Strategic Analysis of ASDA

Strategic Analysis
Of
ASDA

Table of Contents
Introduction:..........................................................................................................................................1
PESTEL Analysis of Asda:....................................................................................................................1
Political factors..................................................................................................................................1
Economic factors...............................................................................................................................2
Social factors.....................................................................................................................................3
Technological factors.........................................................................................................................3
Environmental factors:......................................................................................................................4
Legal factors:.....................................................................................................................................4
SWOT Analysis of Asda:.......................................................................................................................6
Strength:............................................................................................................................................6
Weaknesses........................................................................................................................................6
Opportunities.....................................................................................................................................6
Threats...............................................................................................................................................7
Porter’s Generic Analysis of Asda:........................................................................................................8
Competitive Strategy for Asda:..........................................................................................................8
Porter’s Five Forces Analysis:...............................................................................................................9
Bargaining power of buyers:..............................................................................................................9
Bargaining power of suppliers:..........................................................................................................9
Industry Rivalry:................................................................................................................................9
Threat of New Entrant:....................................................................................................................10
Threat of Substitute Products:..........................................................................................................10
Recommendation:................................................................................................................................11
Conclusion:..........................................................................................................................................12
References...........................................................................................................................................13
Figure 1: The UK Retail industry outlook for quarter 2 in 2016............................................................2
Figure 2: Retailer investment plan in 2014............................................................................................4
Figure 3: Estimated amount of legal spending by retailers....................................................................5
Figure 4: UK retail industry market share............................................................................................10
Figure 5: Product-wise cheapest supermarkets....................................................................................11

Introduction:
ASDA was built by a group of farmers of Yorkshire in 1965 and sold only grocery products. However
in 1999, after coming along a long path, ASDA was taken over by Wal-Mart. After this takeover,
ASDA entered into other retail sectors like- electronic products, insurances, home appliances etc
(Saunders, 2011). At present ASDA is the third largest retailing company in The UK and sells more
than 35000 products to its customers. Apart from selling core retailing products, Asda provides
financial and telecommunication services as well. Even after being a subsidiary of Wal-Mart Asda has
retained its British structure and management group since the takeover.
PESTEL Analysis of Asda:
Political factors
The political environment in the UK is much stable and has ensured the sustainability of the retailers.
The retail industry employs over more than 10% of the UK workforce, amounts for more than 5%
value generated each year and contributes almost 17.5 billion pound taxes ("UK Retail Industry:
International Action Plan by GOV.UK", 2016). The recent policies about increased taxes, especially
on alcohol, is about to bring some changes in the industry. To keep the fierce competition in control
the government have many regulations which prevent harming the industry or consumers.
Economic factors

The volatility of the political conditions global economy has faced some deep changes in the early 20th
century. Economic growth was high in the 2000s and then sharply declined after 9/11 in America
(Colin Grahame Bamford, 2002). But this volatility has hardly touched UK economy as it remained
comparatively stable. UK turned into an lucrative market to investors for many reasons – lower tax in
EU, infrastructure development, low labour cost etc.
After the Brexit and because of UK leaving the EU things are about to change a little. The short-term
outlook for The UK and the global economy both have weakened (Retail Economics, 2016). The
consumer spending hasn’t decreased yet after Brexit (the Guardian) but it is expected to fall by 1.3%
in 2016 and 2017 (Retail Research, 2016). The UK economy was weakening even before the Brexit
vote, so Brexit cannot be held liable for everything. The GDP is expected to fall by .5% by the end of
this year and levelling up of inflation and unemployment will influence retail spending and other
decisions.
Figure 1: The UK Retail industry outlook for quarter 2 in 2016
Source: Retail Economics, 2016
Situation after publishing new policies is uncertain which is making the retail industry unstable.
Retailers have to discount prices to prevent sales decline which ultimately causing them losses. In
recessions, consumer will be warier of spending cutting down extra expenditures which will make
them switch from brands to low-cost products. In such situation value for money, strategy becomes
successful which can help Asda to retain its sales and market shares.
Social factors