Impact of Macro Environment on Organizations and Strategies

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Impact of macro environment on organizations and its strategies.........................................1
LO2..................................................................................................................................................3
P2 Internal environmental analysis to identify organizations capabilities and skill set..............3
LO3..................................................................................................................................................5
P3 Analysing competitive edge and market position of ASDA..................................................5
LO4..................................................................................................................................................7
P4 Strategic management plan for achieving organizational objectives.....................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is a strategic move and action that business uses to attract customers,
expand business and achieve organizational goals. It is a business plan designed to reach desired
goals. It is a roadmap which helps business in meeting its goals. In this report, ASDA is taken as
an organization. It is the largest British supermarket retailer, founded in 1949, headquartered in
Leeds, UK. It sells general merchandise, food, clothing and financial services as well as
electronics. This supermarket chain is owned by the biggest American retailer Walmart. This
report includes macro and micro environmental analysis to know about organization's
capabilities and weak point, evaluation of competitive and market position of the organization
using Porter's Five Forces and at last development of strategic management plan for
accomplishing objectives.
LO1
P1 Impact of macro environment on organizations and its strategies
A PESTEL analysis is tool used to analyse and monitor the impact of external
environmental factors on an organization. This tool is mostly used when expanding or entering
the new market or starting a new business. PESTEL stands for Political, economic, social,
technological, legal and environmental. A detailed analysis of the same is done on the
organization which are discussed below.
Political factors: It refers to the extent of government intervention in the industry or in
the economy. It includes political stability or instability, tax policy, government policy,
environmental law, trade restrictions etc. European Union regulations will have a direct impact
on an ASDA (Fernie, Fernie and Moore, 2015). The major issue is Brexit, if UK is removed
from EU then it may result in increase in import and export price. The actual impact is not clear
but corrective action plans need to be formulated to face such challenge. So, ASDA needs to
constantly monitor the political environment to reduce its impact. A stable political environment
in UK is relatively more beneficial for the ASDA.
Economic factors: These factors have a direct impact on how an organization does its business
and how much they are profitable. It includes inflation rates, disposable income of consumers,
interest rates, foreign exchange rates, economic growth, unemployment etc. which may have an
adverse impact on the industry as a whole. It will cause a problem such as workforce
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requirement, cost of financing the business plan and implementation process, credit policy of
ASDA.
Social factors: It refers to the area which involves shared beliefs and attitude. It includes
changing lifestyle, culture, income distribution, age, gender, safety, health conscious, changing
trends etc. these factors are majorly important when it comes to marketing the product to the
consumers (Sammut‐Bonnici and Galea, 2015). All these factors will affect the complete market
research of ASDA as the strategy is formulated on the basis of market research.
Technological factors: It refers to the innovation and changing needs of technological
advancements. Technology affects business in three ways, that is, new ways of producing and
distributing products and services and the new ways of communicating with the target market.
These factor have an immense impact on the decision to enter or not enter the certain market
(BURBERRY, 2017). So, if ASDA fails to implement technological changes as and when
required then it will become difficult for ASDA to survive in the market and give tough
competition. This will ruin the strategy of ASDA as everything is now automated.
Environmental factors: This factor has become important in recent times. It includes weather,
climate change and other environmental effects that may affect the industry such as tourism,
agriculture, insurance etc. These factors have become important because of carbon footprint
target set by government, increase in scarcity of resources, global warming etc. All these factors
are important for ASDA as people nowadays are aware and conscious about the negative impact
of these business on the environment (Scanning the Environment: PESTEL Analysis. 2016).
These factors will influence the product needs and it will major impact the ASDA strategies
which involves research and development, production and procurement.
Legal factors: These factors may overlap with political factors but it may include some specific
laws such as employment laws, antitrust laws, consumer protection laws, patent laws etc. It
becomes important for the company to know what is legal and illegal in order to trade ethically
and legally (Çitilci and Akbalık, 2020). If the organization trades globally then it becomes
important to abide by the rule and regulations of that country. This will impact the complete
business strategy plan of ASDA as every plan is formulated considering the legal policies of the
country in which to operate majorly it will affect the pricing of the product and distribution
channel.
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