Strategic Analysis and Business Strategy Report for ASDA

This report provides a comprehensive analysis of ASDA's business strategy. It begins with an introduction to business strategy and the chosen company, ASDA, a British supermarket retailer. The report then delves into a PESTLE analysis to assess the impact of the macro-environment, including political, economic, social, technological, legal, and environmental factors. Following this, a SWOT analysis evaluates ASDA's internal environment, highlighting strengths, weaknesses, opportunities, and threats. The report also examines ASDA's core values, vision, mission, and objectives, and applies the McKinsey 7-S model to analyze the organization's effectiveness. Finally, the report applies Porter's Five Forces model to evaluate competitive forces and suggests strategies to improve ASDA's competitive edge and market position. The analysis informs strategic management decisions, providing insights into ASDA's operations and potential for growth.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Application of appropriate frameworks to analyse impact and influence of macro
environment.................................................................................................................................1
M1 Critical analysis of macro environment to determine and inform strategic management
decisions.......................................................................................................................................4
TASK 2............................................................................................................................................4
P2 Analysis of internal environment and capabilities of the organisation...................................4
M2 Critical evaluation of internal environment to assess strengths and weaknesses of
organisation's capabilities, structure and skill set........................................................................7
TASK 3............................................................................................................................................7
P3 Application of Porter's five forces model to evaluate competitive forces..............................7
M3 Appropriate strategies to improve competitive edge and market position based on
outcomes......................................................................................................................................9
TASK 4............................................................................................................................................9
P4 & M4 Application of a range of theories, concepts and models and strategic planning for
company and strategic management plan....................................................................................9
D1 Critique and interpret information and data.........................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy can be defined as a plan which is used by business entities in order to
attain objectives such as customer satisfaction, profit and sales maximisation. An attractive
strategy can help to enhance organisation's performance and result in achieved business
objectives (Adner, 2017). For large as well as small companies it is very important to formulate
attractive strategies that may help to deal with challenges such as increasing losses can be dealt
appropriately. The organisation which is selected for this report is ASDA which is a British
supermarket retailer. It is mainly established in Leeds, West Yorkshire, UK. It was founded by
Peter Asquith, Fred Asquith and Sir Noel Stockdale in year 1949.
This report covers various topics such as analysis of impact and influence of macro
environment has on an organisation, assessment of internal environment and capabilities of
company, evaluation and application of outcomes of an analysis with the help of porter's five
forces model. Apart from this, application of models, theories and concepts is also covered under
this assignment.
TASK 1
P1 Application of appropriate frameworks to analyse impact and influence of macro environment
Macro environment: It can be defined as a condition which exists in the economy not in
a specific region or a sector. There are various types of factors that are required to be analysed
while studying macro environment in order to formulate strategic decisions. These are gross
domestic product, employment, monetary policy, inflation and deflation rates. In order to analyse
impact of these factors on ASDA, PESTLE analysis is conducted.
PESTLE analysis: It is a macro environment tool which helps to determine impacts and
influences of various external forces that can leave negative effect on business and its strategies
(PESTLE analysis, 2018). For ASDA all the aspects of it are assessed in order to monitor
impacts and influences of them on organisation. The analysis is as follows:
 Political: Various types of governmental laws, legislation, policies etc. are considered as
the part of such factor. It is vital for ASDA to comply with all of them and adjust
organisational policies according to them in order to execute business in appropriate
manner. Such types of elements can influence the company and strategies because of
slight change in government policies. When political parties make modifications in
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existing laws, then managers of ASDA have to formulate new strategies according to
them which affects whole organisation as it is not possible to change them frequently.
 Economic: Economic growth, inflation, deflation, exchange rates, taxation etc. are the
variables considered as economic factors. ASDA get influenced due to economic
elements because it affects purchasing power and spending capability of customers.
Strategies and organisation itself get impacted due to such factors because when these
components fluctuates sales and revenues get affected and managers have to form new
policies to reduce their negative impact. ASDA always try to comply with aspects related
to economy in order to ignore future losses (Baker, 2014).
(Source: PESTLE analysis, 2018)
 Social: Age distribution, population growth, career attitudes, health consciousness etc.
are social factors that are related to buying behaviour, beliefs and attitudes of customers.
