Analysis of Macro and Internal Environment for Strategic Management Decision

This study critically analyzes the macro and internal environment of ASDA, a leading supermarket chain in the UK, to inform strategic management decisions. It includes a PESTLE analysis, SWOT analysis, and Porter's five forces model to develop effective strategies. The report also discusses the importance of technology and stakeholder management in strategic planning.

Business strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Analysis of macro environment to identify and inform strategic management decision............3
Internal environment analysis by using appropriate tools...........................................................6
Porter's five forces model to develop strategies..........................................................................9
Apply concept, theories and models of strategic management and develop strategic plan.......10
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Business strategy refers to set of competitive actions or moves that a company uses to
gain attention of their target market and to achieve organizational aims. It outlines how
organizations can be carried out to reach at their desires ends. It also defines what companies
need to do to achieve all their goals which can be aid guide decision-making procedure for
resource allocation and recruiting. The present assignment is based on ASDA, which falls under
category of the best retailer, online groceries provider and leading supermarket chain in UK.
This study will critically analyse macro environmental factors by applying appropriate
tools to identify its impact on strategic management decisions. Beside this, it will also critically
evaluate internal environment of company by using relevant frameworks such as SWOT.
Furthermore, this report will explain strategies development by using Porter's five forces model
to improve competitive boundary and market position. At last, it will describe appropriate
strategic management plan that has tactical strategic objectives as well as priorities for company.
MAIN BODY
Analysis of macro environment to identify and inform strategic management decision
PESTLE analysis-
Political factor-
Brexit is one of the political factors that impact on decision-making process of ASDA
and its management (Shaw and Shaw, 2019). Due to this factor when England leave EU retails
sector lose their main trading partners that can affects on their sales and productivity. Without
trading partners ASDA and other retailers cannot be able to supply their products, as it put
negative impact on business practices. Administration can develop trade partners by following
some rules according to current scenario.
Economic factor-
These factors play essential role in growth or failure of ASDA (Stouraitis, Harun and
Kyritsis, 2017). Economic growth is one of the key element that affects strategic management
decision negatively because the factor in UK as compare to previous year going down which
means company has to adjust their current business practices which makes them able to generate
revenue. GDP growth rate as compared to last year in UK was 1.41%. So, it clears that firm need
to improve services and activities that can be increase GDP more than now.
Social factor-
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Health and welfare awareness among people drive them towards purchasing healthy
products which put high pressure on ASDA to keep their inventory according to market needs
(Flaherty and et.al., 2020). It put positive impact on strategies' management decision of firm as
they already consider buyers requirement and provide fresh as well as organic food products.
This act can increase profit margin and sales of company.
Technology factor-
Technology development gives ASDA the best chance which they can use to gain
attention of buyers and retain exiting consumers with product purchase for long (Loon, 2017). It
put positive impact on management judgement as they can create own application to take order
and deliver it at mention address by client. It can make workers able to build strong bond
between potential customers and business. It also allows firm to take buyer feedback via using
app which make them capable to consider possible changes.
Environmental factor-
Government and buyers concern towards environment safety put high pressure on ASDA
to keep business practices sustainable (Urquhart and et.al., 2017). It also makes positive impact
on firm strategy as company develop Eco-friendly environment in outlets. They besides
instrumental as retail firm in back upping C decrease. Their outlets are 40% more energy
efficient and emit 50 percent less Carbon Dioxide than standards new physique outlet. ASDA
already work with their providers to cut down total of C emitted which makes them able to
achieve better outcomes.
Legal factor-
Regulations and rules of nations in which ASDA operates and wants to operate can be
put positive impact on decision-making of management when they follow it (Greenwood, 2019).
Laws related to employment can put negative impact on firm because every nation has different
terms and conditions according to economy. To operate in other country company have to pay
employees accordant to rule that goes to be quite difficult to do.
Stakeholder Matrix-
It is another framework used to identify external factors that affect strategies employed
by ASDA. Organization wants to establish their business US which makes them stronger to
reach at global level.
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Keep satisfied (High power and low interest)-
Suppliers of ASDA are the main stakeholders who have high power to put negative
impact on current operational activities of company (Botes, Niemann and Kotzé, 2017).
Organization keep their suppliers satisfied because without obtaining needs they can switch to
another firm who is able to fulfil their requirement. It impacts negatively on firm business
expansion strategy at that movement management had to build better connection with suppliers.
Monitor(Low power and low interest) -
It can be said that workers of ASDA or any retailer does not hold power to take any
decision and then implement it at workplace (Lipsitz and Starr, 2019). Employees are less
interested in growth and success of company, as they are able to switch to another job where all
their needs are fulfilled when people leave work then organization can replace them with other
applicants who are more effective and knowledgable.
