Analyzing Asda's Business Environment and Stakeholders

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EC4F11FB - INDIVIDUAL REPORT ‘BUSINESS
ENVIRONMENT ANALYSIS’
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Executive Summary
The project provides a study of business environment of organisations along with the impact of
environmental factors on organisations. Different type of organisations such as public, voluntary
and private organisations has been described here along with their definition and purpose. NHS,
Oxfam and Asda have been considered here as public, voluntary and private organisation
respectively in this study. Stakeholders mapping has been provided here along with the
importance and stages of stakeholders’ analysis in the business. Five forces, PESTLE and SWOT
analysis have been applied in Asda in order to understand impact of business environmental
factors in the organisation.
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Table of Contents
Introduction......................................................................................................................................4
Business and purpose.......................................................................................................................4
Stakeholder mapping.......................................................................................................................5
Micro and Macro industry analysis.................................................................................................7
Conclusion and Recommendation.................................................................................................10
References......................................................................................................................................12
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Introduction
Business environment of an organisation can be considered external as well as internal factors
influencing the business. External factors include political condition, economic condition,
society, technology and environmental condition and internal factors include competition,
strengths and weaknesses of an organisation. In this study, different type of organisations such as
public, voluntary and private organisations are going to be described along with their definition
and purpose. NHS, Oxfam and Asda have been considered here as public, voluntary and private
organisation respectively in this study. Stakeholder mapping is also going to be provided here in
order to understand how Asda meets objective of its stakeholders. Five forces, PESTLE and
SWOT analysis are going to be applied in Asda in order to understand impact of business
environmental factors in the organisation. Recommendation is also going to be provided in the
study for Asda in order to deal with the factors of business environment.
Business and purpose
Public Organisation
Public organisations are managed as well as owned by the government of local, state as well as
central in order to provide services to citizen of the country. As stated by Hamilton and Webster
(2018), different areas of public organisations are manufacturing, health, electricity, transport,
agriculture, banking, telecommunication, police, mining, army, insurance and education. The
purpose of public organisations is to generate employment opportunities and providing health as
well as education facilities at very low cost. The funding for public organisations is arranged by
government through taxes, penalties and duties. Benefits to work in public organisation are their
security of jobs, allowances, retirement benefits and perquisites. NHS (National Health Services)
is a public organisation of UK that helps people by providing health related services at very low
cost. The organisation also helps people of UK in living well by taking care of their diets,
nutrition, sleeping, exercise and quitting alcohol and smoking (nhs.uk, 2019). People of UK take
the services of the organisation at low cost and recover from health related issues.
Private Organisation
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Private organisations are established for the benefits of individual. It can also be established with
the partnership of two or more people. In accordance to Noe et al. (2017), the purpose of private
organisations is to earn profit. Private organisations deal in different areas such as IT, finance,
retailer, transport, teacher, construction and pharmaceutical. The funding for private
organisations is arranged by individual, groups, taking loan from bank and family. The benefits
of working in private organisations are high salary, incentive and effective environment to work.
The job of private organisations is not secure enough. Asda is a private organisation of UK and it
provides groceries, financial services as well as general merchandise through stores of UK and
online platform (asda.com, 2019). The company is earning profits by providing effective
products as well as services to customers. It has been found that the company takes care of
environment at the time of performing business activities. Zero waste policy has been introduced
in the organisation in order to manage waste during operations.
Voluntary Organisation
Voluntary organisations are established in order to provide free services to people. As
commented by Aithal (2016), management or directors use to establish voluntary organisations
by the support of government or without the support. The funding for voluntary organisations are
arranged by trustees and donations. The purpose of voluntary organisation is to help people in
order to improve their lives without thinking about any profits. The different areas of voluntary
organisations are charities, orphanages, old age homes and NGOs. Oxfam is a voluntary
organisation of UK. The company uses to help people in order to fight with poverty. People are
empowered to work in the organisation in order to fight against poverty and live effective lives
(oxfam.org, 2019). Health as well as educational services is also provided by the organisation in
order to fight with poverty.
Stakeholder mapping
It is important for an organisation to understand their key stakeholders so that it can meet the
needs of stakeholders in order to run the business in effective way. As influenced by Carballo-
Penela and Castromán-Diz (2015), stakeholder mapping is a process that is helpful for an
organisation to identify the stakeholders of the business. Stakeholders are important part of
business and they have different needs from the business. It is important for manager to identify
those needs of the stakeholders and meet those needs to run the business. Manager of Asda needs
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Identifying Analysing Mapping Prioritising
Customer
s
Employees
Owners Suppliers
Customers
Employees
Owners
Suppliers
to perform stakeholders mapping in order to meet the needs of stakeholders for the benefits of
the business. A business has different stakeholders but manager does not need to focus on all
stakeholders in same way. Stakeholder mapping helps in arranging the stakeholders as per
priority so that high priority stakeholders can be focused for the benefits of the business. There
four stages of stakeholders mapping are as follows
Identifying
In this step of stakeholders mapping, it is important for a manager to identify stakeholders of the
business. As stated by Frösén et al. (2016), stakeholders are people who are interested in the
progress of the business. Stakeholders are those who either contribute and participate in a project
or impacted by the project. The stakeholders of Asda are customers, employees, owners and
suppliers. Environment as well as society is also impacted by a business so these can also be
considered as stakeholders.
