Asda Business Strategy: PESTLE, SWOT, and Porter's Five Forces Model

This report provides a comprehensive analysis of Asda's business strategy, examining both the macro and micro environments. It utilizes frameworks such as PESTLE to assess external factors like political, economic, social, technological, legal, and environmental influences. The report also delves into Asda's internal capabilities through SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is applied to evaluate the competitive forces within the industry, and stakeholder mapping is used to understand the influence of various stakeholders. Furthermore, the report explores Ansoff's growth matrix to identify potential growth strategies for Asda, including market penetration, product development, market development, and diversification. Bowman's strategy clock and the balanced scorecard are also discussed as tools for strategic decision-making and performance measurement. The analysis aims to provide a holistic view of Asda's strategic position and potential avenues for future growth.

Unit 32
Business strategy

Table of Contents
Introduction................................................................................................................................3
Main Body..................................................................................................................................3
Applying appropriate frameworks analyse the impact and influence of the macro
environment............................................................................................................................3
Pestle analysis........................................................................................................................3
Mission and objective of the company...................................................................................3
Pestle Analysis.......................................................................................................................3
Ansoff’s growth matrix..........................................................................................................5
Stakeholder mapping..............................................................................................................7
Analyse the internal environment and capabilities of a given organisation...........................7
SWOT analysis.......................................................................................................................7
Porter’s generic forces............................................................................................................9
Applying Porter’s Five Forces model evaluate the competitive forces...............................10
Applying a range of theories, concepts and models.............................................................10
Bowman Strategy.................................................................................................................10
Balance scorecard.................................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13

Introduction
Business strategy is the best strategy for the growth of plan to achieve their own
vision, prioritizing, objectives and accomplish for the growth of financial performance
through the business model. With the help of cost leadership, differentiation and make focus
for the growth of basic strategies. With the help of business model is a management for the
development new or make existing methods. It is helpful for growth to make describing value
proposition, consumers and finance. Asda is British supermarket chain, its headquartered is in
Leeds, England. The company is founded in 1949 and now the company is providing their
services in grocery, general merchandise and different financial services (Aldianto and et.al.,
2021). This report analyse company’s macro environment and their business strategy. It is
further discuss that organisation’s internal capabilities and environment are needed to be
discuss in an effective manners. Furthermore, porter’s five forces model provide the growth
to new market of the company. In last, models, theories and concepts are developed an
understanding for an organisation.
Main Body
Applying appropriate frameworks analyse the impact and influence of the macro environment
Pestle analysis
Mission and objective of the company
The mission of the Asda Company is to become one of the best Britain retailers that
actually exceed the customer’s need within the market. They wants to stakeholders of the
business and understand the stakeholders and complete their customer’s customer. Their main
task is to meet every customer’s demand and provide them for growth in terms of products
price. There are different strategy which are adopted by the company to make a strategic
intent and different direction places.
Pestle Analysis
This analysis is a strategic framework which provides valuable information on
external factors that impact the organisation and gain macro perspective of industry
environment. In context to Asda, it allows the company to create an impression in relation to
external factors that may affect in development of new products and service in the industry
(Alrousan and et.al., 2021). The following factors are given below:

