Business Strategy: Impact of Macro Environment on Asda and Strategic Management Decisions

This report analyzes the impact of macro environment on Asda and its strategies. It critically evaluates the internal environment and capabilities of Asda using appropriate frameworks. It also suggests strategic management decisions based on the analysis.

Business strategy.

Table of Contents
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies....................................................................................4
Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................6
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................7
Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities..............................................................................................9
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.......................................................................................................................9
Devise appropriate strategies to improve competitive edge and market position based on the
outcomes...................................................................................................................................11
Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organization..................................................................................................................12
Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................14
Conclusion ...................................................................................................................................15
References......................................................................................................................................16

Introduction
Business strategy refers to a plan or set of plans that tells the company about the actions
that must be taken by the company in order to survive in a particular market. It determines the
clear set of goals and objectives which are needed to be fulfilled by the organisation. It has a
close check on the products and services of the company through which they are going to enter
the market and are going compete against their competitors. It is important for the companies to
make sure that these business strategies are flexible, adaptable and the research of the company
is up to date so that they can modify the strategy according to the dynamic environment of the
industry (Bhaumik and et. al. 2017.). In context to Asda, it is a British multinational supermarket
chain headquartered in England. The company was founded in the year 1949 by Peter and Fred
Asquith. The company is also in the business of payment services, insurance and mobile phone
provider. In this report, internal as well as external factors affecting the company and its
management is given. Factors that can affect the workings of the company are provided in the
given below report.
Main body
Applying appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies.
Vision and mission: The vision of Asda is to become innovative and independent while
fostering values like honesty and providing their customers a wide variety of goods at reasonable
price. The mission is to achieve long term objectives of business by maintaining a sustainable
position in marketplace exceeding its customers expectation.
Objectives: The narrow objective is to provide goods and services at relatively low
prices compared to their competitors while maintaining the quality of products (Boryshkevych
2019.). The board objective is to make revenue more than their expenses so that the organisation
can be benefited in long run.
Strategy: Strategy are the choices that are made by the organisation so that the whole
organisation can work smoothly and efficiently. Strategy helps to attain vision and objectives by
planned action such as launch a new product effectively, methods to increase margins and grow
market share.

Any organisation has a considerable effect of macro environment on its functioning and
strategies which can be analysed by using aforementioned frameworks:
Pestle Analysis:The external factors that may have positive or negative effect on
organisation has been listed below:
Political factors: Local, national and international level regulations related to tax,
employment and consumers safety impact Asda in positive or negative way like increase of tax
rates or minimum wage will reduce profit. An another example of political influence is Brexit
which severely effect supplying chains of Asda resulting in overall instability of organisation.
Economic factors: The economic factor that may effect Asda include income level,
employment rate, availability of capital and inflation rates (Boyd, and et. al.2017.). Due to lock
down in 2020 Asda experience a heavy loss as a lot of people loss jobs which reduce their
shopping activity eventually low margin to chosen firm. Inflation lead to boost the production
cost which impact profit and in long term availability of capital for future goals of firm.
Socio-cultural factors: Social factors helps to know the needs of customers and thus
facilitate organisation to come up with product or service that help to earn high margin. One
example is the demand of organic or vegetarian products as some communities restrict
consumption of non-vegetarian food items and to address this issue Asda sells a huge number of
such products. The frequent changes in the changing trends and taste of consumers in cloths
impact in negative way but also offering a chance to use it as a opportunity but this is very hard
to do so.
Technological factors: Technology is now used in each and every stage of business
process and Asda also successfully implementing it in delivery, promotion and innovation of
new products (Chatterjee, 2017.). As technology change every now and then so to keep up with
it Asda need to be ready with funds which is not a problem as excess margin gained can be used
for this purpose. The future lies in self check out stores that operates 24 hours a day with
minimum hurdles and more facilities can affect firm positively if firm planned in this direction.
Legal factors: Some legal aspects help an organisation to gain an image in society as it is
considered ethical as all laws are followed by them like environment safety regulations but it
became a catastrophic problem when there is unnecessary intervention that slow the functioning
of organisation like long process in obtaining funds from grants and banks.