Analysing
After identification of stakeholders of business, manager of an organisation needs to perform
stakeholders’ analysis. As commented by Ibrahim and Primiana (2015), in these stages, roles as
well as responsibilities of different stakeholders are defined. Manager of Asda needs to
understand the stakeholders high impacting the business. For this purpose, five factors such as
contribution, influence, engagement willingness, legitimacy and involvement necessity can be
considered in order to analyse the stakeholders of the business of Asda.
Mapping
Mapping is a tool or exercise to understand the engagement of stakeholders of the business.
Manager of Asda can use this tool to understand the roles of stakeholders for the business along
with their needs so that their demands can be met. In accordance to Gomes et al. (2015), as there
are different stakeholders of a business but some are more important than others because of their
roles. Mapping helps in understand effective stakeholders playing well to meet the objective of
business.
employees
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Figure 1: Stakeholder mapping
(Source: Influenced by Khan and Quaddus (2015)
Prioritising
As influenced by Khan and Quaddus (2015), prioritising stakeholders is important as all
stakeholders do not play effective roles to achieve the business objective. Manager of Asda
needs to set priority for stakeholders and meet the needs of stakeholders playing effective roles
in the business. After performing priority, it has been seen that customers need to be at top
position as per priority then employees, suppliers and owners.
Micro and Macro industry analysis
Identification of environmental factors affecting business is important for an organisation. As
stated by Prajogo (2016), there are two types of factors affecting organisational business such as
external or macro factors and internal or micro factors. Internal or micro factors of a business are
its strengths, weakness, competition, threats and opportunities. External or macro factors of a
business are political condition, environmental condition, technology and legislation of a
country. SWOT and PESTLE analysis can be used in understanding the micro and macro factors
of a business respectively. Porter’s five forces is a competitive strategy that is used to get
competitive advantage. Manager of Asda needs to use SWOT, PESTLE and Porter’s five forces
in the organisation to understand the business environment in effective way along with the
impact of micro and macro factors on business.
SWOT analysis
Strengths Weaknesses
● High brand image in UK
● Skilled workforce
● Effective distribution channel
● Zero wastage policy
● Gap in product range
● Low investment in technology
● Less investment in Research and
development
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● High employees’ turnover
Opportunities Threats
● Expanding business in new market
● Introduce new ranges of products
● Expanding online business with the
help of Social media and other
platform
● Shortage of skilled employees
● Market saturation
● Changing customers need
● High competition with Tesco and Aldi
Table 1: SWOT analysis of Asda
(Source: Influenced by Raziq and Maulabakhsh, 2015)
It has been seen by applying SWOT analysis in Asda that the company needs to introduce new
range of products in order to improve its business. It can use its brand image for expanding its
business in international market. The company is investing fewer amounts in technology and due
to this it is facing the issues of employees’ turnover. It is important for the organisation to invest
in technology as well as development and research purpose. In accordance to Raziq and
Maulabakhsh (2015), job satisfaction among employees is required for reducing employees’
turnover. Training can be effective way to reduce employees’ turnover by improving their skills
as well as knowledge. Needs of customers are changing in UK so it is important for the
organisation to use technology for providing effective experience of shopping to customers. The
company has high brand image so it can invest in social media to attract customers and increase
the sale of the organisation. As commented by Aithal (2016), Zero waste as well as recycling
policies can be effective for improving business and harming less the environment through
business operation.
PESTLE Analysis
Politics ● Stable policies across UK
● 1.9% inflation rate
Economic ● Corporate tax 19%
● 76.10% rate of employment
Social ● High rate of education
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● Changing demands of people
Technology ● Advance technology of the country
● Preference in Online shopping by
people
Legal ● Employment Act 2002
● Equality Act 2010
Environment ● Changing climate
● Environment protection policies
Table 2: PESTLE Analysis
(Source: Influenced by Aithal, 2016)
As commented by Richards et al. (2019), macro factors such as political condition,
environmental condition as well as technology of a country impact the business of an
organisation. It has been found by applying PESTLE analysis on Asda that the company is
running its business effectively due to stable political condition across UK. It has to pay high tax
to government in order to run its business in the country thus profitability of business is affected.
Employment is high in UK so people are able to spend their earning to buy quality things and the
business of Asda get positive impact due to this. People of UK are educated so they are able to
do online shopping and increase the sale of the organisation. High technology of the country is
beneficial for the company to improve its business. Legislation of the country needs to be
followed by Asda in order to avoid legal consequences at the time of running business. As
commented by Aithal (2016), climate of UK changes frequently so online business can be
impacted as internet connectivity disturbs during the changes in the climate. In UK, government
is introducing policies to reduce the environmental impact. The company is also using Zero
wastage as well as recycling policies in order to support environment during business operations.
