Analyzing the Impact of Macro Environment on Business Strategy of OCADO

This report analyzes the internal environment and capabilities of OCADO using appropriate frameworks. It also applies appropriate frameworks to analyze the impact and influence of the macro environment on OCADO's strategies. The report evaluates the competitive forces of a given market sector for OCADO using Porter’s Five Forces model and devises strategic planning for OCADO using a range of theories, concepts, and models.

Business Strategy

Table of Contents
INTRDUCTION..............................................................................................................................3
TASK...............................................................................................................................................3
Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies...............................................................................3
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.............................................................................................................................6
Applying Porter’s Five Forces model evaluate the competitive forces of a given marketsector
for an organisation..................................................................................................................9
Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation..............................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRDUCTION
Business strategy is group of actions which is utilized by organization for achieving their
vision and objectives for long time. With help of effective business strategies reputation and
brand image of company are easily maintained in minds of consumer for long time. (Chen, Jing
and Tan, 2019). The chosen company for analysing the activities of business effectively is
OCADO which is situated in United Kingdom. The company was established in 2000 and it is
the multinational retail based company. The organization are dealing with wide range of products
such as electronic equipments, grocery items, home appliances and others. This report will cover
analysis of internal environment and capabilities of a given organization using appropriate
frameworks, appropriate frameworks analyse the impact and influence of the macro environment
on a given organization and its strategies. It also covers porter's five forces model and evaluating
the competitive forces of a given market sector for an organization.
TASK
Applying appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies.
Ocado's mission is to provide an unparalleled range of products on it's e-commerce
websites and provide them exactly as they are ordered before time to provide a seamless
customer experience. Their long term goals include:
 Change the way customers shop for their daily requirements by making every type of
product available online
 Become the most reliable and popular online e-commerce service provider for all
supermarket chains in UK
Being a web focused retail giant, it is subject to various elements of the macro-environment
given below in the form of a PESTLE analysis.
PESTEL Analysis -
It stands for political, economical, social. Technological, environmental and legal. It is a
method which is utilized by OCADO for analysing the impact of macro external factors which
are described below -
 Political – It refers to different types of government rules, laws, policies and other type
of activities which is followed by the company for run their functions smoothly. In

relation to OCADO, it is essential for management that they must initiate various policies
and rules of UK government effectively within organization. Because with the help of
effective policies company easily maintain good relation with stakeholders in long term
which includes customers, suppliers and others. In the light of Brexit and political
instability, the prices of food items has been unreliable and spending is not consistent at
all.
 Economical – It refers to those factors which effects the performance and productivity of
organization economically which includes interest rates, salary of employees etc
(Devinney and Hartwell, 2020). In context to OCADO, management must use different
types of pricing strategies for enhancing the sale of their product in short duration
between customers. It includes gift vouchers, discount in prices and other strategies. Due
to using these strategies the revenue and economic growth of organization are effectively
sustained in long run. With help of pricing strategies the buying powers of users are
effectively in difficult situations also. Grocery industry has been experiencing inflation in
costing of materials used to produce finished goods and the slowdown of the economy
amid the pandemic has affected Ocado as well.
 Social – It refer to those factors which are responsible for influencing changes in the
behaviour and attitude of consumers which includes social class, family etc. In relation to
OCADO, it is necessary for higher authority that must provide services and products to
customers according to their needs and wants. Because in today's time mostly people like
those type of products which are stylish, easily adaptable and consumed in low time. For
example cloths, food products and others. But in other side due to frequent change of user
taste and preferences company faced lot of challenges for delivering their product to
customers in time. However, Ocado has been putting emphasis on clean grocery products
as customers are demanding organic and healthy food products and it has a robust model
minimizing waste in the food delivery process.
 Technological – It basically concerned with those factor which is used by firm in the
aspect of digital platforms and technology and technological equipments (Dunne, and
McBrayer, 2019). In context to OCADO, it is necessary for management that must use
advanced technology in both offline and online mode for deliver their product to
customers in fast manner. It includes various software, online portals, official website and

