Evaluating ASDA's Strategic Position: Internal & External Factors

This report provides a comprehensive analysis of ASDA's business strategy, beginning with an introduction to the company and its market position. It critically examines the macro environment using PESTLE analysis, covering political, economic, social, technological, legal, and environmental factors influencing ASDA's operations. The report delves into ASDA's internal environment and capabilities through SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is applied to evaluate industry competition and strategic implications. Furthermore, the report employs various models, theories, and concepts to interpret strategic directions for ASDA, culminating in a conclusion that integrates external and internal environmental factors to inform strategic actions and objectives. Desklib offers this and many other solved assignments to aid students in their studies.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
LO.1 A brief about the ASDA and critically analysis the macro environment ..........................4
LO.2 Organization’s internal environment and capabilities-.......................................................6
LO 3. Porter’s Five Forces model analysis-...............................................................................10
LO4. Models, theories and concepts which assist and provide understanding and interpretation
of strategic directions to ASDA.................................................................................................12
CONCLUSION..............................................................................................................................22
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy is merger of every decision taken in an organization and activity
perform by a business to achieve their goals or objective and secure a position in competitive
market. In simple words business strategy is direct set of actions, plans and goals which
highlights that how an organization will compete in a market with the number of services and
products (Henry., 2021). There are three levels in business strategy they are corporate level,
business level and functional level. Corporate level strategy is developed by top management
whereas business level strategy is formulated by managers (general manager) and functional
level strategy is formulated by supervisor or first line managers. ASDA PLC is deal in retail
industry and it is supermarket chain, headquartered in Leeds, England. Company provide
products at very low price and it is the key of success for ASDA. Company have extensive
distribution network that is 25 distribution base across UK.
This report will cover the brief introduction about the company and critically analyses the
macro environment through PESTLE analysis. Company internal environment and their
capabilities by critically analysis the strengths and weaknesses of the organization. This report
also highlights the porter's five force model and how this model evaluates the competition in the
industry, by which an organization can improve their marketing position and competitive edge.
This report also includes concepts, models and theories to interpretation and for derive a good
strategic planning for organization. Critically analysis external and internal environment factor to
make a valid strategic direction, action and objective of the organization.

MAIN BODY
LO.1 A brief about the ASDA and critically analysis the macro environment
ASDA is one of leading retailers in UK, headquarter located in England. They serve
customers by their stores and online service such as living store, supercentre, supermarket,
superstores across the United Kingdom. Company was listed on London stock exchange, in 1999
it was acquired by Walmart. It was the second largest super market in the UK. ASDA is public
limited company. Company offer George and non-food products, such as George home, general
merchandize and fashion to their customers (Hans., 2018). Their key of success is low price by
which customer attract towards them. They target almost all segments of society however their
general target are women of age group 20 to 30, because they buy day to day products which is
use by them and their family member. Company offer household essential at very low price.
ASDA mission is to become the best retailer along with satisfy customers needs. Their objective
is to provide services and products at reasonable price so customer afford easily. And vision is to
become highly valued organization by satisfying customers needs and loyalty with both
customers as well as shareholders. Their objective is provided quality products, at low price, they
also focus on sourcing from local and free of hassles and offer good range of products to
customer at low price under one roof.
PESTLE analysis is used to know the macro environment of an industry, it stands for Political,
Economic, Social, Technological, Legal and Environmental factors that affect organization. It
provides environment information about the organization direction, growth targets, brand
positioning and productivity. It also helps in identifying the new product development and
changes in existing products. PESTEL analysis is important for business strategic planning
moreover this is used for analyse the macro factors which affect a business (Shtal, and et.al.,
2018).
Political factor: Includes laws, regulation and decision which take by government. A stable
political environment is beneficial for ASDA. Political factors have major impact on retail
industry like taxes, international and national regulation, customer rights, legislation etc. it gives
impact on organization decision-making (Stack., 2021). ASDA follow all these laws to stand in
the industry however if government increase tax rate so it affects ASDA profitability and
problem in maintain or provide the products at low price. With this ASDA as well as industry

face issue like recession, low GDP and inflation. Political decision also affect economic
environment. Economic factor: Involve unemployment, economy growth/decline, interest rate,
working hours, inflation rate, cost of living etc. these economic factor have impact on pricing
strategies of the ASDA, like in lock-down many individual lost their jobs it impacts on decrease
the shopping activity. ASDA is getting the advantage of growing GDP of UK due to covid 19 the
unemployment rate is increase which affect ASDA sales (decrease), this issue is face by all
business as well. High cost of living affect business in general sales. Government increases the
interest rate than it is very difficult for business to take loan (due to high interest rate).
Social factor: Such as culture norms, population growth, expectation, age distribution, income
statistics, health and safety (Tien., Phu, and Chi., 2019). Due to change in preference and trends,
ASDA has benefits of these changes like now people spend more money so it improves sales of
the organization. The demand for vegan, organic and vegetarian food and fashion is growing fast
in UK also so it easy for ASDA to sell their products. The youth population has spent more
which help this industry to grow. Majority of population in UK is young so its beneficial for
ASDA because they are the target segment of organization. Due to fast changing in preferences
of individual its very difficult to survive in the market. For this organization must be innovative
that is make changes in existing product or develop new products.
Technological factor: The technological factor are the new equipment and practices which
affect business. The technology change very fast and it affects many organizations badly.
Government of UK make technology updated in order to make great consumer life beneficial.
For retail industry its necessary to use the latest technology. ASDA follow this and implemented
the updated technology which helps them in many ways. It also has some drawbacks like for
advance technology business need to keep more fund. Now all supermarkets are working on how
they effectively use technology in favour. It helps in making money and opportunities for
innovation to grow in the economy.
Legal factor: Are the rules and regulation of the country. Every business has to obey rules and
regulation of the country. ASDA is following all rules of the UK. All the documents of the
company is in legal format. If any organization is not pay wages fair then it gives negative
impact on the business operation so there should be fair wages. Company must follow legal
structure like proper audit, bookkeeping of all records etc. In retail industry many business are

