Analyzing ASDA: PESTLE and SWOT for Strategic Development

This report provides a comprehensive environmental analysis of ASDA Stores Ltd., a British supermarket retailer and subsidiary of Walmart, focusing on its operations in the United Kingdom. The analysis employs the PESTLE framework to evaluate the political, economic, social, technological, legal, a...Read More

Running head: ASDA ENVIRONMENTAL ANALYSIS
ASDA ENVIRONMENTAL ANALYSIS
Name of the student:
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Author Note:

1ASDA ENVIRONMENTAL ANALYSIS
Task 2
LO3: MACRO Environment
The aim of this paper is to discuss the essentiality of analysing the macro and micro
environment of ASDA Stores Ltd. which is a British supermarket retailer. It is a part of retailer
giant Walmart and mainly focuses on the core business of supermarket. Along with the
supermarket business, the company also provides financial services as well as mobile phone
products. The marketing promotions of ASDA chiefly focuses on the price structure. Unlike the
parent company Walmart, ASDA is also operating under the slogan “Save money. Live better”
(Asda.com 2019). This report will discuss the PESTLE of the United Kingdom in regards to
ASDA and analyse the strengths, weaknesses, opportunities and threats. Based on these analyses,
the paper will provide some recommendations which will help the company to expand their
operations in the foreign markets in one hand and solve the internal issues without much effort.
PESTEL Analysis
The PESTLE analysis of the country where the company has been operating for more than 60
years is the United Kingdom. This analysis aims to address some of the very important political,
economic, social, technological, legal and environmental factors that have either benefited the
companies operating in this market or putting pressure on them for surviving.
 Political Factors:
It is related to government policy that can have an effect on business such as new legislation
and regulatory shifts. For example, stable government of China has been attracting more
business operators to enter the market.
 Positive Impacts

2ASDA ENVIRONMENTAL ANALYSIS
The United Kingdom consists of Wales, England, Scotland and Northern Ireland. This is one of
the most powerful and influential countries of the world. The country is marked by political
stability which has been a great strength for both the nation and the business. The country has
been in a focus for foreign direct investment. The business tycoons around the world have
directly invested in various Industries originated in the UK. Despite the fact that there is some
hidden corruption in the political structure but these do not affect much on the policies of the
country which can manipulate the business organisations.
 Negative Impacts
Due to BREXIT, there are some political issues which have affected the business
organisations in a negative way. This has created uncertainties as well as political debate. To
some BREXIT will create chaos but others state that it will definitely open doors to immense
opportunities for the business organisation situated in this country. The company will be affected
by the national and international regulations along with those of the European Union. These will
affect the legislation, consumer rights of employment and taxes. Therefore, the decision-making
process of the organisation will also be manipulated. Therefore, it must monitor the political
environment of the country consistently and bring changes into the company policies to survive
in this highly competitive market.
 Economic Factors:
High economic growth helps companies to attain more success in the market as economically
strong market has consistent customers and employee. For example, with the largest economy of
the world, the US attracts more business than any other countries.
 Positive Impacts

3ASDA ENVIRONMENTAL ANALYSIS
The UK has more and less stable economy and it is the fifth largest economy by the nominal
GDP in the world. The decision of 2008 had created some uncertainties for the economic
landscape of the country but the government had taken all the necessary steps to improve the
situation. The government has announced to reduce the corporation tax. In 2020 financial year
this tax will be 17%.
 Negative Impacts
The common household in the UK faces some challenges since 2017. The prices in the shops
was rising fast as the value of pound was reduced. Over the cost of importing goods in the
country was much high. Moreover, wages why not up to the line along with the increased prices.
However, this situation has improved after 2017 as the inflation rate rose to 3.1%. Now the
economic condition of the UK is supportive of business for ASDA (Beitelspacher and Rodgers
2018). The company needs to consider financial factors like cost of credit pay level or more
competitive pressures, energy prices and civil supply and demand. This will definitely impact on
the price strategy of ASDA.
Social Factors:
The countries where the population is highly educated and skilled and the standard or living is
higher, cultural diversity increases. This helps the companies to work more competitive manner.
India is highly diverse market along with its large in size therefore, many companies are entering
this country for business.
Positive Impacts
The UK has a huge consumer market for which most of the International Organisation
accumulate in this region. In July 2017 the national statistics published that the country has a
population of 65.6 million in 2016 (Ons.gov.uk 2019). The diversity of culture is high in this