Environment factors: Due to awareness about environment safety people want to opt for
an organisation which promote Green economy, organic food and follow less polluting
approaches. Therefore it is of extreme necessity for Asda to follow environment friendly
strategies to differentiate itself from its competitors. The sustainable practices like green energy
in all of its operation and less or paper packing and waste disposal may also help firm to gain
trust of customers.
Stakeholder Analysis: Stake holder is an effective tool that identify different
stakeholders who effect on organisation and this analysis help to group these stakeholders on the
basis of their level of participation in organisation (interest)and degree of influence(power) so
that it will be easy to communicate with these groups and take precise and productive decisions
(Chen, 2019.). Some of the eminent stakeholders of Asda which are most important to
considered are discussed below.
Customers: Customers are responsible for profit level and increment in turnover through
purchasing of goods and services so both their influence and participation has relatively high. If
they are not served best by Asda then customers may use substitute products they use and hence
affect organisation negatively so in order to keep satisfied Asda need to continuously adopt
sustainable strategy like promotion and discounts so that they remain attached to their service.
Suppliers: A supplier is also a business who convert raw material into purchasable goods
that a supermarket like Asda can sell in their stores. Both ends are interlinked and rely on one
other to function efficiently and be responsible to their customers (Choudhury, 2018.). The
participation and influence of suppliers is low for any organisation in general.
Employees: This stakeholder is basically a person who is hired to do a specific task and is
responsible to provide information about organisation or for a product in case a customers
demand for it. As it is the first person who on behalf of organisation interact with customers so
its participation in organisation is high but influence is low. The employees in Asda are thus
important as they help to achieve business goals and eventually making it successful and
company is putting its every possible effort to provide them a safe environment of work.
Government: Government has high influence and low participation in operations of
Asda and the main influence is regarding the collection of tax and the reverse effect of Asda on
government include the employment opportunity provided by Asda (Collis, 2019.). Government

may affect Asda by imposing new laws and regulations like increasing tax or increasing National
Minimum Wage.
Critically analyse the macro environment to determine and inform strategic management
decisions.
Asda company is running its business in UK in a very stiff competition due to negligible barrier
to new entrants, threat of substitute and less alternatives for suppliers networks. PESTLE
framework is used to assess the external factors that may have positive and negative effect on
Asda (Foss, and Saebi, 2018.). To achieve its objectives Asda take many strategic decisions by
studying of factors like political, social, economical,technological,legal and environment which
include increasing the sale of fresh products which involve loose sale at reduced prices and also
use methods to reduce prices of product by packing products themselves and giving their own
brand name.
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
SWOT analysis
Strengths Weaknesses
Huge range of products: The company is a
supermarket store and the biggest strength of
the company is that it offer a wide range of
products to its customers. The company also
provide financial services. The wide variety of
products makes sure that the company is able
to attract a large segment of potential
customers and will be able to capture a big
market segment.
Extensive distribution network: the company
has a wide range of distribution centres across
UK which helps the company in storing chilled
foods as well as perishable products such as
carbonated drinks or cereals.
Limited presence in international markets:
The company is having a little presence in the
international markets which is a disadvantage
as the competitors of the company has
effective presence in the market (Harlow,
2018.). It is also helping the competitors in
attracting large amount of customers and in
capturing potential market segment.
Horse meat scandal: In 2013, the campaign
started by Asda in which they were providing
fresh meat to its customers has faced a
controversy which stated that the meat
provided by the company contains the DNA of
horse meat. It was a food adulteration scandal

Effective marketing campaigns: one of the
major strength of the company is their effective
marketing campaigns which helps them in
reaching to their potential customers and will
also help in attracting customers towards the
products and services of the company.
which has severely affected the reputation of
the company.
Opportunities Threats
Expansion into international market: One of
the biggest opportunity that the company have
right now is to enter international market with
the products and services of the company
(Kähkipuro, P., 2019.). It is important for the
company to make sure that they are attracting
potential customers.
Presence in online market: Nowadays, most
of the companies are having online presence
and are also working in order to attract
audience through online platform. Since Asda
has a large amount of products and services to
offer to customers, it would be highly
beneficial for the company to have online
presence.
Changing policies of government: a big
threat to the company is the continuous
changes in the policies of government. It can
be a disadvantageous factor for the company as
it can have a major impact on the workings of
the company and also on the business f the
company. Changes in the policies of
government can directly and severely affect the
company.
Price war between competitors: the markets
are highly price sensitive and little changes in
the prices can have a major impact on the
customer base of the company. Decrease in the
price by one competitor forces other
competitors to decrease the price as well which
can have a direct impact on the profits of the
company.
VRIO framework
VRIO Analysis:
Resource or
capability
Value Rarity Imitability Organisation Competitive
advantage

