Macro and Internal Environment Analysis of Iceland: PESTLE, SWOT, and Porter's Five Forces

This assignment provides an analysis of the macro and internal environment of Iceland, a popular supermarket in the UK. It includes the use of strategic frameworks such as PESTLE, SWOT, and Porter's Five Forces to evaluate the capabilities and resources of Iceland. The assignment also discusses competitive forces in the retail industry and suggests tactics and objectives for achieving strategic aims.

ENVIRONMENT

Table of Contents
INTRODUCTION ...........................................................................................................................................3
PART A.........................................................................................................................................................3
Defining macro and internal environment analysis of Iceland by using appropriate strategic
frameworks such as PESTLE, and SWOT and evaluation of its capabilities and resources ......................3
Applying porter’s five forces model to examine competitive forces of retail industry for chosen
supermarket..........................................................................................................................................10
Identifying Iceland existing and potential competitive edges................................................................11
Devising reliable tactics and tactical objectives to achieve overall strategic aims.................................11
PART B.......................................................................................................................................................12
Presenting the strategic planning by using effective theories and models............................................12
Justification and suggestion based on application of strategic growth models.....................................15
Evaluating ways by which chosen tactics can be monitored to assure success.....................................15
CONCLUSION.............................................................................................................................................16
REFERENCES ..............................................................................................................................................17

INTRODUCTION
Business environment term defined as combination or collection of certain factors
whether it is internal & external that influence organizational practices and management
activities in varied manners. Some forces put positive impact on a company and certain impact
negatively. The effect of each factor depend on competencies of a sector. The current assignment
will be based on Iceland, which included in list of older, but popular supermarkets in the UK. It
was founded in 1970s with limited resources. By offering quality products organization has now
reach at global level. It has an emphasis on sale of fresh fruits and frozen items, including
prepared vegetables and meals. Organization offer valuable and budget friendly products that
made buy easier for consumers. The study will explain internal and external environment
analysis by using PESTLE, SWOT, Porter’s five force, stakeholder analysis and value chain
models in regard to supermarket. Furthermore, it defines current and in the future competitive
benefits, including strategic planning for firm by applying range of models, theories, and
concepts.
PART A
Defining macro and internal environment analysis of Iceland by using appropriate strategic
frameworks such as PESTLE, and SWOT and evaluation of its capabilities and resources
Without considering external and internal factors and conducting environmental analysis,
a company like chosen supermarket may unable to obtain expected results (Kwilinski et.al.,
2019). In the corporate world, there are many models, theories and concepts exist that
organization management may take into their consideration that are;
PESTLE analysis-
Political factor-
Fluctuation in any political factors like government rules and policies related trade, etc.
may directly impact an organization management strategies and practices. For example, due to
pandemic, government in every nation has taken decision to close market and make
announcement of lockdown, which put negative impact on Iceland business tactics. It drives the
attention of management to redevelop each tactic by considering current circumstance and

external business environment within retail industry. Due to this, management may feel a lot of
pressure to run venture smoothly. Trade barriers, tax rate changes and other forms of fluctuations
relate to this factor may bring challenges for company in term of sustaining venture for long run.
Economic factor-
Changes in economic factors may impact strategic management practices and actions of a
company. For example, due to COVID-19, many people are job less recently, which is of the
biggest change in unemployment rate. It increases ration of unemployed individual that may put
negative affect on Iceland strategies in term of restructuring employment plan and tactic. It may
affect recruitment and selecting tactics of company in term of driving attention of hiring local
people, which is not possible for manager to hire in a bulk.
Social factor-
Current market trend as social factor may put positive impact upon Iceland business
strategy related to supply chain management operation of brand. For instance, people due to
health issue and to look fit may adopt healthy diet, which include consumption of vegan items, it
drives attention of manager towards obtaining vegan food products from sustainable suppliers
which enable firm to enhance satisfactory level of supermarket. It allows organization to
maximize its customer base and profitability.
Technology factor-
Technology advancement in term of emerging social media marketing platforms may put
positive impact on advertising tactic of Iceland. For example, it drives concentration of manager
to use Instagram, which enable them to develop new strategy to promote supermarket globally
by creating official account and mention each information about its products that help gaining
attention of new consumers and contribute to retaining existing (Pantano and Vannucci, 2019). It
also supports to generate excellent brand awareness, which is quite essential for marketer to
produce.
Environmental factor-
Customers and government prime concern in the context of environmental problems may
put direct impact on sustainable management strategies of organizations. For example,

