Impact of Macro Environment on ASDA and its Strategies

This report discusses the impact of macro environment on ASDA and its strategies. It includes a PESTLE analysis, stakeholder analysis, SWOT analysis, and VRIO analysis of ASDA. The report also examines the internal environment and capabilities of ASDA.

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 Impact of macro environment on ASDA and it's strategies .............................................3
TASK 2............................................................................................................................................7
Assessment of internal environment and capabilities............................................................7
TASK 3 .........................................................................................................................................10
P3 Porter's Five Forces Model of ASDA ............................................................................10
Porter's Five Force Model....................................................................................................10
TASK 4 .........................................................................................................................................13
P4 Strategic planning of ASDA ..........................................................................................13
CONCLUSION..............................................................................................................................14
Reference.......................................................................................................................................16

INTRODUCTION
Business strategy is known as the combination of different decisions that are taken and
the actions which are performed within an organisation for attaining goals and objectives of
company. It is not possible for any company to work without making objectives and aims and
making specific targets (Aubry, and et. al., 2012). The main focus of business strategy is on
capitalising the strength of company and using this for developing competitive advantage. The
goal of business is achieved by executing different strategies of business. There are three levels
of business strategy – corporate, business unit and functional level. The following report is based
on an organisation naming ASDA. This is a British supermarket retailer which has headquarters
in Leeds. This company deals in financial services and mobile phone provider too. This report
discuses about impact of macro environment on company's objectives. This report explains
SWOT analysis, VRIO model, Porter's Five forces model and strategic planning of ASDA.
TASK 1
P1 Impact of macro environment on ASDA and it's strategies
Mission:- The mission of ASDA is to offer quality products and services to customers
and increasing their satisfaction level.
Vision:- To become one of the best value retailer of Britain by producing good quality
services and products.
Objectives:- The objective of ASDA is maximise the rate of expansion and provide
supermarket services across the world. This ultimately will help in increasing market share and
profits of the company (Burgess, and Radnor, 2013). Another aim is to increase the jobs within
company so that economy will grow.
PESTLE analysis: This is a very important framework that is involved in strategic
planning. It is helpful in analysing macro environmental factors which are affecting functions
and processes of business. There are seven elements in PESTEL analysis and these help in
knowing the ability of company to expand business in different countries. These are described
below -

 Political:- ASDA is a supermarket and grocery organisation of UK and the main
political factors that affects it's functioning are taxes, consumer rights and employee
legislation. There are different rules of international, national or EU which have to be
followed by ASDA managers to work within company. The political environment is
monitored on regular basis and on the basis of rules, decision making of company occurs.
 Economic:- It is essential for ASDA to consider economic factors like cost of credit, pay
level, labour supply and demand, energy prices, etc. while running business in different
countries (Cacciolatti, and Lee, 2016). ASDA has to focus on these economic factors as
they are directly linked to pricing strategies of company.
 Social:- There are different social factors that ASDA managers consider while doing
business in different countries. The offering of products and services to the company in
ASDA depends upon social changes like celebrity following, ageing population, healthy
lifestyle, etc. If this company analyses social factors effectively, it is easy to introduce a

new product or service that includes all requirements of customers and clients. A proper
analysis of social factors is helpful for ASDA to develop segmentation strategies.
 Technological:- This factor includes usage of new technology within processes and
functions of the company. ASDA is dealing with grocery products and supermarket
chain. There are various technological advancement which can be used by this company.
This company can use broadband services within it's supermarket and mobile
applications. Also, ASDA has the opportunity to use online delivery of products and
services. The supermarket organisation naming ASDA is working on developing new
technology and using latest equipments for delivering products and services.
 Legal:- It is important for ASDA to abide by the regulations and rules of countries in
which it is operating. If there is any case of breach of these laws, there are punitive
actions which can be taken by relevant authorities (Cserháti, and Szabó, 2014). This can
be explained by an example- ASDA has to pay minimum wage that is to be given in all
UK organisations. Also, this company cannot dismiss any employee without an unfair
case.
 Environmental factor:- This is known as duty of organisation to involve in environment
safety cases. The main factors on which ASDA has to work are green economy, organic
foods, hazardous waste, carbon footprint, pollution, etc. In today's world, there is increase
of awareness about environment friendly activities and eco friendly missions among
individuals. Thus, ASDA is taking initiatives to work upon taking initiatives related to
doing environment friendly activities.
It has been concluded from the above analysis that ASDA is having various opportunities
to expand it's market in different countries. The main motive of this company is to maximise
profit and sales of the company (Eason, 2014). This requires to do proper PESTEL analysis
before starting business in any area or region. ASDA ensures that it follows all regulations and
legal rules while performing business operations.
Stakeholder Analysis
Stakeholders are defined as those people who are directly or indirectly affected by the
way in which business is done. It is essential for any organisation to have loyal stakeholders so
that it can expand market share and grow business in different countries (Stakeholder
Analysis,2020). The stakeholder analysis refers to different techniques and tools used for