Research and
development
No - - - Competitive
disadvantage
Global
presence
Yes No - - Competitive
advantage
Employees Yes Yes No - Temporary
competitive
advantage
Patents and
intellectual
property
Yes Yes Yes No Unused
competitive
advantage
Financial
resources
Yes Yes Yes Yes Sustainable
competitive
advantage
Value: The valuable resources offer competitive advantage to firm which may be
sustainable , temporary or unused depending on the four dimensions. Research and and
development is not valuable as it output it generate is less than the input it gulp making it a
competitive disadvantage for chosen firm.
Rarity: There are numerous firm in same category as Asda which are recognised
internationally means it doesn't have rarity factor which means it has competitive advantage
unlike research and development. The rest are further checked for imitability and organisation
dimensions.
Imitability: the employees in this era are easy to find which means they can also be
possessed by other firms too making them of temporary competitive advantage. The patents and
intellectual property and financial resources are not ease for any firm to copy as they are secured
legally by Asda.
Organisation: Talking about organisation of patents and intellectual property they are not
used to their full potential as they are not organised as has potential to boost market position of
chosen firm which made them fall for unused competitive advantage where as financial
resources are organised so they have sustainable competitive advantage for firm.
BCG matrix

This frame work helps a company to analysis and make strategies which help them to
grow and develop in long run. It is based on two criteria that are market share and and market
growth that will expand their existing product in promising markets. These criteria come up with
four categories which can be represented in a 2*2 grid which are named as Stars, cash cows,
dogs and question marks (Steyn, B., 2018). The BCG analysis for Asda products is as follows.
Stars-There are numerous products on which company is working as they have high
market share as well as market growth. Significant investment can boost its market share and
thus extracting more profit in long run and the financial services fall under this categoty. Further
if its geographical expansion is considered, the Europe segment come under the star category and
has more chances to cash generation if invested strategically.
Cash cows-This category provide financial stability to any organisation as there is more
cash generation as compared to cash usage and is the most mature phase of any product or
company. The products offered by Asda of different brands like groceries, kids and women
clothing and many more which have daily basis demand are cash cows for chosen firm as the all
pre-requisite like suppliers and distribution chains are well established with minimum cash
usage and high cash generation.
Dogs- The products in this category is most difficult to categorised if considered for the
case of Asda as almost all product have good market share while the product under this category
is supposed to have low market share and low market growth. Also, the sophisticated
management of firm will never let any of its product to fall under this category but the plastic
bag strategic business unit fall under this category.
Question marks-The Asian market has high growth rate for Asda products but they is
not responding to it and losing opportunities. The reason might be it has low market share so this
geographic segment come under question marks category. But if considered and planned
effectively this market has the capacity to be in a star category. The food products offered also
fall under this category.
Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities
Internal analysis of a company helps in determining the strengths and weaknesses of the
company which can affect the management and workings of a company. In case of Asda, the
strengths and weaknesses of the company are as follows:

Strengths: The company has a strong distribution channel as well as a wide range of products
and services. Some of various services provided by the company are Asda mobile, Asda Money,
George Clothing, etc.
Weaknesses: Restricted entry barriers are one of the major weakness of the company
(Kaliappen, and et. al.2019.). Some local vendors or domestic markets have restricted the
company from doing business in their area because of the strong competition and the threat of
lower prices.
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organisation.
Porters five forces model:
Porters five forces model helps the company in determining the industry attractiveness and
understand its position in the market in which will help the company in improving its
performance and will also help in making strategies for the long term survival of the company.
Threat of substitutes: the availability of substitute in the market makes it difficult for
the existing companies to compete in the market. Substitute can affect the market of the company
specially when the substitute are of low cost and the switching cost for the customers are low.
The markets are highly price sensitive and availability of cheap substitute makes survival of the
products of company difficult in the market (Kim, 2018.). It is important for the company to
make sure that the substitute of the company cannot achieve the level of utility which is provided
by the original product of the company. In that way the company will be able to retain their
existing customers.
Bargaining power of customers: It refers to the power that the customers hold. It can be
said that it is the amount of pressure that customers can make on the company in order to reduce
the prices of the product or to get high quality of products. In case of Asda, the bargaining power
of customers can be reduced if there is high switching cost or there is no availability of
substitutes in the market. If there is a strong competition in the market then it can increase the
bargaining power of customers.
Bargaining power of suppliers: It refers to the power that the suppliers of the company
hold. They can have a direct impact on the profitability of the company as they have their own
margins and increment in their margins of suppliers can reduce the profits of the company
(Löwstedt and et. al.2018. ). In case of Asda, the company is a large and reputed organisation.

