Bargaining power of customers (HIGH):
Bargaining power of customer is gives impact on business because customers have higher
switching cost when they are not received effective and best quality of product and services. ,
2020). Bargaining power of the customers is very low because in the retail store already products

are available at relatively very low price. Hence, product is already available at reduced price
and due to this reason customer cannot bargain for price. Thus, customers have no bargaining
power.
Threat of substitute product (LOW):
The availability of substitute products and services are lower which make competitive
environment more challenging for ASDA and for other existing players. Number of substitutes
of the single product are available in the market. Hence, one product that is available at ASDA is
also available in the other market and due to this reason ASDA earn low profit in the business.
Thus, threat from substitute is very high in the market.
Competitive rivalry (HIGH):
The competition is very high in this industry among the existing company shows the
number of the competitors which are given high impact on the business (Constantiou, Marton
and Tuunainen, 2017). The competitors of ASDA such as Tesco, Morrisons etc.
As per the above analysis, here is understood that bargaining power of suppliers, threats
from new entrants and threat from substitute products are weaker force which are created lower
impact on the business. On the other side, company affected by competitive rivalry and
bargaining power of customers because those are created higher impact on the businesses. Those
are the factors which are related to the porter five force analysis. This represents all those factors
which impact to ASDA with higher and lower forces are.
Ansoff matrix:
This model is a strategic marketing planning tools which is used for analysis and generate
four alternative directions for strategic development of business (Nußholz, 2017). Market penetration: this refers with some changes and make new strategy to increase
sales of company in effective manner. In this firms by innovating their product lines try
to increase their market share at fast pace. In current time period there are large number
of firms that are following this strategy because already their market is in saturation stage
and either then can enter into the new market or make innovation in their current market
so that revenue can be enhanced. This is the reason due to which now a days most of
firms develop R&D centres in their business so that business revenue can be increased at
fast pace.

 Market development: This consists with enter new market or country without introducing
any new product and services at market place (Harding, 2017). in this companies are
target to existing product to new market segments. In this strategy firm search new target
audience and serve products to them. With slight changes firm try to satisfy needs of the
customers in the market. Hence, it can be said that it is the one of the best strategy that
any company can follow in its business. Product development: In this company make various strategies which are reflects the
development in existing products and services of company. In that company can include
improve quality of product, review of packaging, ask with customers about some changes
and influencer for feedbacks etc. in these firms develop new product into existing market
segment.
 Diversification: It refers to the situation where a business firm add new product in its
product line or enter in to the new market in order to tap opportunities that are available
in the new market. In this company need to introduce new product and services for
attracting more customers toward company in effective manner. In these companies are
diversified into new businesses by developing new products for new market.
This model is help to analysis product and services strategy of company (Prendeville and
Bocken, 2017). As per this, the best options and direction for ASDA is market development
because through that company have chance to target new customers towards company.
Theories, concept and models, strategic planning.
From the above analysis of all the questions find out the various threats which are
important to overcome by ASDA for gaining the highest competitive advantage for company. In
respect of that here is included Bowman strategy clock model:
Bowman strategy clock:
This model is explores the options for strategic position of company. The main purpose
of this model is to illustrate the business will have variety of options to know the position
product. The explanation of these strategies are as follows: Low prices and low value added: For ASDA this strategy is not appropriate because in
industry retailers are making available quality products at low price. Customers will not
accept low quality product at low price in the market. This strategy will not prove good

for ASDA because in this price of product is lower but value is as well. As per that, this
is not strategy for company. Low prices: In this strategy company can set lower prices of product and offers to
customers. This help to attract more customer as per their lower price of product
(Buckley, 2020). Hybrid: In this strategy company make available differentiated product at low price and
of good quality. This option is best and effective for company ASDA to use. Differentiation: the main aim of this strategy is to offers the highest level of perceived
value to customers. This is the effective opportunity for ASDA to producing product by
considering new trends which are happens at market place. For that company need To
increase investment on research and development department because through that
ASDA is able to analysis the complete market and find out those new trends which are
comes within the industry. Focused strategy: This another strategy which have aim to position of product is high at
market place (Evans and et.al., 2017). This strategy can have adopted by using premium
price through targeted segmentation, promotion etc. this help to company for leading
highest profit margin. Monopoly pricing: In this strategy firm make available its product at very high price
because already there is no competitor in the market.
 Loss of market share: In this strategy firm make available mid-range of products which
are poor in quality. In UK retail sector this strategy will not work out because people
already get good quality product at high price in the market.
Porter generic strategy model: Cost leadership: In this strategy firm make an effort to control cost of production in its
business so that goods can be made available to the customers at cheaper rate. This
strategy is already followed by Lidl and Aldi in the market. Through that company have
to implement an advisory board which is help to best control cost and proper
management. With the help of this management get feedback about decision before
taking decision actions and getting additional tax advantage to ASDA. Differentiation: This involves the new marketing product and services in different from
and more competitive advantage. In To adopt advanced technology and increase

investment on research and development department. Through that operations can be
automated to reduce cost (Bolton and Hannon, 2016). through that company have
analysis new trends for business growth. Focus strategy
◦ Cost focus: Under this strategy attention is paid on the cost of the product so that by
reducing its customer base can be increased in the business at rapid pace. Cost
reduction assist firm in developing more reliable customer base in the business.
◦ Differentiation focus: In this strategy firm focus on product differentiation and add
new product in its product line or innovate its existing product line. By doing so it
serve customer’s needs in better way then rivals.
Recommendation for ASDA to adopt strategy new market identification as porter generic
strategy model. ASDA must also be looking for commencing its operations in the new market so
that more areas of income generation can be created in the business. Through the bowman
strategy, ASDA should make online shopping apps for offering online shopping facility to
customers for attract customers towards business.
Strategic management plan:
Strategic management plan is help to ASDA for promote growth and sustainability of
company at market place in effective manner.
Strategy:
The strategy of ASDA is to target the customers who are like online shopping. Increase
the investment on research and development department for analysis the market. With the help of
this company is able to analysis the current trends.
Objective:
 Doing online marketing by launching new campaigns on Facebook.
 To promote growth and sustainability of business till the year-end.
Tactics:
 Preparing mobile apps.
 Aggressive marketing of the brand name through social media platforms.
This help to ASDA for promote their growth and sustainability of business at market place.

CONCLUSION
From the above study, it has been concluded that business strategy is important part of
company which helped to promote growth and sustainability of company in effective manner. In
this report, covered various frameworks which had helped to gain the highest growth of
company. There has mentioned that various factor has affect to business in negative and in
positive manner. For analysis internal analysis of company and capabilities used SWOT analysis
and VRIO analysis through analysis capacity of organization for perform task in effective
manner. Bargaining power of supplier, threats of new entrants and substitute product has created
lower impact on the business. Strategic management plan and mention strategies for promote
growth and sustainability of business at market place in effective manner.

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ONLINE
About ASDA. 2020. Online. Available through: <https://www.asda.com/about>
ASDA Porter Five Forces Analysis. 2018. Online. Available through:
<https://www.case48.com/porter-analysis/13769-ASDA>
PESTLE analysis of ASDA. 2019. Online. Available through:
<https://www.howandwhat.net/pestel-analysis-of-asda/>
SWOT Analysis of Asda. 2019. Online. Available through:
<https://www.pmi.org/learning/library/stakeholder-analysis-pivotal-practice-projects-
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VRIO Analysis of ASDA. 2018. Online. Available through: <https://www.case48.com/vrio-
analysis/13769-ASDA>