environmental change due to pandemic, may negatively affect product delivery strategy of
Iceland, in term of moving management to develop tactic through which they may deliver
products at home to customers with limited workers existence at workplace. It enables them to
take better precautions and safely deliver needed items to people at their door on time.
Legal factor-
Government rules within UK related to retail and other sectors, due to pandemic may
influence highly. For instance, in term of wage, authority may take strategic decision and change
their policy. They may order business industries to pay half salary to their workers during initial
duration of lockdown even they shut companies. It may put negative impact on Iceland
employment tactic in term of putting a lot of pressure on manager to pay half salary without
earning much due to lockdown.
Stakeholder matrix-
It is one of those strategic models that provide information in term of interest and
influence of stakeholders in regard to Iceland strategies.
Keep satisfied –
 Government
 Owner
Manage closely –
 Managers
 Investors
Monitor-
 Target customers
 Suppliers
Keep informed-
 Workers
Keep satisfied (High power & interest)-
Management may take initiative to satisfy their owner or founder and government in
nation where it may operate such as UK, because they hold high power to influence venture of
Iceland in varied manner. As they both are highly interested in success and growth of
supermarket, manager may take their approval before taking step forward gaining competitive
edge.
Manage closely (High power and low interest)-
Just like above, manager and investors are also included in category of Iceland
stakeholders that may influence business through their activities, which they conduct according

to power and interest extent (McNicholas and Cotton, 2019). For instance, management may
manage relationship with these two quite closely, because they have high power to decrease or
increase profitability and low interest in regard to business success due to accessibility relate to
employment.
Monitor (Low power and high interest)-
Along with above two category of stakeholders, it is important for Iceland manager to
conduct specific activity regarding customers and suppliers as they may hold low power but
highly interested to retain with brand. They may put negative impact on company strategies in
term of switching to other supermarkets for products purchase reason.
Keep inform (Low power and less interest)-
Manager may take initiative to keep employees inform about their decision, nothing more
than it because they are not interested in grow of Iceland and may have low power to change
strategy. They may unable to put much impact on Iceland and its strategy development process
related to wage and other employment areas.
SWOT analysis-
Strengths-
Number of stores- in term of resource and capability, Iceland may have more than 920
outlets and its successfully operate these in UK retail industry, which enable it to obtain benefit
in term of increasing profitability. By using this strength, company may gain competitive edge
and give touch competitive to key rivals. In term of strength, firm may use this element to grow
and get unexpected success as it capable to do so. Within number of outlets, it may create
positive environment where people prefer to perform and retain within brand forever.
Skilled workforce- talented and experience employees is the useful resource of
organization, which management may use to obtain varied benefits in term of increasing
customer satisfaction, profits margin, productivity and productivity even better than competitors
that is important for brand. With talented and knowledgeable people organization may take
initiative to give tough competition to its rivals.

Figure 1: SWOT Analysis
(Source: SWOT Analysis, 2021)
Weaknesses-
Small size of outlet structure- in term of weakness, lack of appropriate structure within
Iceland store may put negative impact on its business growth and strategic management planning
(Elavarasan and et.al., 2020). It may decrease the customer visit number and sales of brand,
which is not appropriate for its progress and aim achievements.
Lack of geographical presence- along with above, organization may have another weak
point, which may put negative affect or influence on venture in term of decreasing productivity
and profits margin of supermarket. Due to limited geographical existence, firm may not be able
to increase high profitability than its rivals.
Opportunities-
Scope of global expansion- In order to increase the productivity and profitability of
Iceland, management may take initiative to develop business expansion strategy, which enable
them to reach at international level and grab the advantages available there as each opportunity
provide unexpected outcomes.
Rising demand for vegan items- another chance related to business growth, manager
may grab by developing effective plans and strategies is term of making arrangements in the
context of current market trend and that is veganism. It allows brand to retain potential buyers
and gain the attention of new, which is quite beneficial and essential as well.
Threats-