Managers and marketers of ASDA try to gather information of social changes in order to
understand demand and requirements of customers. If organisation is not able to take all
of them into consideration then it can influence and impact ASDA and its strategies
adversely. If it is not able to understand such elements then it will become difficult to
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Illustration 1: PESTLE analysis, 2018

introduce new services or products in market and develop segmentation strategy
(Carayannis, Sindakis and Walter, 2015).
 Technological: Innovation in the technology is a part of this factor which is required to
be considered by business entities in order to retain existing customers and attract
prospects. As ASDA is a supermarket, so it is vital for it to use innovative techniques to
execute operations appropriately. Continuous changes in such components influence and
impact ASDA and its strategies because if organisation is not able to meet expectations of
customers regarding new technology then it can result in decreased sales and profits. In
order to reduce this impact, it is vital for managers to analyse latest trends in market and
formulate strategies according to them.
 Legal: Different types of acts that are related to consumer rights, food and safety,
advertisement standards, labelling of products is considered as legal factors. All of them
influence and impact ASDA and its strategies as legal implications changes with and all
the organisations are required to formulate their policies according to them (Dunning,
2014).
 Environmental: All the factors that are related to environment and nature are considered
as the part of this element of PESTLE analysis. If ASDA is not able to fulfil
governmental policies regarding environment protection laws, then it can impact and
influence the organisation and its strategies. When company is not able to demonstrate
that it is an environmentally friendly organisation, then it can harm market image of it. It
is also vital for managers to formulate strategies for business according to environmental
factors in order to make sure that it is not harming nature and natural resources.
The above analysis depicts that ASDA is a large sized organisation which is executing
business all around the world and rendering services on global level. Growth rate of ASDA is
very high because it is complying with all the legal regulations for the purpose of executing
business in appropriate manner. Profitability of the business entity is very high because it focuses
of economic and social factors which helps to offer such products to customers that they are
willing to buy and operate business according to economic conditions. ASDA has captured larger
market share of UK which is 15.3% of whole territory (Market share of ASDA, 2019). It is also
using product development strategy in order to retain its existing clients and capture more market
of its competitors such as Tesco, Sainsbury's etc. The above analysis helps to determine potential
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of ASDA which is very good and it has ability to expand business because it complies with all
aspects of PESTLE analysis.
M1 Critical analysis of macro environment to determine and inform strategic management
decisions
For all the business entities, it is very important to analyse macro environment in order to
determine and inform strategic management decisions because with the help of it, managers can
gather information of external factors which may leave negative impact upon business. With the
help of this analysis, managers can formulate strategic decisions for organisation which can
result in attainment of organisational objectives. Lack of knowledge regarding such elements can
affect decision making of managers and result negatively for company. When an organisation is
willing to develop a business strategy then it is very important to carry out external analysis in
order to gather information regarding market conditions.
TASK 2
P2 Analysis of internal environment and capabilities of the organisation
Internal environment: All the factors that are available within the organisation are
considered as the part of internal environment. These are employees, corporate culture,
management etc. It is vital for managers of ASDA to analyse all of them so that appropriate
strategies for future period can be formulated. SWOT analysis can be used for the same purpose
(Finney, 2014).
SWOT analysis: It is an internal analysis tool which helps to determine strengths,
weaknesses, opportunities and threats of the organisation. All these elements helps managers to
form strategies for business entity in order to reach long term goals. For ASDA it is as follows:
Strengths (Capabilities) Weaknesses
 Management of ASDA is very good
due to its capability of skilled
workforce which helps to execute all
the operations appropriately.
 Brand image of ASDA is highly
organised and for all the organisations
it is not possible to maintain it. This
 Price of products that are offered by
ASDA is very high as compare to its
competitors which is not affordable for
all types of customers.
 Global presence of business entity is
limited due to this, it is not able to
identify for most of clients from
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capability helps organisation to retain
its customers.
different countries.
Opportunities Threats
 ASDA is expanding its business in
various other sectors such as jewellery,
photo department, opticians and
pharmacies etc. which can help it to
increase its market share and profits.