Manage closely (High power and High interest)-
Local and national authority has high power and highly interested in growth of ASDA
which in return increase GDP or help in economic growth rather than past few years. Company
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Illustration 1: Stakeholder Matrix
(Source: What is a Stakeholder, 2020)

must manage their business operations and practices according to government rules as well as
policies as they can put high pressure on them to be effective.
Keep informed (low power and high interest)-
ASDA should always inform their potential buyers about things that may change in
existing products or when they produce the new one as they have low power to influence current
practices but are highly interested to buy quality goods or services in exchange for money.
Internal environment analysis by using appropriate tools
SWOT analysis-
Strengths-
The strength of ASDA is to come from a huge network of varied outlets throughout UK
that has assured that firm has a strong brand name or image in market. With strong brand name
they can enter into market place where buyers are able to purchase products or services. It has
more than 136 outlets which means that firm benefits from economies of scale. Company is able
to adopt any new concept that works in US because they have strong workforce who are capable
to act effectively in any situation.
Weaknesses-
ASDA has positioning issues, its products are not as good as those of Waitrose and other
similar brand such as TESCO, ALDI etc. it can impact on their current business expansion
strategy and other things relate do it. Due to this weak point of company they can lose their
potential consumers and may be impact on its brand image within market place negatively.
Lack of investment in new technologies is another weakness of this organization that also
put negative impact on present strategy as well as operations efficiencies. Firm need to focus on
their weaknesses.
Opportunity-
It can be said that ASDA effectively obtain competitive advantages and become global
leader when they can garb available opportunities in market. Company by investing into
advanced technologies reach at target market easily and identify their needs to deliver products
accordingly which in return increase sales and profitability. They need to invest in implementing
fast technologies that can enhance speed of production function effectively which makes them
able to cater items in market on timely manner.
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Wit the help of this opportunity ASDA can enter into new place where they can cater
better quality goods accordant to market demand efficiently.
Threat-
The main threat of company is increasing competition posed by other business rivals such
as Morrisons, Sainsbury's, TESCO and Aldi are operating in same sector since for so long with
better quality services and strong team. TESCO and Aldi have also been effectively gaining
market share in United Kingdom retail industry that they pose a big threat to ASDA. Due to this
factor organization feel more pressure to give their best and much better than everyone. Because
of intense competition firm has to do many changes which is also very important for company to
gain all benefits in their industry.
Porter value chain framework-
Primary activities-
Inbound logistics-
As compared to other existing players, ASDA is among the most the cheapest retailers in
United Kingdom. Among others, company efficient ordering systems and economies of scales
play vital role in assuring that firm is capable to sell their products at low prices which makes
them able to make more profits.
Operations-
To manage their operations organization adopts different strategies that assure firm
production, marketing and other functions are efficient. Company has implemented ERP
(Enterprise resources planning) within business structure that assures management achieves
effectiveness and efficient in all their operations appropriately.
Outbound logistics-
Apart from depending only on ASDA physical outlets, company has an online presence
that assures employees those buyers who prefer to shop online or have no access to firm physical
stores do their purchasing online. Company is able to identify potential consumers and reach at
them.
Marketing & sales-
Organization generates their brand or products awareness in effective manner because
ASDA is using varied marketing tools. It makes firm able to reach at their target market. Firm is
heavily relying on social media marketing as well as word of mouth promotion.
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Services-
To satisfy their buyers Asda is now offering fresh food items and other products along
with groceries. This has added more services to their offering in order to assure that it appeals to
different types of consumers. Firm establish close relations with different manufactures which
consider as their other supporting services which makes assure that business is capable to obtain
items at low prices.
Secondary activities-
Company infrastructure-
The infrastructure of ASDA makes them able to accomplish day to day activities on
timely manner and handle legal issues effectively. Finance department allocate funds to all
departments according to their need and demand.
Human resource-
HRM with appropriate skills and knowledge handle existing workforce, they develop
training and development programmes for them to increase employees productivity level more
than before which in return increase business sales and performance level.
Technology development-
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Illustration 2: Value Chain Analysis
(Source: Porter's Value Chain Analysis, 2019)

It analysed that Asda is not investing in implementation of technology at production
process that affect overall business practices negatively. It is really very important for company
to use advance technologies in varied functions.
Procurement-
It denotes procedures included in buying inputs that may range from machinery, supplies,
equipment and raw materials. ASDA collect things from good suppliers who are able to provide
quality things which used by company to manufacture products and deliver in market.