The suppliers wants to supply their products to the company which makes their bargaining power
low and provide an advantage to the company.
Threat of new entrants: It refers to the threat of new entrants that the company have on
the as it will increase the competition in the market. If the industry is profitable and barriers to
entry is low then it will definitely attract large number of players in the market and will also
reduce the market share of the company. In case of Asda, the entry of new players requires high
amount of investments and there is a greater importance on the unique experience that the
company is providing to its customers. If access to distribution channel is restricted then it will
be a discouraging factor for the company as it will decrease their efficiency.
Rivalry amongst the existing competitors: It refers to the number of competitors that
the company is having in the market. It is important for the companies to make sure that they are
having competitors advantage in the market so that they will be able to capture a large market
segment an will also be able to have a loyal customer base (Mandasari and Wandebori, 2020.). In
case of Asda, the company has a tough competition n he market as they have competitors such as
Tesco, Sainsbury, Morrison, etc which are big players of the market. The industry is having
perfect competition n the market.
Ansoff matrix
Ansoff matrix helps the company in making plans and strategies which can help the
company is fulfilling their goals and objectives. It helps the company in finding the right path
through which they can improve their performance and will be able to have a competitors
advantage in the market.

(Source:Strategic Growth with the Ansoff Matrix)
Market penetration: It refers to the strategies of the company to promote their existing
products in the existing market. In order to increase the current market share of the company, the
company tries to promote its existing products so that they can reach to their potential customers
and can attract more customers. In case of Asda, the company makes sure that they are
promoting their products and services effectively and efficiently. Whenever the company opens
up a new store, they make sure that they are spreading awareness about the location so that they
can attract large amount of customers. The aim of the company is to increase sales with the help
of existing product.
Market development: It refers to the strategy of the company with the help of which the
company tries to enter a new market with the existing product of the company. It helps the
company in capturing various markets with existing product (Martínez-Martínez, and et. al.
2019.). In case of Asda, the company tries to open new stores which ensures that the company is
able to cover specific market regions. In order to gain more market share, the company can
Illustration 1: Strategic Growth with the Ansoff Matrix

expand its reach in the markets of United Nations, Asia, Europe, etc. It is a great opportunity for
the company to attract large number of customers from potential market.
Product development: It refers to the strategy of the company to introduce new product
in the existing market. It helps the company in increasing their market share and will also help
the company in involving innovation in the workings of the company. In case of Asda, the
company continuously renovate its gas stations, grocery stores and other products as a part of
product development strategy. Product development strategy of Asda helps the company in
increasing their sales and will also make sure that the company is able to expand or increase its
market share.
Diversification: It refers to the strategy of the company through which they enter a
completely new market with a new product. It is considered to be the highest risk strategy as the
have to gather infrastructure as well as skills in order to support their decision. In case of Asda,
the money exchange services, gas stations services shows the diversification strategy that the
company is following (Raharja, and et. al. 2019.). The company has an opportunity to expand
horizontally into various markets such as consumer electronics, sports equipments, car
accessories, etc.
Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
Market development can be an effective strategy for the company. The company provides
wide range of products to its customers and are not only having supermarket chains but are also
providing money exchange services and gas station services (Rahman and et. al. 2019.). The
biggest weakness of the company is that it does not have international presence and if company
expands its business it will help them in capturing large market segment which will increase the
revenues of the company. Asda can expand their business and can give a tough competition to its
competitors.
Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given organization.
Porter's generic model:
Cost leadership: It refers to the advantage that the company can avail by decreasing the
cost of the product. It can make their processes efficient which can help in decreasing the cost of
products. It will not only increase the profit margin of the company but will also help in gaining