identifying and analysing demands and needs of project. Stakeholders of ASDA aims for
examining both external as well as internal stakeholders. It is important for identifying the way
in which this company communicates with other stakeholders. This is one of the largest
supermarket retailer within UK. The stakeholders of ASDA and their help in attaining business
objectives is mentioned below -
Internal stakeholders- In context of ASDA, the internal stakeholders are employees,
executive boards, shareholders and managers (Hoque, 2013). The main owner of ASDA is US
brand Walmart and the executive board of this company consists of President and CEO, Chief
Customer Officer, Chief Financial Officer, SVP-People (SVP-Senior Vice President), SVP-
Operations, and SVP-Commercial. There are approximately 15 Lakh employees working in this
organisation and salary /pay of these employees is increased on regular basis in order to motivate
them.
External stakeholders - ASDA is having external stakeholder such as suppliers,
customers, creditors, groups, local communities, pressure groups and government. This company
is serving in many countries around the world. The main thing on which this organisation must
work on is to increase the level of customer satisfaction. There are lot of competitors of ASDA
within market like Tesco, Aldi, Sainsbury, Morrisons, etc. This company is facing problem with
it's suppliers (Kohtamäki, and et. al., 2012). This company faced an accuse for not using
Grocery supply Code of Practice.
Communication with stakeholder - There are various communication methods that
helps in reaching stakeholders. ASDA has all information related to it's products on it's websites
and it also provide regular press releases for informing it's stakeholders about position of
company within market. Also, extensive marketing campaigns are carried out for reaching both
present as well as potential customers. Customers can share their problem on email or contact
numbers of the company. There is also online conversation provided to customers if they want to
give any feedback.
From the above stakeholder analysis, this has been concluded that ASDA has it is
concluded that stakeholders are an essential factor for company (Lee, and Smith, 2018). ASDA
is running it's business since many years and provided good products and services to people.
This helps ASDA to increase loyal and satisfied customers.

TASK 2
Assessment of internal environment and capabilities
SWOT analysis of ASDA
SWOT analysis is that tool of management which is used by strategic leader of
organization for scanning external environment and make strategies according to it for
attainment of organisation pre determined objectives (Lee, 2014). It is analysis of ASDA about
there strengths, weakness, opportunities and threats.
Strengths: Extensive Distribution : ASDA has large number of distribution channel across UK
which includes around 25 distribution stores. These stores are used to store chilled foods,
clothing, and ambient products like cereals and carbonated drinks. Huge Range of Products : ASDA has a long range of products, where they sale clothes,
food, beverages, ASDA mobile and ASDA money. Highly skilled workforce : ASDA has a high investment in their staff's training and
development because trained staff bring high efficiency in work and increase profitability
in long run of organisation. Strong dealer community : Dealer of ASDA are strength of company as they just not
only supply product to enterprise but also promote firm and provide training to staff
about there product for better understanding of customer.
Weaknesses : Limited Global Presence : This company has few presence in global market as compare
to its major competitors like TESCO and M&S. This is weakness for company as it
directly impact on profit of company (Linn, Sanden, and Piekkari, 2018). Low feedback machinery : ASDA have company has not being able to tackle challenges
present by new entrants in segment and has lost small market share in niche categories
that is because of lack of feedback in organisation. Research & development : This firm has also a weakness of low investment in research
and development. R&D is a crucial step for any firm as it have its direct impact on firm's
future growth.

Opportunities : Entering in new market : ASDA have high number of opportunities for expending its
business in new market as because of government intervention and free trade agreements
there are large number of possibility in market. Acquiring Smaller Company : Acquisition of small company can help ASDA to expand
its business operations. this also leads in improving company's market share as well as
distribution channel. Presence in Online Market : Online selling of products is becoming trend in today's
market where customers are tend to shop online. ASDA has a big opportunity to expand
its business online.
Threats : Price war : Price of there products is always a threat for any organisation this is because
of competitor's pricing polices . ASDA has also suffering from this threat because itse
main competitors are selling at low prices .
 Government Changing Policies : polices of government are keep changing regularly
which can be act as threat to firm. Like ASDA is facing BREXIT as a threat.
After SWOT analysis of ASDA it is examine that firm have limited threats in long run but they
have to focus on pricing strategies (Milovanovic, 2015). Extensive Distribution, Huge Range of
Products, Highly skilled workforce and Strong dealer community are those strengths of company
which can help company in effective leadership with combined strategic plan for macro & micro
environment. There are some weaknesses also but they can be cover up by further opportunities
of the organisation.
VRIO analysis of ASDA
This model is adopted by organisations for evaluating weakness and strength of company. This
analysis is fundamentally on four aspects which are value, rarity, inimitable and organization .
There are four resources of ASDA financial resource, local food product, trained staff and
distribution network. Valuable : Valuable are those resources of company which it needs for survival and
growth in business environment. Financial resources of a firm are used in strategic
planing and management for using opportunities. Local food market of UK is very wide