4ASDA ENVIRONMENTAL ANALYSIS
region therefore the business organisations can get a lot of opportunities and get different
segments of consumers. This create an opportunity for the business organisations to employ local
skilled and experienced workers which will meet the need for human resource. Aging
population, Healthy lifestyle and celebrity following in the market, the company will get the
scope to introduce new and customised products as well as services in this market. This will also
help it to develop segmentation strategies.
 Negative Impacts
The population of the UK is getting older soon which will have a negative impact on the
labour market of the country as well as manipulate the Healthcare system. The living standard of
the people of this country is high. Therefore, the companies produce high quality products and
services to cater the demand of the consumers in the UK market (Dalgic and Bloemen 2015).
Technological Factors:
The recent business structures need investment in advancing technological infrastructure within
the country which can offer the entrepreneurs opportunities for doing business. Japan has a
highly technical market which makes it attractive for companies.
 Positive Impacts
The United Kingdom is one of the most advanced countries which has adopted Technology
in every possible manner. London is the capital where there are numerous financial as well as
technological institutions. The government has invested in advancing technological infrastructure
within the country which can offer the entrepreneurs opportunities for doing business in the UK.
Businesses will be frequently developing new technologies for giving the best solution to the
customers (Colicev, Malshe and Pauwels 2018).
 Negative Impacts
The UK based companies can meet the demand of the overseas customers through online
business but in case of the supermarket like ASDA, it does not have proper infrastructure to use

5ASDA ENVIRONMENTAL ANALYSIS
super-fast broadband and mobile app facilities that can allow the customers to collect delivery
services faster than ever.
Ecological Factors:
Recently changing ecological factors in the world is manipulating the companies to change their
production strategies. The issues like green economy, carbon footprint and pollution have created
barrier in entering the market of Australia.
 Positive Impacts
The economic activity of the country completely impact on the environment however the
government has made some significant improvements to reduce the negative impact of business
on environment. The local councils, charities, media and the government have taken initiative to
create an environmental awareness among the citizens as well as the business organisations. The
country of emphasis extreme weather conditions but this do not affect any type of business in
this country.
 Negative Impacts
Green economy, carbon footprint, pollution, hazardous wastes and promotion of organic foods
have become important for the supermarket organisations (Lancaster and Massingham 2017).
Unlike other companies, ASDA has also felt pressure to operate in an environment friendly way.
Legal Factors:
The legal factors like change in the taxation policies, fair trade deals and rights of the employees
and consumers affect the business of the companies greatly. The rigidity in the legal sections of
the county like North Korea, no business aims to enter its market.
 Positive Impacts
There are various legal procedures and policies which the business organisations are asked to
follow. These include the policies regarding employee rights, licencing for doing business,
quality assurance and consumer empowerment regulations. ASDA therefore must obey these

6ASDA ENVIRONMENTAL ANALYSIS
rules and regulations as any type of bridge can result in punitive actions by the relevant
authorities (Laverty et al. 2018).
 Negative Impacts
The company will be affected by the national and international regulations along with those of
the European Union. These will affect the legislation, consumer rights of employment and taxes.
LO4: Micro Environment
 Briefly explain what micro environment is and what is its role or importance to a business
success.
 Brief state what are the SWOT factors (S: Strength, W: Weakness, O: Opportunities, and T:
Threats)
SWOT Analysis
 Internal and external analysis (SWOT) in order to identify strengths and weaknesses.
SWOT Factors Chosen Organization
Strengths ASDA is a British Supermarket retailer which has the present
organisation Walmart. It has created a positive image to their customers
for their convenience, wide variety of products and value for money. Like
the parent company Walmart, this company also focuses in saving money
of the clients and always keep the costs lower than the competitors. This
company has coal quality associated with the uses of Information
Technology for supporting operations. The technology is used for
monitoring the performance store by store and make the delivery method
easy. The information technology has supported its efficient procurement.

7ASDA ENVIRONMENTAL ANALYSIS
As the company focuses on providing best quality products to their
customers, it invests money and time for the employee training process
and developing their skills (Moatti et al. 2015). As Walmart is the parent
company, ASDA has also focused on the non-food items in their stores. It
has quadrupled the non-food offerings to more than ten thousand general
merchandise lines. The social factors of UK has provided the company
with skilled labours along with supply chain who know the expectations
of the customers best.
Weaknesses The main problem of this company while operating in the UK
market is the unavailability of smaller supermarkets as well as
convenience stores. The UK has placed restrictions on the constructions
of bigger stores in the suburb area as well as the rural area. Despite the
fact that Walmart is the parent company of ASDA, there is a huge lack of
control which main effect the business of this company and leave it weak
(Chen 2018). Walmart is the world’s largest grocery retailer but it has
sold products across different sectors like food, stationery, clothing and
many others. Asda being a part of Walmart does not have flexibility like
the other competitors.
Opportunities Being the part of Walmart, ASDA has gained the opportunity to
harness the enormous buying power especially on the general
merchandise. Despite the fact that the profit margin of clothes or
accessories have gone down but food still accounts for the most important

8ASDA ENVIRONMENTAL ANALYSIS
part of the company’s turnover. Moreover, the low pricing model
followed by ASDA has who held its sales. ASDA has the opportunity to
form strategic alliance, take over and merge with other international
retailers that can be focused on growing food as well as non-food markets.
In order to solve the issue of small supermarket, ASDA has bought Netto
supermarket. This is all to the issues of small Store format by converting
all the Netto locations into ASDA stores (Pantano et al. 2017).
Threats The competition level in the retail grocery market has been
increasing with the advent of Tesco and Morrisons in the UK market
which causes a great threat for this company to operate. Due to recession
the UK family disposable income has been lowered which leads to
moderate food price inflation in the grocery stores. The issue of
employment uncertainty also can lead ASDA to feel tremendous pressure
in the UK market.
Explanation
 The economic and political situation of the UK is welcoming and support the FDI which
give full support to the company.
 The social factors of UK have provided the company with skilled labours along with
supply chain who know the expectations of the customers best.