others. Due to using these methods popularity of their brand image and product are easily
spread in market and between public effectively. Being focused on strictly online has it's
disadvantages as well as server downtime and supply unavailability on the back end spoil
customer experience.
 Environmental – It is related to those factors which impact the organization naturally
which includes food, temperature, population density, increasing pollution etc. Therefore,
it is necessary for the management of OCADO that they must used effective plan for
increasing the use of eco friendly and recyclable materials in their products. Because due
to use of recyclable materials waste are highly decreased by organization in work place
area which is which highly harmful for environment and health of living organisms.
Ocado has made considerable commitments to organization wide sustainability by
reducing food wastage and it is also using green methods of arranging customer
deliveries.
 Legal – In this stage firm faced the legal factors which includes government norms and
regulations. In respect to OCADO, it is important for management that they use the
government laws and norms effectively within organization. Due to utilization of norms
effectively fairness and transparency are highly maintained in their activities. It leads to
enhance positive image in the minds lower level employees and customers towards
company in long run. Ocado does need to be ethical going forward as has been targeted
with quite a few controversies such as legal cases of information theft and copyright
infringement.
Ansoff Matrix -
It is a method which is utilized by the management for developing the success and future
growth of organization. In this management used various strategies for increasing company
growth which are described below -
 Market penetration – It is defined as increasing the sale of old product in existed
market. In relation to OCADO, it is essential for higher authority that they must
implement various strategies which is favourable for customers. Because favourable
strategies for customers easily enhanced the sale of their various products at maximum
level. Strategies includes maintaining fair price, facilitating beneficial schemes and
maintaining balance in production capacity according to the demand of customers.

 Market development – It refers to expansion of market by the management with help of
of using existing products. Therefore, it is necessary for higher authority of OCADO that
they must utilize effective strategies for expanding their business activities in various
locations. In this strategy technology such as social media is highly helpful for company
for expanding their business. Due to the expansion of business the reach of their services
and products are easily increased for all customer segments.
 Product development – In this process management highly focused on develping new
products and services for consumers in existing market (Kochhar, 2018). In respect of
OCADO, it is mandatory for management that they utilize reliable suppliers and talented
workforce for manufacturing quality products. Because quality product is highly
essential for achieving the trust of customers towards their product in long term.
 Diversification – In this stage company mainly focused on generating new market with
help of introducing new product. In context to OCADO, management must diversify
their product and services at wide range. Because due to effective diversification through
both offline and online the basic needs of customers are easily fulfilled in time. It leads
to attract the consumer in large number for buying their product.
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
It is a tool which is used firm for analysing their their competitive potential and
competitive potential. The factors which are essential for evaluating the organization are -
Ability and
Resources
Valuable Rare Imitable Organised
Financial
Resource
Yes Yes No Yes
Employees Yes Yes Yes Yes
Patents Yes No No Yes
World wide
presence
Yes Yes Yes
No

 Valuable – In context to OCADO, for management financial resources, patents,
worldwide presence and workers are the essential valuable asset. Due to utilizing these
valuable asset organization are able to deliver accurate and reliable to customers in long
term.
 Rare – It refers to those elements which is used by OCADO for generating their revenue
in low time in difficult situations. It includes financial resources, workers and world wide
company presence. Due to using these elements the market share of firm are also
increased at higher rate.
 Imitate – It refer to engaging the functions or activities of business with help of applying
different types of elements (Lamberg, Ojala and Gustafsson, 2020). It includes workers,
world wide presence and with help of these elements management easily increased their
productivity and work efficiency for long time.
 Organized – In this stage the management of OCADO mainly focused on fulfilling their
vision, mission and objectives in time. Therefore, for fulfilling these objectives
management used patents and workers effectively.
Mckensy's 7s
It is a model which is used by the organization for increasing the work efficiency,
productivity and performance of employee with in the firm for long time. This model are divided
in seven parts which are described below -
 Structure – It basically refers to the overall structure of the organization which are
designed by top level management. In context to OCADO, management must establish
effective infrastructure within the organization. Because with help of effective
infrastructure tasks are clearly distributed to all levels of employees which leads to
increase their work efficiency at higher rate.
 Skills – In context to OCADO, the higher authorities are always used skilled and
qualifies workers in various departments. Due the use of talented workers the resources
of the firm are utilized in optimum level.
 Style – In respect of OCADO, it is necessary for management that they must maintain
flexibility in their style for managing the lower level employees systematically. Because

the style is highly important for managers for maintaining effective communication with
their team at time of doing job.
 Strategy – Use of effective strategies are highly important for OCADO to run their
activities nationally and internationally in smooth manner.
 Shared values – It is a core of business for OCADO management for maintaining their
vision, objectives and mission in long term between customers.
 Systems – System basically refers to updated technology, software and equipments which
is utilized by OCADO company. The main purpose of using this elements by
management is to monitor and increase the performance of workers effectively.
 Staff – Staff basically comes under the segment of workers who are doing their job in
OCADO company. Due to maintaining talented staff the resources of the firm are
effectively utilized.
Resource based view -
Resource basically refers to the equipments or materials which is utilized by the firm for
increasing their performance and productivity in long term. In context to OCADO resources are
divided in two parts. Tangible resources refers to those resources which is used by firm in
tangible way which includes inventory, cash, machinery and others. All these elements are
essential for increasing the portfolio of firm in long time. But intangible resources refer to those
resources which is not able to touch and it generates with help of tangible sources. Intangible
includes brand recognition, goodwill, intellectual property and others.
Stakeholder Analysis
Stakeholder is basically a process where various types of information are systematically
analysed and gathered. Due to analysing various types of information management easily find
out the interest of those parties which is essential for implementing the new type of project,
programme, policies and others.
 High interest, High power – It refers to stakeholders have higher authority for taking
any type of decisions regarding their business activities. Because these type of
stakeholders are highly responsible for handling the whole employees and company
activities smoothly. In context to OCADO, CEOs and board of directors are comes under
this category and only they have high interest and high power.