 ASDA is planning to market it self on
social media which can help to reach
maximum number of customers and
increase sales.
 Competition from small retailers such
as ALDI and LIDI is faced by ASDA
which can result in decreased profits in
future.
 Competitors are cutting their prices
continuously which is a threat for
ASDA because its prices are very high
and it will affect its market share.
Core values: Some of the core values of ASDA are strive for excellence, respect
individuals and deliver best services to customers. All these values influences strategic direction
in positive manner because managers focus on these aspects while formulating plans or taking
actions for the attainment of goals.
Vision: ASDA's long term vision is to be the world's largest retailer with higher
profitability and productivity.
Mission: ASDA's mission is to be the best value retailer of Britain by always exceeding
needs of customers (Overview of ASDA, 2018).
Objectives: Main objective of ASDA is to reduce waste and become market leader in
retail sector. Its another goal is to make goods and services more affordable for each and every
customer. These objectives have been shaped by stakeholders appropriately because they are
highly focused with the attainment of all of them.
McKinsey 7s Model: It is used by business entities to analyse organisation's
effectiveness which postulated that there are seven different types of factors that are required to
be reinforced and aligned to be successful (McKinsey 7s Model, 2018). This model was
developed by Tom Peters and Robert Waterman in year 1980s. All the aspects of it for ASDA
are as follows:
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(Source: McKinsey 7s Model, 2018)
 Structure: The way in which business units and functional departments are organised is
considered as its structure. In ASDA hierarchical structure is implemented in which a
proper chain of command is followed. It helps to execute all the operations in appropriate
manner because staff members perform all the tasks properly by following instructions
that are provided to them by top management (Habib and Hasan, 2017).
 Strategy: It is a plan which is developed by the managers in order to achieve business
goals. In ASDA management is highly concerned with formulation of effective strategy
in order to remain competitive in retail industry. With the help of it long term goals and
objectives are achieved by company.
 Systems: The procedures that reveals daily activities of organisation are considered as
systems. In ASDA, it is implemented properly which results in management of regular
procedures, workflow and decisions that are made by high authority to meet long term
goals.
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Illustration 2: McKinsey 7s Model, 2018

 Shared values: These are such standards and norms that are commonly accepted by
company and influence behaviour of employees at workplace. In ASDA managers set
guidelines for workers in the form of shared values. These are corporate culture, vision
and identity (Holotiuk and Beimborn, 2017).
 Skills: It is the set of abilities that are important for each employee of organisation in
order to perform tasks that are allotted to them. In ASDA managers expect that their staff
members should have certain skills such as communication, decision making, conflict
and problem handling (Keyes, 2016). In order to achieve business foals organisation is
also required to have some skills such as competitive advantage, unbiased etc.
 Style: It includes leadership and management styles which are implemented within the
organisation for the purpose of effective execution of business operations. In ASDA,
democratic leadership and management styles are followed which helps to motivate
employees and increase their engagement level in operational activities. It also results in
increased profits of company because managers take opinion from workers which helps
to formulate appropriate decisions for betterment of company.
 Staff: It refers to the human resource of organisation and the way in which they get
recruited, selected and managed by it. In ASDA, appropriate training is provided to
employees in order to increase their work quality and productivity. It helps whole
organisation to reach its long term objectives.
M2 Critical evaluation of internal environment to assess strengths and weaknesses of
organisation's capabilities, structure and skill set
Internal analysis is very important for all the business entities as it helps to assess
strengths and weaknesses of organisation's capabilities, structure and skill set. With the help of
internal analysis tools such as SWOT managers can determine problems and positive points of
company. It also guides top managers to formulate strategic decisions which can help to deal
with challenges that may take place in future.
TASK 3
P3 Application of Porter's five forces model to evaluate competitive forces
Porter's five forces model: This model was introduced by Michael Porter in year 1979
in order to facilitate such organisations which are willing to analyse competitiveness in the
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industry (Porter's five forces model, 2018). There are five different forces that are assessed with
the help of this model. All the elements of this model for ASDA are described below:
(Source: Porter's five forces model, 2018)
 Existing rivalry: Under this force of Porter's five forces, existing competitors of the
company in industry are analysed. There are various rivals of ASDA such as ALDI,
LIDI, Tesco, Waitrose, Sainsbury's etc. In order to sustain in the market it is vital for
managers to formulate attractive strategy which can help to deal with it. In UK, its
competitive advantage is very good and threat of rivalry is low because it has brand loyal
customers which are retained by company by providing them good quality products
(Laguna and Marklund, 2018).