where ASDA work and it is valuable for enterprise as it prescribe all customers of firm.
According to VRIO analysis trained staff is most valuable asset of ASDA because it
invest huge cost in training of their employees (Morton, Wilson, and Cooke, 2015).
Distribution network is also a valuable asset of organisation as it depends highly on it. Rare : Financial resources of ASDA are founded rare in VRIO analysis as strong
financial resources are posses by few companies who have global presences in industry.
Local food product are rare according to this analysis on ASDA. Reason behind this is,
food product industry of UK where products are available easily. Well trained staff is a
rare resource of ASDA as company invest more on there staff's training & development.
Distribution channel of this firm is also rare as it prefer in its own distribution channel
where they deliver there product at nominal fee to there customer.] Imitable : financial resources of this firm can't be imitate essay because it acquire them
with their prolonged profits over years . Trained staff of company can be imitate easy as
other firms have their own training programs which doesn't require huge cost.
Distribution channel of firm can't be imitate by other competitor as they are following
their own distribution channel.
 Organized : All resources have to be organized by company to ensure smooth
functioning which are financial resource, local food product, trained staff and
distribution network (Pasquinelli, 2014). ASDA is focus on its distribution channel as it
is that resource which is rare and imitable for company . This characteristic has helped
company in gaining a competitive advantage in market and ensuring effectiveness in
strategic leadership. Financial resources of company are also a great competitive
advantage to company but it is not focusing on them.
Resources Valuable Rare Imitable Organized results
Financial
resources
Yes Yes Yes No Unused
competitive
advantage
Local food
market
Yes No Competitive
equality

Trained staff Yes Yes No Temporary
competitive
advantage
Distribution
network
Yes Yes Yes Yes Long term
competitive
advantage
After implementing VRIO framework on ASDA it is analyse that company have four major
resources financial resource, local food product, trained staff and distribution network in which
financial resources and distribution network of ASDA are those sources who provides great
competitive advantage to firm in long run. Human resources of firm are also provide them with
small term competitive advantage but their food product have less competitive advantage in
firms long run .
TASK 3
P3 Porter's Five Forces Model of ASDA
Porter's Five Force Model
Porter's five force model is used by company for analysing the external market
conditions which helps in identifying the industry's weakness & strengths for formulating
leadership strategies.
 Competition in the industry : competition in industry is first force which effect any firm.
If there is large number of competitor there will less power of company over industry and
if there is less competitors then there is high power of company,where it can decide its
policy without the intervention of external factors (competitor). In context of ASDA there
are large number of competitors like Tesco, Morrison, and Sainsbury , who have big
investment and huge market share this firms adopting new strategies every day so ASDA
have to adopt various strategies in order to ensure that they appeal to the public who are
their customers.

 Potential of new entrants into the industry : potential of new entrants is also an important
factor of this model as new entering firms have there direct impact on other existing
competitors as they effect the profitably. But ASDA has no issue with that as it is
operating at very high investment, and it is impossible for a new firm to make high
investment and earn profit according to that investment. Power of suppliers : In this step of porter's model the powers of a suppliers are analysed,
if supplier of the firm are less in number then organization will loose its power of
bargaining but if there is a huge market of raw material of product than organization will
get its power to bargain for raw material. This will impact positively on enterprise as it
leads in decreasing the cost of production of the organization. The bargaining power of
ASDA'S supplier can be said to be low since they have to supplier products according to
various supermarkets. Power of customers : power of customers means ability that customers have to drive
prices lower. This is happen when firm have a particular product and limited number of
customer, than customer have power of driving prices low. This have direct impact on
firms profit as lowering the price will leads to low revenue. ASDA has no such issue
because company have variety of products as well as number of customers which
reduces powers of customers of company.
 Threat of Substitutes : threat of substitutes refers to that fear of firm where customer have
an choice between company and competitor product . In case of ASDA the threat of
substitute is more as there are many competitors like ‘corner shops’, organic shops and
off licenses are selling particular products( at a low cost because of product
specification ) which leads in high competition to ASDA.
After analysing the five models of porter on ASDA it can be concluded that firm is facing
a tough competition from its competitors but it can mange this by using strategic planing and
good governance (Rasula, Vuksic, and Stemberger, 2012). Other factors are constant for this
enterprise but they have to focus on there substitutes because it can become a major threat to the
organization profitability and long run existence .
Ans-off's growth vector matrix:-