9ASDA ENVIRONMENTAL ANALYSIS
 The hike in petrol prices have increased the demand of the logistics and transportation
which is threatening ASDA to enhance their product prices (Blanco and Cohen 2017).
 The legalities in the UK is more or less flexible but the company faces many customer
grievances in these least few years.
Recommendation
 ASDA if wants to gain competitive advantage in the market and overcome all the issues,
must follow some startegies which include-
 Firstly, selling off some idle assets of company that do not focus on core business of
providing the customers with the basic grocery requirements.
 Secondly, approaching the monetary institutions which have rested on the business and
restructure the debt by re-mortgaging specific aspects of business.
 Thirdly, restructure the ways in which the company’s products and services are given by
the use of real-time marketing analysis as well as in-time delivery from the distribution
centres.
 Fourthly, the senior management needs to enhance their monitoring on each store in a
regular rotation.
 Fifthly, the company needs to create a best practice team and implement mentorship
program.
 Sixthly, create customer feedback method over the internet and any online process so that
they can be connected with the company in most possible manner.
 Seventhly, the company must have an open-door policy so that the senior managers have
access to the resources of the company to sae with their subordinates.

10ASDA ENVIRONMENTAL ANALYSIS
 Finally, to motivate the employees the company must introduce incentive and rewards
programs
Conclusion:
Therefore, it can be concluding that through proper analysis of political, economic,
social, technological, legal and environmental factors that manipulate the external forces of the
company are important. These either support the growth of the company or work complete
against the growth. Through proper analysis of the strengths, weaknesses, opportunities and
threats can be pointed out easily. These factors present in the market where the ASDA aims to
operate and expect to develop itself to be one of the most important retail organizations, put
pressure on it for surviving the tremendous competition present. There are some internal issues
also which create barrier for the company to flourish completely. Hence the company must
follow some very important strategies so that it can grow in the market of the UK in one hand
and expand its business on the other.

11ASDA ENVIRONMENTAL ANALYSIS
List of References
Asda.com (2019). Asda.com - Online Food Shopping, George, & more. [online] Asda.com.
Available at: https://www.asda.com/help/company-details [Accessed 23 Jan. 2019].
Beitelspacher, L. and Rodgers, V.L., 2018. Integrating Corporate Social Responsibility
Awareness Into a Retail Management Course. Journal of Marketing Education, 40(1), pp.66-75.
Blanco, J.M. and Cohen, J., 2017. Macro-environmental Factors Driving Organised Crime.
In Using Open Data to Detect Organized Crime Threats (pp. 137-166). Springer, Cham.
Chen, C.M., 2018. A review and analysis of service level agreements and chargebacks in the
retail industry. The International Journal of Logistics Management.
Colicev, A., Malshe, A. and Pauwels, K., 2018. Social Media and Customer-Based Brand
Equity: An Empirical Investigation in Retail Industry. Administrative Sciences, 8(3), p.55.
Dalgic, T. and Bloemen, H., 2015. Internationalisation of the Eurofood Retail Sector with
Special Reference to Foreign Market Entry Modes. In Proceedings of the 1993 World Marketing
Congress (pp. 176-177). Springer, Cham.
Lancaster, G. and Massingham, L., 2017. The development of a strategic approach to marketing:
its culture; internal macro-and external micro-environmental issues. In Essentials of Marketing
Management (pp. 11-42). Routledge.
Laverty, A.A., Thompson, H., Cetateanu, A. and Filippidis, F.T., 2018. Macro-environmental
factors and physical activity in 28 European Union countries. The European Journal of Public
Health, 28(2), pp.300-302.

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Moatti, V., Ren, C.R., Anand, J. and Dussauge, P., 2015. Disentangling the performance effects
of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in
the global retail industry. Strategic Management Journal, 36(5), pp.745-757.
Ons.gov.uk (2019). Overview of the UK population - Office for National Statistics. [online]
Ons.gov.uk. Available at:
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/
populationestimates/articles/overviewoftheukpopulation/november2018 [Accessed 23 Jan.
2019].
Pantano, E., Priporas, C.V., Sorace, S. and Iazzolino, G., 2017. Does innovation-orientation lead
to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing and
Consumer Services, 34, pp.88-94.
Pantano, E., Priporas, C.V., Sorace, S. and Iazzolino, G., 2017. Does innovation-orientation lead
to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing and
Consumer Services, 34, pp.88-94.