 Low interest - High power – In this process those people are involved in the form of
stakeholders whose interest are very low in business activities. The other important fact is
that in this category those type of people mostly focused on positive outcome or result by
the employees and firm. In relation to OCADO, only investors are comes in this stage
because they are like a sponsor and huge investor of company and only have rights and
powers for taking any type of decision.
 High interest –Low power – It refers to those stakeholders who have high interest and
low power in activities of business. In context to OCADO, customers are involved in this
category. Because in the aspect of customers they did not have any type of authority for
guiding the organization. They only have right to buying the product.
 Low Interest – Low power – It is related with those stakeholder whose authority and
interest both are low or at zero level in the activities of business. In relation to OCADO,
middle and lower level workers are involved in this stage. But are also the part of
stakeholders and in the aspect of lower level workers they the power to fulfil their roles
and responsibilities only.
TOWS Matrix
It is a much more detailed and comprehensible form of business environment analysis
which goes much deeper in analysis of a company's internal and external environment than
SWOT and it is used for strategy formulation of a company. All aspects of environment are
analysed, categorized and formulation takes place after combining opportunities and threats with
strengths and weaknesses.
Internal Factors
External Factors Strengths Weaknesses
Opportunities Maxi-Maxi Strategy Mini-Maxi strategy
Threats Maxi-Mini Strategy Mini-Mini strategy
Maxi-Maxi Strategies – These strategies are undertaken solely for the growth of the company
by capitalizing on opportunities with competencies and resources. Ocado has a robust online e-

commerce platform and demand of online trade is high amid the pandemic so it should try to
invest in new product lines and increase online variety.
Maxi-Mini Strategies – Aim of these strategies is to minimize weaknesses by focusing on the
strength of the companies. Competition in UK retail is high but by providing it's online services
to other supermarkets. Ocado can eliminate competition.
Mini-Maxi Strategies – The revamping and elimination of internal weaknesses of the company
with the use of outside opportunities is the major goal of these strategies. Ocado lacks specialists
to handle the growing demand of robotics and artificial intelligence in online operations and UK
is currently booming with firms providing third party AI solutions which can be used to deliver
better customer service.
Mini-Mini Strategies – These are strategies that are used by companies in a dire state and only
focused on making the company survive by eliminating threats and minimizing weaknesses.
Ocado is a powerhouse in online retail shopping solutions and does not need to follow these
strategies.
Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organisation.
Porter's Five Force Analysis:
It is a tool which is utilized by firm for analysing their current position in market. It is
also useful for identifying the weakness and strength of firm and other competitors.
 Threat of new entrants (moderate) – It refer to increasing threat to existing
organization from the competitors due to facilitating new product to customers in the
market. It leads to increase the chances for enhancing the threat to the performance and
productivity of firm. In context to OCADO it is moderate because their infrastructure are
already well established in various locations which leads to enhance their popularity
between customers.
 Threat of substitute (Low) – It refer to increasing threat for the firms by the
competitors with introducing similar products at low price (Rondi, De Massis and
Kotlar, 2019). In relation to OCADO it is low because they already providing best
quality substitute to all customer segment with affordable price to customers. In this way
the relationship with customers are effectively maintained in long term.

 Supplier's bargaining power (moderate)- It refer to a individual of an organisation that
supplies the raw material or products raw material to the businesses for producing a
finished goods . In context to OCADO, it moderate because they maintained effective
supply chain management and good margin with suppliers at the time of using quality
raw materials in work place.
 Competitive Rivalry (Moderate) – Since Ocado is not a tradition retail marketplace
and focusing exclusively on online retail channels, it is subject to a decent list of
competitors such as Instacart, Morrisons, Cranswick and John Lewis which are all online
deliverers of a host of goods. However Ocado does not have much to worry about as it's
a very well established brand with a huge supply chain network and online platform and
it is well ahead of the competition after partnering p with one of it's rivals, Morrisons.
 Buyer's bargaining power (Low)– It basically refer to putting pressure on organization
by customers for buying the product at valuable and profitable price. In context to
OCADO, it is low because their products are highly reliable for customers Due to
reliability positive word of mouth are highly increased by consumer.
Porter's generic strategy
It is a method which is developed by Michael Porter in 1980. With help of using this method
firm easily analyse the strength and weakness of the competitors. Then according to that
management used the appropriate strategies for run their activities smoothly.
 Cost leadership- It refers to fixing competitive or low price for their product and
services in market. Due to using this strategy threats are highly decreased for
organization by the competitors. In context to OCADO, it is essential for management
they fix different price in their products which is favourable for all customer segments.
Then in this way the profit and performance of firm are effectively increased.
 Differentiation- It refers to facilitate unique and quality product to customers at wide
range which is totally different from other competitors (Savitri and Naili, 2020). In
context to OCADO, the authority management must maintain the supply and demand
effectively with help of facilitating wide range of products to customers.
 Cost Focus- It is basically the part of cost leadership but little bit difference is that in this
stage management of OCADO focused on some particular area. Then according to that
particular area firm sell their product with cheap price in narrow mode.