Intense competition- in today’s competitive business environment, each brand whether
it operate at national or international level, may give tough competitive to each other. It increases
rivalry between organizations that may possess greater threat for Iceland success in term of
putting a lot of pressure on management to develop strategic plans, which is not possible to
create in short term duration.
Pandemic- another threat that put negative impact on whole world is COVID-19, which
drive the attention of national and global authorities to take major decisions like Lockdown that
decrease ration of sales and productivity of retail industry as well as other. It may decrease
profits margin of Iceland.
Value chain analysis-
Primary activities-
Inbound logistics-
In term of this activity, company is able to delivery and offer quality food items to
customers, because it conducts effective inbound activities by using the key skills and
competencies of workers, which enable firm to obtain varied benefits in form of increasing
profitability.
Operations-
Iceland is one of those supermarkets in the UK that may conduct its each operation like
supply chain management in systematic and effective manner (Tassou and et.al., 2019). For
instance, due to having more than 120 warehouses, supermarket may capable to offer products
on time to customers.
Outbound logistics-
In term of this practice, Iceland is capable to build strong and trustworthy relationship
with suppliers who are able to delivery or provide fresh and organic food items to organization
which it may offer to target market according to their needs and expectations.
Marketing & sales-

Iceland is not much effective in regard to marketing, because it may utilize YouTube,
TV, and other traditional marketing methods, which in recent time are less efficient as they
consumer a lot of time. While it able to offer after and before purchase service to customers,
through which they may ask any question related to product quality, in stock items etc.
Service-
At workplace with experience and knowledgeable employees Iceland may capable to
offer quality services which contribute to enhance satisfactory level of customers and increase
the productivity as well as sales of brand, which is quite important and beneficial to enhance.
Figure 2: Value Chain Analysis
(Source: Value chain Analysis, 2018)
Support activities-
Firm infrastructure-
This activity may put negative impact on Iceland success and progress in retail industry,
because it may do not have appropriate outlet structure which drive the attention of customers
towards those supermarkets where they find wide space where purchasing is easy as compare to
Iceland.
Human resource management-

In term of HRM, manager may capable to retain people as they appreciate staffs’
performance and hard work and value their efforts, which in return boost morale of each
candidate in unexpected way.
Technology development-
For purpose of marketing, company may not effective because instead of using digital
marketing channels it may use traditional ways through which management may not able to
generate brand awareness at global level.
Procurement-
It may increase the profitability and customer base of Iceland because management it
able to maintain their relation with key suppliers who are offering organic items.
Applying porter’s five forces model to examine competitive forces of retail industry for chosen
supermarket
Bargaining power of customers-
The extent of this force is high, because in recent time each supermarket attempt to offer
quality and affordable items to customers, which drive their attention towards them. It may
decrease the sales of Iceland and also put negative impact on varied manners. People prefer to
shop from convenient places, when they do not found these they switch to new brand where
everything is available according to their needs and expectations. These are the main reason
behind high bargaining power.
Bargaining power of suppliers-
Degree of this force is low because many trustworthy and sustainable suppliers available
in the market, which may tend to work with profitable brands like Iceland. It may put positive
impact on supermarket business growth in term of maximizing profitability and sales ratio,
which is quite essential for management to increase more than key rivals that has operated in
retail industry with useful resources. It permits brand to retain potential suppliers that contribute
to increase customer’s satisfaction.
Threat of new entrance-

Extent of this force is low, because it is quite challenging to enter into retail industry as a
company may invest a huge amount of money to make their venture more sustainable and
popular than existing players like TESCO, Iceland, ASDA etc. which is not possible. It may put
positive impact on chosen supermarket, in term of driving attention of management towards
developing effective strategies in the context of gaining competitive advantages more than
existing players, instead of preventing venture from new brands.
Threat of substitute products or services-
Degree of this factor is high because existence of Blue Apron as international fresh food
brand that offer quality items in different categories better than Iceland, which may put negative
impact on chosen company competitiveness. Accessibility of substitute products in market may
decrease the sales and success chances of supermarket, which is not beneficial for its progress
within retail industry.
Competitive rivalry between existing supermarkets-
Extent of this factor is high, due to increasing competitive practices conducted by each
supermarket brands in sector to gain and remain competitive. It may put a lot of pressure on
Iceland management to sustain their venture in market and give tough competitive to big brands.
Intense competition within industry may create challenge for company which it attempts to
overcome by performing unexpectedly.
Identifying Iceland existing and potential competitive edges
Iceland is one of those retailers that has operated its venture within retail industry UK
from long time. It may take decision to grow even better and get unexpected success by taking
current and potential competitive advantages. For example, global brand presence is the main
competitive edge that firm may grab by taking right decision and developing effective plans. In
term of similar thing, it may obtain another benefit such as wide customers base by offering
range of products to target market and maintaining inventory stock up to date as per consumer’s
demand. These two are competitive edge that supermarket may get and obtain long term benefits
by considering these in effective and systematic manner. Organization may generate its
business or brand awareness globally, by using key tools.