Porter's five forces model to develop strategies
It is the best analysis frameworks that aims at develop position of a company in any
sector in perspectives of five different forces. Here, this model is used in regard to ASDA and
produce effective strategies to improve competitive edge by using it.
Bargaining power of suppliers-
Suppliers are a group of experts that supplies products and services to another company
such as ASDA. It can be said that degree of this force is low because number of supplier is large
which allow organization to choose another one (Talay, Oxborrow and Brindley, 2018). It can be
low because suppliers do not get so much power that even then they can demand for increasing
cost of supply activities. It does not put any negative impact on firm, and they can sustain for
long within marketplace with satisfied consumer base. With low power suppliers has to work
with ASDA for longer which is beneficial for them as well as business.
Bargaining power of consumers-
Any individual who buy services or goods for their personal use and not for producing is
called buyers. The level of this force is high because customers have power to slow down
productivity and sales of ASDA. Target market of company has many options where they can get
and purchase instead of purchasing from firm. Availability of the biggest players in retail
industry increase power of buyers as it allows them to switch which directly impact on
organization sales and production procedure negatively. With strong bargaining power shopper
can put pressure on company to lower prices of products or services and to improve quality of
goods.
In order to retain potential buyers and gain attention of new one Asda has to produce their
products after identify consumers needs as well as their preferences. They can take feedbacks
from customers about company products.
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Threat of new entrance-
New entrance means a company attempt to enter into UK retail industry to gain all
competitive advantages and increase their profit margin. Degree of this force is would be low as
companies wish to enter into market need to make a lot of capital investment to establish their
good presence at new place. It is the main reason that put high pressure on new entrant and
creates barriers for them which makes them unable to enter. This threat makes industry less
attractive. Thus, it can be said that this force would not affect ASDA as they do not feel any
pressure and perform effectively.
Threat of substitute services or goods-
The extent of this force is high because buyers can easily and efficiently access items or
other things without having to pay extra costs for it. Convenience outlets usually referred to as
main shops, where people can buy things according to needs, off licences and organic shops is
considered as substitute products easily accessible in retail industry. Threat posed these form of
stores can be said to be high since they have stock of varied types of items implying that people
would less have to frequent supermarket to fulfil their needs.
To gain competitive benefits company need to measure their inventory management
procedure and keep it up to date according to trends.
Competitive rivalry among current companies-
Competition between existing players such as TESCO, ASDA and Aldi is very high as
the main supermarket adopts different methods and strategies to assure that they can appeal to
consumers who are their potential target market. Without matching a concurrent increase in
clients demand, profitability for ASDA are bound to go down. Thus, at that movement company
need to focus on their weaknesses and overcome by implement new advanced technologies
which make them able to improve product quality. As it also help them to gain attention of
buyers and achieve all their set objectives.
Apply concept, theories and models of strategic management and develop strategic plan.
From the above discussion which is based on the various concepts which are help to
analysis whole market and its current trends that are affect to ASDA Company. Through that
company management is able to find out various threats and opportunity to company for
overcome threat for gaining best competitive advantage for company. In respect of that, here is
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included Bowman strategy clock and porter generic model for analysis best way to improve
strategic management of company are as follows:
Bowman strategy clock:
Bowman strategic clock model is the explore options for strategic management and
positioning. This help to provide best competitive advantage for company in effective and in
valuable manner. The main purpose of Bowman strategic clock is to illustrate the business which
will provide variety of options to position of product which is based on two dimensions price and
perceived value. This is applying in ASDA are as follows:
 Low price and low added value: this is not for the competitive position for business.
ASDA is the retailer company for that, this strategy is not suitable and effective because
company deals in various kinds of product and services which are different and their
quality of product is attract to company (Bowman strategy clock model, 2018). The
product is not differentiating and the customers perceive very little value which is dispute
a low price.
 Low price: this is another strategy of clock model. At their ASDA can make their
compete focus on lower cost of product and services. With this strategy company is
become a lower cost leader in a business. This help to attract customer as per that lower
price of product. In this, ASDA have lower profit margin with lower price of products.
 Hybrid: this position is involves element of lower price, but also some product
differentiation. This have aim to persuade consumers which there products are added
value through the combination of a reasonable price and acceptable product
differentiation. As per that ASDA is able to sets lower price of new product by adding
some feature into existing products.
 Differentiation: the main of this strategy is to offers customers highest level of perceived
values. In that branding plays a very important and effective role in strategy as with the
quality of product (Echchakoui, 2018). This is the best and effective opportunity for
ASDA in order to producing product by considered with new trends that are generated
into market place. In completing this strategy company need to make complete focus on
their investment on research and development department and market analysis. This help
to provide complete details of current trends and created best unique product for
attracting customers.