competitors advantage in the market. In case of Asda, they make sure that they are providing
high quality products at affordable prices because of perfect competition in the market.
Differentiation: It refers to adding value to the products of the company in order make it
more value for he customer. In case of Asda, the company adds real significance to its products
so that the customers will be willing to pay high prices for the products of the company also their
will be less threat of substitute as well.
Cost focus: it is important for the company to add value to its products. It is important
for the company to make sure that they are focusing on increasing the value to the products so
that the product can attract large number of customers (Sarjana, and et. al. 2018.). In case of
Asda, they make sure that they are providing products at affordable costs and are focusing on the
quality of the product.
Differentiation focus: It refers to the added value in the product in terms of specific
features. The company tries to add value to its products and will make sure that the customers are
willing to pay higher prices for the additional value that the product is providing.
Bowman's strategic clock
This framework helps the company in positioning their products in the right way. Strategy in
context to Asda is given below:
(Source:What is Bowman’s Strategy Clock?)
Illustration 2: What is Bowman’s Strategy Clock?

Low price and low added value: According to this strategy, Asda can keep the prices of
the products low but in that case the value added to the products will also be low. In order to
provide products at affordable prices, it is important for the company to keep the cost of product
low.
Low price: In this strategy the company keeps the prices of their products low but it can
be risky as some customers rate the benefits and value of the products on the basis of their prices
(Steyn, 2018). If the prices are low then the customers may think that the product is cheap and
will not buy it.
Hybrid: It refers to the strategy where the company keeps the prices of the product low
and will also provide differentiation in the products of the company. Asda uses this strategy to
capture new market segment.
Differentiation: It refers to the strategy where the company includes differentiation in
their products in order to make their product different from competitors and to obtain
competitors advantage in the market.
Focused differentiation: It refers to differentiation where company is providing high
quality luxurious goods to its customers at high prices. In this case products becomes status
symbol for the customers.
Risky high margins: It refers to the strategy where the company increases the prices of
their products in order to increase their profit margins. It is a risky strategy as the markets are
highly price sensitive.
Monopoly pricing: It refers to the pricing strategy which can be adopted by the firms
who have their monopoly in the market. The company can increase their prices as they know that
there is no competition in the market and the customers has no choice.
Loss of market share: The companies who fails to fulfill the needs or wants of
customers or who are not able to cope with current trends comes in this category.
Vertical and horizontal integration
Vertical integration: It refers to the merger of two companies working on same
production level. In case of Asda, it can be the best suitable integration process for the company.
Horizontal integration: The integration at this level is a merger that takes place between
companies whose production level is operation on different stages.

Diversification strategy: It refers to the strategy where the company adds new product
in their supply chain model in order to increase their profits. This strategy is applied to the
organizations who wish to grow and are willing to introduce new products which can help them
in increasing their profits.
Hybrid strategy: It can be used as a entry strategy as it works on differentiation strategy
as well as cost reduction strategy simultaneously. In this strategy the company increases their
volume of production which in turns decreases the cost of production of the products (Sukoco,
2017.). It is a win win situation for the company as they will be able to decrease the cost of
product which will increase their sales, also the company will be able to get competitors
advantage in the market.
Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.
Company overview
Asda is a British supermarket chain established in the year 1949. The company has online
presence through which they can sell goods to its potential customers. Besides supermarket
services, the company also offers money exchanging services and financial services.
Mission
The mission of Asda is to become the best value retailer. The company wants to exceed
the expectations of the customers and provide them delightful experience.
Vision
The vision of the company is to provide high quality goods to its customers on affordable
prices. They want to become the best supermarket chain with a loyal customer base.
Objectives
 To expand in international market.
 To enhance online presence
 To increase sales by 10%.
Tactics
In order to enter international market, it is important for the company to make sure that
they are having effective marketing strategies which is affordable ad has a wider reach. In order
to do so, online marketing can help the company in engaging more and more people which will
eventually increase the sales of the company.

Strategies
The company is to adopt market development strategy in order to expand their business
in international markets. It will help the company in entering into new market with their existing
products and will help in capturing potential market.
Conclusion
From the above report it is concluded that, business strategy can help the company in
increasing the sales and will also help in expanding the market. It is important for the company
to make sure that they are working according to the strategies and plans made by them in order to
increase the customers base of the company and to attract potential customers. It will enhance the
profitability of the company and will help the company in achieving their goals and objectives.

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