Devising reliable tactics and tactical objectives to achieve overall strategic aims
Without developing effective strategies and plans, Iceland may not be capable to gain any
competitive edge. Its management may concentrate on creating valid and beneficial tactic on the
basis of overall external and internal analysis. For example, to overcome the negative impact of
substitute items, brand may take initiative to keep its inventory full of those goods that customers
prefer to purchase and demand for. In order to achieve business objectives, manager may focus
on developing new that are;
To increase workforce within 2 months
To generate brand awareness that increase profitability within 1 year by 50%
To maximize loyal customer base in 12 months.
PART B
Presenting the strategic planning by using effective theories and models
Executive summary:
The present strategic planning helps to determine different growth factors that contribute
the company to improve the performance. For that effective models and theories had applied that
assists to enhance the business operations. The chosen firm for this strategic planning is Iceland
which is a British food business who operates at global level with 40 owned franchised stores
internationally. Through Ansoff growth vector matrix, company will determine the growth
strategies that helps to build a brand image at global level.
Mission
To deliver sustainable and profitable long term growth for all the customers and also
engage with its stakeholder so that it assists to meet the changing demand of customers.
Vision
To become one of the most preferred companies which helps to meet the changing
demand of customers and this in turn assist to become a leader within food supermarkets.
Objectives:

 To increase the customer, base up to 15% by the next 6 months
 To enhance the sales by 30% within next 1 years.
 To offer range of new and innovative products that helps to increase the customer base by
20%.
Ansoff growth vector matrix
The model is used by firms in order to analyze and plan the strategies for a growth and
along with this, it also justifies the use of each quadrant (Loredana, 2017). There are four
different quadrants associated with the models that helps a business to determine the appropriate
growth of a business. Similarly, in the context of Iceland, these strategies are as mentioned
below:
Market penetration: The first quadrant is focused upon the increasing sales by using
current products into existing market. Through this, company also increases its sales, but it does
not raise the brand performance. If quoted company uses this growth strategy, then it will help
the business to improve the overall performance or sales, therefore, it helps to meet second
objective of the company.
Product development: It is all about introducing new product within existing market and
this in turn helps to provide innovative products to their current customer base (Kim, Ku and
Lee, 2020). Also, with the help of such quadrant, company is able to improve the customer base
as well as quality. This will be helpful in pandemic time that support company to raise the
overall performance within current market.
Market development: It is a third quadrant that helps to focus upon entering new market
through present products. This might be riskier as compared to product development strategy
because it required enough capital and relevant resources that assist to meet the defined aim.
Along with this, company have to develop new sales channels that helps to sell the product
within new market.
Diversification: One of the riskiest strategy that might affect the overall business
performance because it deals with offering new products within new market. However, sometime

this strategy also takes a business at further level of success as well. Most of the top organization
does not uses this strategy because it requires expertise for accomplish the defined target of the
company (Ahmadi and Alizadeh, 2018).
Among all the defined growth strategy, Iceland uses product development in which range
of new products will be introduced that helps to improve the overall performance of the company
and attain the defined objectives as well. In this, company also uses range of organic products
and start offering the same through online mode during pandemic that attain to improve the
overall performance in effective manner. Along with this, company might also start offering the
product at discounted rate that attract new customers towards it. Therefore, this growth strategy
is effective as compared to others in order to attain the set objectives and also consume less time
to improve customer services. This in turn also improve the financial performance of a business
and also generate the higher rate of return in near future by investing less
Bowman strategic model
It is another model that helps to analyze the position regarding to its competitor which
entails the position within an existing market. There are eight different strategies that helps to
examine the position which are as mentioned below:
Low price & low value added: It is relied upon the selling the products in high quantity,
in this product of Iceland might be low value which affect the combination in opposite manner.
That is why, it reflect the price and service is of low value, if company offered products in large
quantity.
Low price: It is not about selling the product at low cost, but it is depending upon have
low margin so that process become efficient and cost will be reduces (Desai, 2019). This might
help the business to increase the performance and grab attention of customers.
Hybrid: It is relied upon the low price and Differentiation, which is all about ensuring
price is competitive, in order to promote the added value. This in turn assists the company to
maintain the good margins and also show the balance between cost and differentiation.