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 Focused differentiation: the main aim of this strategy to create position of product at the
highest price level, at their customers by the product because of the high perceived value.
In that company ASDA can make their complete focus on making different product and
service with aim to achieve premium price by highly targeted segmentation, distribution
and promotion. This also best strategy for ASDA Company.
 Risky high margins: this is the high risky positioning strategy which is failure. With the
help of this strategy, business sets their higher price of product without offering anything
extra for perceived values (Desai, 2019). Higher price of product is created higher profit
margin but most of the time that is not possible or company because higher price of
product is decrease attraction of customers. So, this strategy not suitable for company.
 Monopoly pricing: monopoly pricing in the market, there is only one business which are
offers products. That has complete need to concerns with added value for customer
perceives in product. With the help of this, ASDA have opportunity to offer product as
per customers’ needs and wants.
 Loss of market share: the main position of company is a recipe for disaster in any
competitive market. That is setting with the middle range of standard price for a product
with lower added value. Through that company and customers have effective and
valuable options for customers.
Porter generic model:
The porter generic strategy is consist with three factors such as cost leadership,
differentiation and focused strategy. Here is mention and evaluate strategy in respect of ASDA
are as follows:
 Cost leadership: this strategy is involving complete competitive advantage by
considering lower price of product. In that companies are sets lower price in order to
attract more customers towards company and its products. In respect of ASDA, can use
this strategy and sets lower price into industry is help to increase customer base and
generate more profit for company in effective and in valuable manner (Porter generic
strategy, 2017). With the help of this, company have to implement an advisory board for
making best control as well as proper management. Through that company is able to get
all the feedbacks from customers and make best decision as per customers required is
added advantage for ASDA.
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 Differentiation: this is the best strategy because in that company have their complete
focus on unique feature of product (Firoz Suleman, Rashidirad and Firoz Suleman, 2019).
Most of the customers are attracted towards unique product and services. In that company
ASDA is to adopt advanced technology which are happens into US and increase
investment on the research and development. With the help of this, operation can
automated for reduce cost.
 Focused strategy: focused strategy is consisting with two factors such as cost ad
differentiation focused strategy. That is help to company for follow best strategy in order
to attract more customers by expanding business into new market. cost focused strategy is
make proper and effective focus on cost of product and services which are offers by
ASDA or seeks for target customers. This creates more profits for company. On the other
side, differentiation focused is completely related with new product launches into new
market in order to attract new customer towards company (Bell, Dyck and Neubert,
2017).
As per that analysis, here is add recommendations for ASDA for adopting new strategy into
new market by considering market diversification strategy. In that company have great
advantage to expand their business into new market as well as country. With the help of
Bowman strategy clock model, company should used online apps for attracting customer who are
like to purchase product and services from online stores. With the help of this ASDA, have
chance to create higher customer base and enhance profit margin in effective and in respective
manner.
Strategic management plan:
Strategic management plan is the complete detailed document which is include all the
blue print of work by including all those activities which are help to company for attract
customer by expanding their business into new market. With the help of this, ASDA is able to
promote growth and sustainability of company at market place in effective manner.
Strategy:
The main and effective strategy for ASDA is to target customers who are like to online
shopping. Additionally, increase investment on research and development department for
analysis market. Through that company have effective advantage to analysis whole current
market and customers requirements. Additional, strategy for company to analysis united state
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like taste of customers, preferences, needs and wants. At the time of innovative thinking,
company need to ensure about quality and quantity of products as well as price. ASDA should
sets price of product lower as per industry is help to attract more customers.
Objectives:
 To expand their business into United Stated.
 To promoting online stores for customers till the end of 2020.
 To promote growth and higher sustainability of business till the year end.
 To hire best employees for working on it.
Tactics:
 To organize training and development program for improving performance of employees.
 To provide online training for using online stores.
 Designing and building mobile apps.
 Paid more for promotional activities.
With the help of this, strategic management plan ASDA is able to promote their product and
services by expanding business into United State. This creates higher benefits for company. In
that company required to enhance investment on research and development department for
analysing complete market and gathered knowledge of current trends. As per that, company
attract new customers from new market which is increase profit margin in an effective manner.
That is create opportunity to attract and gathered new market and some innovation into existing
products and services.
CONCLUSION
From above discussion it has been concluded that ASDA build their strong position in
UK and across nation in effective manner. With skilled and talented employees company gain all
benefits and satisfy their target consumers effectively. By using PESTLE analysis it has been
identified that political, economic, social, technology and other factors put positive and negative
impact on company, but by developing strategic marketing plan firm overcome from all issues or
affects. Furthermore, it has been summarized that by taking effective action and using relevant
strategies organization achieve business aims and objectives as well.
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