Porter’s Five Forces
Bargaining Power of buyers
Bargaining power is the power of customers in the organisation. In case of Asda, the bargaining
power is high. In accordance to Takata (2016), customers of a country have power to purchase
products as well as services from different stores. Asda provides high quality products as well as
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services at effective price. Customers of UK demand for high quality products at low price due
to high power of buyers in the country. Profitability of a business get disturbed in case buyers
demand for high quality products at low price. Asda is focusing to reduce the cost of operation in
order to provide products at effective cost to attract customer towards the organisation.
Supplier Power
As there are fewer suppliers in UK so the power of supplier is high. Supplier uses their power
and takes high amount for providing raw materials to the organisation. In accordance to Raziq
and Maulabakhsh (2015), the cost of operation increases as producers have to pay high amount
for raw materials. Asda is introducing zero wastage and recycling policies in order to reduce the
operation cost so that after paying high amount to suppliers, it can provide products to customers
at affordable price.
Rivalry
Competition is high for Asda in UK as there are many organisations such as Tesco and Aldi
providing same products to customers. As stated by Prajogo (2016), it is important for an
organisation to differentiate its products or services in order to get competitive advantage at the
time of working in the country with various organisations. Asda can do investment in stores in
order to provide effective shopping experience to customers.
Threats of Substitute
Substitution threat for Asda in the country is less as it does not need to worry to be substituted
because of its high brand image in the country. As influenced by Carballo-Penela and
Castromán-Diz (2015), it is important for manager of an organisation to have effective
relationship with customers in order to retain them. Manager of Asfa can involve customers in
some of business activities and use their suggestion and feedback for business. This helps in
retaining customers and reducing the threat to be substituted.
Threat of new entrance
In case of Asda, new entrants’ threat is less as it is not easy for a new organisation to enter into
the market and compete with the organisation. As commented by Richards et al. (2019), a large
amount is required for investment in order to start a retail business so in the country there is less
threat from new entrance.
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Conclusion and Recommendation
It has been found from the project that organisations need to analyse the factors of business
environment for running their business effectively in the market. Different organisations are built
for different purpose. Public organisations are established in order to help people by providing
education, health and other services at low cost such as NHS of UK. Private organisations are
made for profits by providing products as well as services to customers such as Asda of UK.
Voluntary organisations are established for helping people without taking any cost such as
Oxfam of UK. Stakeholders mapping is important for Asda in order to identify the effective
stakeholders of the business. Stakeholders can be prioritised by using stakeholders mapping tool
to meet the needs of essential stakeholders for the profitability of business. The business of Asda
depends on macro as well as micro factors such as policies, legislation, technology and
competition. It is recommended to manager of Asda to apply SWOT, PESTLE and Porter’s five
forces in the organisation in order to understand the environmental factors affecting business. It
can make effective strategies by understanding its strengths as well as weakness with the help of
SWOT and PESTLE analysis. The company can get competitive advantage by using five forces
of Porter in the business. As the company is facing high competition with Aldi and Tesco so it
needs to differentiate its services and products from the market in order to get competitive
advantage in the market. The company can use technology in order to improve customers’
services in the organisation so that customers can have affective experience of shopping.
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References
Books
Hamilton, L., and Webster, P. (2018) The international business environment. London: Oxford
University Press.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., and Wright, P. M. (2017) Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Journals
Aithal, P. S. (2016). Study on ABCD analysis technique for business models, business strategies,
operating concepts and business systems. International Journal in Management and Social
Science, 4(1).
Carballo‐Penela, A., and Castromán‐Diz, J. L. (2015) Environmental policies for sustainable
development: an analysis of the drivers of proactive environmental strategies in the service
sector. Business Strategy and the Environment, 24(8), pp. 802-818.
Frösén, J., Jaakkola, M., Churakova, I., and Tikkanen, H. (2016) Effective forms of market
orientation across the business cycle: A longitudinal analysis of business-to-business
firms. Industrial Marketing Management, 52, pp. 91-99.
Gomes, C. M., Kneipp, J. M., Kruglianskas, I., da Rosa, L. A. B., and Bichueti, R. S. (2015)
Management for sustainability: An analysis of the key practices according to the business
size. Ecological Indicators, 52, pp. 116-127.
Ibrahim, R., and Primiana, I. (2015) Influence Business Environment on the Organization
Performance. International journal of scientific and technology research, 4(4), pp. 283-293.
Khan, E. A., and Quaddus, M. (2015) Examining the influence of business environment on
socio-economic performance of informal microenterprises: content analysis and partial least
square approach. International Journal of Sociology and Social Policy, 35(3/4), pp. 273-288.
Prajogo, D. I. (2016) The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171, pp. 241-
249.
Raziq, A., and Maulabakhsh, R. (2015) Impact of working environment on job
satisfaction. Procedia Economics and Finance, 23, pp. 717-725.
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