Differentiation: It means that offering the product at different manner in order to present
the unique positioning at global market. This helps a business to grab attention of many
customers towards it.
Focused Differentiation: It is used when company provide high value of product with
high rates. Also, this assists to provide high profit and also aid to increase the market share in
order to grab attention of customers (Arshad and Yazdanifard, 2017). This might help Iceland
Food to gain high market performance in positive manner.
Risky high margins: It means company is offering the products at high price within
adding extra value within products. As a result, customers are not ready to afford the same with
high price which in turn shift them toward another brand.
Monopoly pricing: It is all about having a single company within a market that might
decrease the overall competition within a market. Also, in such situation, companies have to
keep an eye upon all the external market factors, because it causes adverse impact.
Loss of market share: It is all about the worst position of a company in which company
entire brand image got affected and its sales start declining. As a result, company have to focused
upon new market share that helps to improve the brand image and make them fit for the new
market as well.
From the all, Iceland keep all the direction in mind but mostly follows differentiation and
low price strategy that helps to improve the overall performance of a company. In the current
scenario, company already suffer negatively due to pandemic and that is why, it will be better for
the quoted firm to present the products in different manner in order to attract the customers and
improve the business performance. Also, offer product at low cost will be more beneficial for the
business in order to attract the customer and improve the overall performance as well.
Justification and suggestion based on application of strategic growth models
From above analysis, it can be said that by using appropriate tactic or method, Iceland
may grow even better than last few years.
 It can utilize market and product development strategies, which is one of the best
business growth strategies that are available in the world of corporate and used by many

brands. The best thing about each strategy, it that these provide unexpected benefits to
company and enable management to achieve their strategic goals and objectives.
 It recommended to supermarket that it can chose low price strategy, which enable
management to gain the attention of new potential customers who tend to purchase
grocery online as well as offline, with comparative pricing tag on each item that make
shopping worth it for them (Sharma and Jhamb, 2020). It helps to increase the
profitability and popularity of company, which is quite important to enhance more than
key players.
Evaluating ways by which chosen tactics can be monitored to assure success
There are many ways or approaches available in the corporate world that Iceland
management may take into their consideration, in order to monitor chosen strategy and to assure
their success after implementation. For example, they may determine the gap between last and
current year profits margin, which enable them to analyse get information about strategy success
because it may in return increase profitability and productivity of brand even better than earlier
period (Ki, 2021). Furthermore, it may use Benchmarking as another way or approach to ensure
success and measure effectiveness of their strategy implementation plan. It is one of the most
commonly utilized approaches, which may provide benefits to manager in term of enabling them
to make comparison between own and other popular brand success criteria.
CONCLUSION
By summing up above discussion, it has been identified that by using skilled and
experienced workforce competencies that existed at workplace, leaders and management has
overcome the negative impacts of each factor. They have used key strengths of supermarket and
gained competitive edge through each, which is quite amazing achievement of its venture.
Manager successfully enhanced satisfactory level of consumers by considering and offering
items according to current market trend. By the usage of social media channels, marketer has
promoted venture globally and gained the attention of profitable investors and customers that
have capability to increase the sales and profits margin of organization that have operated within
retail industry from long time and sustained as opposite to major rivals such as TESCO, ASDA,
etc.

Furthermore, from above analysis, it has been concluded that by using Ansoff, porter and
other strategic frameworks, manager and leader has obtained unpredicted advantages, which
enable them to grow supermarket and get success even better than last certain years. Market
research and idea for value added products has provided a power to management that they have
utilized appropriately to obtain desire outcomes.

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Online
SWOT Analysis. 2021. [Online]. Available Through: <
https://www.wordstream.com/blog/ws/2017/12/20/swot-analysis>

Value Chain Analysis. 2018. [Online]. Available Through:
<https://www.business-to-you.com/value-chain/>