export or import products so it compulsory to follow the rules of the country. In other words by
knowing legal factor every business understand what they can or cannot do.
Environmental factor: Concerns with waste and pollution, climate change, economy growth
and overall environment protection. Every organization must operate in environmentally friendly
manner. ASDA ensure that their products packaging not affect environment and can be recycled.
By putting extra efforts in this particular factor company has to invest in CSR and sustainability,
which has unfavourable impact on finance of the company.
For making strategic decision an individual should analyse macro environment, for these
they can use PESTLE analysis (Alanzi, S., 2018). The goal of analysis environment is to create a
great understanding of external environment, where a company operates. By this organization
know the market widely. Company must follow all political policies, economic trends, social
culture (rules and regulation), use the latest technology, legal structure and produce products
which are environmental friendly. By analysis this factor organization make a good business
strategy plan and help in growth. Political and legal factor have policies, rules and regulation
which must be followed by company and if they not follow than there may be chances of bad
brand image (Bai., Cordeiro, and Sarkis., 2020). Technological factor helps in growth of
organization if they are not using the latest technology than there is always limitation. Social and
economical factor help in strategic decision like GDP, population, age distribution etc. by this
factor company target there customer and make strategies accordingly.
LO.2 Organization’s internal environment and capabilities-
The internal environment analysis of the organization is much important for the
companies to know as this will help them in making improvements if required in the products
and services of the company (JATMIKO and et.al., 2021). The internal environment of the
company can be evaluated through the SWOT analysis of the organization. Asda company's
capabilities can be evaluated by using the SWOT analysis.
SWOT Analysis-
SWOT analysis is the tool or the method which is used by the businesses to identify as
well as to analyse the internal strengths, weaknesses, external opportunities as well as the threats

of the company. These helps in shaping the present as well as the future operations of the
company and develops the strategic goals.
The Asda company using this tool will help them to acknowledge their strengths,
weaknesses, opportunities as well as the threats. By understanding these environment factors
within the organization helps them in making the effective strategies for the weaknesses so that
they can lead in the highly competitive market (Cheng and et.al., 2021).
Strengths: This component of the SWOT analysis means all the favourable internal activities of
the company which makes the organization different and unique from its competitors in the
market. These factors help the company in contributing for the success and helps in improving
the brand image of the organization. The stores of the Asda company provides the wide range for
services which have more fun and relax for the consumers.
Weaknesses: This element of the analysis are the characteristics of the organization which
hinders the company to become successful and this is the negative impact on the organization.
These are all those activities which the company does not perform well and this does not allow
the company to achieve the goals and objectives effectively.
Opportunities: These can be defined as the external factors which are favourable foe the
company, and they can give the competitive advantage to the company. The companies when
adopt these opportunities can lead in the market as these factors effectively contributes to the
success of the company. The biggest opportunity the Asda company has is to expand in the
different regions or into the new domains. They can expand their business in the areas such as
the pharmacy, jewellery and many more. The company when expands in the different regions or
the countries helps them in gaining the brand visibility (Guangul and Chala, 2019).
Threats: These are the external factors which can impacts the working of the business if not
taken into considerations. The threats are the risks for the company as they are uncontrollable
impacts. The price with the other retailers of the company is the big threat for the Asda company.
The government consistently changes the policies for the saving the environment and many more
than this is the biggest threat to the Asda company.

VRIO theory-
This is the analytical technique which is used for the evaluation of the resources of the
organization as well as the competitive advantage. This model mainly focuses on the internal
capabilities for influencing the competitive advantage. The main purpose of this model is to
focus on the positive factors which will provide the competitive edge to the company. The
evaluation dimensions of this framework are such as
Value: This states the value of the resources and how these can be acquired in the market. Asda
company using this framework will help to evaluate the resources value.
Rareness: The rareness of the resource makes it more expensive. Asda company using this
dimension will help them to evaluate the rareness of their resources.
Imitability: This shows the difficulty for imitating the resource.
Organization: The shows how the organization can use this resource effectively for achieving
the positive outcomes.