 Supplier power: When there are lower number of suppliers then they bargain and sell
products on high prices and in opposite condition, they sell goods on low price. ASDA
have end number of suppliers in UK and out of UK which helps to decrease bargaining
power of them. If one of them is not providing items on low price then ASDA can switch
to others. Bargaining power of its suppliers is low which is beneficial for company as it
can buy goods on low price from them.
 Buyer power: If an organisation is having less number of buyers and price of its
products is very high then it can result in bargaining of them. ASDA is a large company
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Illustration 3: Porter's five forces model, 2018

and it has end number of buyers. Bargaining power of customers for the organisation is
very low because its provides good quality products and services to them.
 Threat of new entry: The markets which are generating high profits attracts new entries
in market and result in competition. It is not easy to enter in retail sector because high
capital investment and market is required and for a new business it is not possible to
spend this amount. Threat of new entry is very low for ASDA which can help it to
generate higher profits and competitive advantage in retail sector (Leekha, Chhabra and
Sharma, 2014).
 Threat of substitute: Such products that could be used on the place of other are known
as substitutes. All large companies in retail sector have a threat of substitutes which are
small grocery shops that are selling such items that are same as supermarket's goods for
ASDA, it is moderate because brand loyal customers does not switch but other clients can
try products from grocery or departmental stores.
M3 Appropriate strategies to improve competitive edge and market position based on outcomes
There are various types of strategies that could be used to improve competitive edge and
market position of ASDA. These are conducting market research, surveys and performing a
porter's five force analysis. With the help of all of them business entities can deal with all the
challenges in appropriate manner by formulating strategic decisions. If there is high competition
in the market, then it is vital for business entities to conduct promotional programs to aware large
number of customers regarding company and its products (Zamberi Ahmad, 2014).
TASK 4
P4 & M4 Application of a range of theories, concepts and models and strategic planning for
company and strategic management plan
Introduction: ASDA is the British leading supermarket retailer, headquartered in
London, UK. Its specialisation is in selling groceries, retail, merchandise, financial services etc.,
with high customer loyalty. ASDA is well-known for quality of service or commitment towards
providing most valuable services within a given period of time. This brand has been recognised
as a sub-division of the Walmart. Currently, this leading business entity is looking for business
planning to develop its existence all around a world (Lehmann, 2016).
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Situational analysis summary: In this, models or concepts such as SWOT, Pestle etc.,
will be used to raise expectancy of business formulation or level of development.
SWOT analysis of ASDA:
Strength Weaknesses
Management and brand image of ASDA is
very good which helps it to attract new
customers and retain existing clients. It helps
to enhance profitability and market share of
organisation.
Price of all the products of ASDA is very high
which results in decreased interest of
customers in it. Low presence on global level
harm its identity which is a major weaknesses
for it because it can affect its profitability.
Opportunities Threat
Business expansion in different sectors has
been planned by ASDA for the purpose of
capturing large market share. Plan regarding
market on social media are also formulated by
the organisation which can help to aware
maximum number of clients regarding its
products.
Small retailers such as ALDI and LIDI are
major threat for ASDA because they and other
competitors are capturing its market share by
offering products on low prices to customers.
Pestle analysis of ASDA:
Political: National, international or EU regulation has impacts employment, legislation or
taxation of the ASDA. Change in government policies has led burden on business operation of
ASDA to control out to carry business functioning. Political war is one of major reason for
impact on operations of ASDA.
Economical: In business context, ASDA needs to consider economic factors such as
inflation, deflation and flex in exchange rate are major burden on their business operation at
utilised period of time. These factors are simply responsible for fluctuation in business entities of
the ASDA (Lueg, 2015).
Social: Various social changes such as distribution of the population, healthy lifestyle
and increasing growth in populations are some important factors for ASDA which in reality
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