Bowman’s strategy clock
It is a method which is developed by David Faulkner and Cliff Bowman in 1997 and the other
name of this method is known as competitive strategy and corporate . In context to OCADO,
management considered some factors for using this method which is described below -
 Low value and low price added – It refers to selling different types of products and
services to users in large scale with help of maintaining low price. In context to OCADO,
authority must use this for decreasing the competition level in market. Due to low
competition reputation and good will of firm are easily maintained between customer
effectively.
 Differentiation – It basically refer to selling of new and unique product which is totally
different from the competitors brand. Due to selling new product by the management
their value and importance are highly increased in minds of customers effectively. In
context to OCADO, it is important for management that they must use unique ideas and
creativity for developing their product.
 Focused Differentiation – It refers to fixing high price in their products and delivering
more value to consumers with help of quality goods to users. But the fact is that in this
strategy OCADO faced little bit problem in this strategy for enhancing their sale and
revenue when dealing with customers.
 Risky high margins – In this strategy prices are fixed higher by the firm in their product
which is favourable for middle and upper class segments. But in other side this creates
negative impact on their performance in the form of decreasing customers. Due to this it
is essential for OCADO that they must maintain always average price in all categories of
products for attracting the customers in large number.
 Monopoly Pricing – It refers to run the business functions and facilitate their product
and services to consumer easily without facing any type of competition (Westerman,
2018). In this process prices are directly fixed by the top level management according to
their profit margin. In context to OCADO, management must use this type of pricing
strategies effectively for enhancing the popularity of the brand.
Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation
Strategic Management Plan

Summary of product
OCADO is going to introducing stylish and clothes which is highly unique and different
concept from others competitors. The mission of this firm is to change the way people shop for
their groceries every week. Ocado has been created to try to make our customers' lives easier.
The company's vision is to become UK's market leader in online grocery and shopping solutions
with a focus towards making the retail industry a much safer and environmentally friendly place.
Objectives
 For the next 5 years, Ocado will look to increase it's stronghold on the UK's retail sector
by helping traditional supermarkets digitise their operations by using it's premier e-
commerce platform like it did with Morrisons and Mark and Spencer.
 Ocado also wants to make the customer's lives easier by dealing in all sorts of products
ranging from technical and electronics to groceries and household goods in the coming 5
years as it is already expanding into uncharted territories with robotic solution providing.
Strategy –
After the analysis of above information of ansoff matrix product development strategy is
suggested to company. Because organization is using this strategy then definitely the product are
liked by the customer very much which leads to increase the goodwill of the brand image in
minds of consumers for long time.
Tactics
Marketing mix 4 P's -
Marketing mix is a set of strategies which is used by the firm for increasing their market
share in low time and it is basically divided in four parts which is described below -
 Product – In this stage the management of OCADO, are going to introduce fashionable
and traditional cloths which is usable for customers according to occasion.
 Price – Here fixing fair and affordable price is important for OCADO in their product
before launching a product
 Place – For selling their product it is necessary for organization they must identify good
location. Because good location is essential for increasing the convenience of customers.
 Promotion – For increasing the popularity of their new product it is important for
OCADO that they must use social media, advertising and other strategies effectively.
Controlling and Monitoring -

For analysing the performance of employees management utilized this method and the
full form of KPI is Key Performance Indicator (Vlados and Chatzinikolaou, 2019). With help of
this strategy activities are done in fast manner and completed the targets of employees in specific
time period. In this way the productivity of employees are sustained in long term.
CONCLUSION
From the analysis of above information it is concluded that good business strategy is
essential for run the activities smoothly. With help of effective strategies firm are able to reduce
the risk in their service activities at higher rate. Due to reducing risk their their goodwill are
effectively spread for long time between public. The several strategies includes the PESTLE,
SWOT, VRIO and others gives support to maintain their position in market.

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