Mackenzie 7s:
The McKinsey 7s model is the tool which is used by the organization to access the future
success of the company. Asda company can use this model as this will them in evaluating the
success of the company.
The soft elements of this are such as
Shared values: These are the norms and the standards which are followed within the company.
The Asda company must ensure about using this framework.
Skills: These are the skills which the company has the talented and the skilled employees. Asda
company has much talented and the skilled employees.
Style: The leadership style of the leaders which will help them in influencing the productivity
level as well as performance. Asda company has effective leaders which influences the
performance.
Staff: This is the human resource of the company as it deals with how they are motivated and
trained. Asda company motivates the employees regularly.
Strategy: This is the plan which is developed by the organization to lead in the market by having
the competitive edge. Asda company is planning good strategies which helps them to stay ahead.
Structure: The organization is made of the chain of command which helps in the transferring
the instructions from the superiors to the subordinates.
Systems: The daily procedures as well as the workflow which helps in making the decisions of
the organization.
Asda company using this strategy will hep them in remaining competitive in the market.

LO 3. Porter’s Five Forces model analysis-
This is the framework which helps the company to analyse the competition in the
industry of the company (Bruijl., 2018). The main objective of the Porter's Five Forces model
helps in accessing the competition in the particular business sector. Each of the five forces of this
model has the main key component of the intensity of market. This model is much useful for the
businesses as it is very simple model and proved much effective tool for analysing the
competition in the industry. This helps in determine the effectiveness of the strategies that is the
strategy has the potential for the profitable company in the highly competitive environment. The
Porter's five forces will be very helpful for Asda company in understanding as well evaluating
the competition in the business of the particular industry (Ong, Ismail and Yeap, 2018).
The five force of this model are such as
Competitive Rivalry: The first force of this model states the number as well as the strength of
the competitors of the company. The industry having the intense rivalry in these the large
number of the customers are attracted towards the company. The company lowers the prices and
launches the marketing tools which has the high impacts in making reach the products and
services to the consumers. The Asda company has the large competition so for this, they must
implement the effective strategies for keeping the customers. When the company's competition
in the market is low then they have the power of increasing the prices because if the prices will

increase, then also the company;s have the power of retaining the customers. If the Asda
company will not lower the prices then the customers will easily switch to the other company as
the switching costs is low. The company lowering the prices will avoid the customers to switch
for buying the products of the other company.
Supplier Power: This force shows that how easy it is for the suppliers to increase their prices.
The company having the large number of the suppliers becomes easier for them to switch to the
supplier who is giving the better deals to the companies. The suppliers having the strong
positions provides them the power of charging the higher prices from the companies. The
company giving more prices to the suppliers may have the impacts on the profitability of the
company as if they will pay much to them then this will reduce the profits of the organization.
This power is driven by the uniqueness of the companies products and services as well as the
strength of the suppliers. The Asda is the third biggest supermarket chain in UK the company has
the large competition as well as the large power of the suppliers (Kohtamäki and et.al., 2019).
Buyer Power: The buyer power states that the if the number of the buyers are low as compared
to the number of the suppliers in the overall industry, then this is refereed to as the buying power.
When the company has very few customers then they have more buying power and the power of
the company increases when there is large number of the customers but with little competition.
This is the pressure which the consumers exert on the companies for meeting their expectations
of the products and the services at the lower prices. It is basically when the buyers have the
power of changing the prices as well as the quantity of the company's products. The buyers of
the Asda company has more power as there are many supermarkets in the country.
Threat of Substitution: Substitution means replace one thing to other or put one thing in the
place of another. Other competitor can take advantage and make a better product from the
existing one. ASDA offer products at low price, as Sainsbury also provide products at low price.
So its easy to substitute a product, so company make good customers relationship and create
loyal customers. A low thread of substitute make an industry extra attractive whereas high threat
of substitute makes industry less attractive so high treat of substitute give positive impact on firm
and low threat of substitute give negative impact on firm. In current senior its easy to substitute
product because customers having different products, and then they compare it easily, and they
select product which match their demand and have reasonable price. ASDA have faced this,
because other companies also provide same products at low price.

Threat of New Entry: In simple words threat of new entry is risk of a new competitor create a
position in market. In retail industry its easy to set up a business and provide products in
supermarkets and online services through their own website or by join venture with other
running companies. This focus on how ASDA is affected by a new entry in the market and how
company retain their customers. In this market its very hard for new entry because with ASDA
there are many big players in the market so if there is chance of new entry than they have to
invest large amount as capital and along with this new entry also struggle in gaining a foothold in
the market. For retain in the market make brand image stronger, so new entry cannot affect
company easily (Weston, and Nnadi., 2021). ASDA must focus on improving market shares, ans
make good brand positioning.
LO4. Models, theories and concepts which assist and provide understanding and interpretation of
strategic directions to ASDA
Porter’s generic strategy
Strategic directions are the basic ideas or actions that allows great amount of consistency
within the strategy over specified time duration. It basically enables the firm to achieve their
vision along with assist them to fulfil the goals of organizational strategies. In context of
illustrating concept in detailed manner, the porter's generic strategy has been followed according