This is a strategic management tool that is used by organisations for making their future
strategies and plans. There are four types of strategies that can be developed within market such
as market penetration, product development, market development and diversification. In context
of ASDA, this approach or model is used for knowing which is the best strategy for increasing
market share of the company. The four strategies of Ansoff in reference to ASDA are mentioned
below -
Market Penetration:- This is a strategy used within companies for utilising existing
product or service and trying it to expand in existing market. There are two factors on which
company focuses such as Quality or low price. This helps in attracting more number of
customers. When any product offered by ASDA becomes popular among customers, it can be
innovated and provided at higher price in existing marketplace.
Market Development: - According to this strategy, there is selling of existing products in
a new market region or area (Ritter, and Andersen, 2014). This strategy is helpful for ASDA to
expand it's market in different countries across the world. It is not easy for ASDA to work in
global market as it has to analyse needs and demands of different customers.

Product development: - Another strategy of this model is product development strategy.
According to this strategy, company is launching a new product in market. The main aim of this
approach is to work upon increasing customer base of new product launched in market. With the
passage of time, ASDA is seen to expand it's functions as well as operations in a successful
manner. There is a lot of development within retail sector and thus there is lot of opportunities
with ASDA to launch a new product in market.
Diversification: - This is an effective strategy in which organisations have to properly
plan and expand their business around the world. This is a strategy used for ASDA in exploring
new customer segment and promoting new product within markets of several countries. It is
important for any company to maximise it's profits and sales and diversification helps in
achieving this goal. When there is need for companies to increase profits, an important factor is
to diversify business and enter into new business.
TASK 4
P4 Strategic planning of ASDA
Porter's Generic Model
When there is need to analyse relative position of firm within industry, the main focus is
on analysing profitability of the company. There are basically two type of competitive advantage
which a firm possess i.e. low cost or differentiation. These approaches are mentioned below -
Cost leadership – The company sets out to become low cost producer within market. The
cost advantage depends upon structure in which ASDA is working. This consists of economies
of scale, access to raw material and technology. When ASDA is able to attain overall cost
leadership, then it is easy for it to be an average performer.
Differentiation - In context of ASDA, differentiation strategy is used for creating unique
existence among market. It is essential for selecting attributes which several buyers within the
industry must know for providing products and services that fulfils needs and demands of
customers.
Focus – According to the generic strategy of focus, companies must know how to work
within market and have competitive advantage. It is essential for ASDA to emphasise on four
segments of retail industry. A particular segment is chosen and strategy is tailored for serving
them to exclude others. There are basically two variants of focus strategy mentioned below -

In cost focus strategy, company seeks for cost advantage within target segment.
Differentiation focus which enables company to seek for differentiation in target segment. Both
of the variant of focus strategy are based on differences between target segment of focuser and
other segment of industry.
Strategic management Plan
This management plan is known as a plan that includes tactics and plans that are used by
company in attaining objectives of the company (Rowlinson, Hassard, and Decker, 2014). It is
important for the companies to develop effective strategies and plans that are helpful in attaining
vision and goals of the company. The strategic management plan of ASDA is mentioned below -
Mission: This is to become one of the best retailer across the world which is able to
provide products and services as per their needs.
Vision: The vision statement of ASDA is to become one of the best value retailer of
Britain by producing good quality services and products.
Objectives: The main aim of ASDA is to increase the rate of expansion and provide
supermarket services across the world. Another motive is also to maximise profits and money
earned by the company. This helps in increasing market share of the company. Another aim is to
increase the jobs within company so that economy will grow.
Extensive marketing: ASDA is hiring a special marketing team that will focus on
organising several marketing campaigns and plans that can be used for attaining goals and targets
of the company. This team will also emphasise on innovation within products and services
offered to customers.
Market research: ASDA conducts market research in different areas and region for
knowing trends and needs of different customers. This research helps in knowing customers and
clients in more effective manner. It is easy to develop products and services according to the
feedback provided by customers. This is helpful in increasing customer satisfaction level and
profits earned by the company.
Tactics: To achieve targets and objectives of the company, ASDA is working upon
developing effective strategies and plans used to attain the specified targets. It is essential for this
company to organise promotional and advertising campaigns for attracting more number of
customers (Storey, 2016).

CONCLUSION
From the above discussion, it is analysed that business strategy is an essential factor on
which companies have to focus while working. It is responsibility of management to ensure that
strategic objectives and goals are developed within the company. There are different models that
are considered by an organisation for analysing external and internal factors of the company.
These models are PESTEL, Porter's five forces model, Vrio model, SWOT analysis and Ansoff
matrix. These helps in determining position of company within market and how new strategies
and objectives are developed for attaining profit and sales. A strategic plan is developed by
company explains position of company in marketplace and on the basis of this strategies are
made for attaining financial organisational sustainability.

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