 Political factors: These factors relate to government regulations which determine
extent of control government has on the industry or company. In context to Asda, the
company functions in a relative stable political environment and is promoted by the
government to provide affordable good and services to its customers.
Positive impact: Subsidies result in lowering the cost of products and services while
maintaining high quality ensuring both profitability and customer satisfaction for the
company.
Negative impact: Sudden changes in political climate can result in company policies
not being in line with the government regulations affecting its operations and management.
 Economic factors: These factors affect how an organisation will price their products
and services as economic factors have a direct relation with company’s long-term
objectives in the market. In context to Asda, factors such as labour supply and
demand, energy price, etc. are taken into consideration to develop effective strategy in
order to keep price relatively low (Azadegan and Dooley, 2021).
Positive impact: The understanding of economic aspects help the company to gain
leverage over its competition by developing effective pricing strategy and reduce product
price.
Negative impact: Due to COVID-19 the economy has been hampered with decline in
the purchasing power of customers resulting in diminished profits for the company.
 Social factors: This factor focuses on demographics and culture of the customers in
market to better understand its customer base. It provides help in developing segment
focus products and services and an effective marketing strategy. In context to Asda,
understanding social factors help in introducing new products and services in the
market curtailing to a targeted customer base.
Positive impact: Provided a sound understanding of the social aspects such as lifestyle
and Habits Company can develop market strategy for a target customer base capturing larger
market share.
Negative impact: The Company will fail in developing desired products and services
for customers without understanding the social aspects of the market (Bratianu and Bejinaru,
2021).

 Technological factors: This factor targets the innovation and technological advances
in a market. Changes in technological factors impact an industries operation. In
context to Asda, technology plays a vital role in development of products and services
through efficient utilization of technology resulting in reduction of waste in resources.
Positive impact: Asda is able to provide quality products and services with minimal
waste in the process. By adapting to new technology during COVID-19. This has increased
the customer base with boost in profitability.
Negative impact: Technology being dynamic the company may incur unavoidable
cost while adapting to these new changes which can increase price of products and reduce
operation efficiency.
 Legal factors: This factor affects both the internal and external elements of
companies as changes in legal or regulatory environment can disturb the functioning
of an industry (Butt, 2021). In context to Asda, it abides by all legal requirements set
by the government to ensure no breach may result in punitive actions is taken by
authorities.
Positive impact: The Company is able to provide quality goods and services in
accordance to laws and regulations set by the government resulting in a better brand image.
Negative impact: Sudden changes in laws and regulations that are not foreseen by the
company can result in disturbance of the operations and strict actions taken by authorities if
not followed through correctly.
 Environmental factors: This factor focuses on the impact of general environmental
protection requirements affecting the industry. In context to Asda, the company
addresses environmental issues and adopts operations that impact the environment in
a positive manner.
Positive impact: The Company can establish itself as an environmentally friendly
enterprise resulting in positive feedback from the customers increasing profits.
Negative impact: Ignoring environmental issues such as waste management can
damage the brand image and reduce profitability in the long run.

Ansoff’s growth matrix
It is a tool which is used by different organization in order to plan, execute and
analyse different competitive strategies for the purpose of growth. This matrix also allows a
scope for identifying the risk related to them (Chudasama, 2021). ASDA Stores Ltd is a
popular supermarket retailer chain in UK. It is dedicatedly offering its customers everyday
low prices in grocery market which is a major factor that drives the company to be
competitive amongst its competitors. The major focus is on finding the best growth strategy
for the company with an efficient evaluation. The four core strategies of Ansoff Matrix are
briefly explained below:
Market Penetration Strategy:
In this strategy, companies try to sell their products in the existing market in order to
make it popular in market. The focus lies majorly on increasing the market share by
penetrating its products as much as the company can. This can be done in many ways like
reducing the prices, capturing competitors market share and many more.
Product Development Strategy:
This strategy is basically used with the focus of building a new product to fulfil needs
and desires of existing market. This strategy is used by those companies who have thorough
understanding of their existing markets. It involves investment in research and development
to develop a new product with complete knowledge of competitor’s product.
Market Development Strategy:
In this strategy, the company enters into a new market with its existing product range.
The focus majorly relies on expanding the existing market to a new market segment. Before
executing this strategy, it is highly important to check all current market situation in order to
avoid all the negative consequences (Dimla, 2021).
Diversification Strategy:
This strategy is the one in which the firm enter into a new market with a brand new
product. This involves building up a new market and product development which makes it
the riskiest strategy amongst all the four strategies. Although, this strategy may also bring
high revenues because of the entry in a completely new range of market and product with
first mover advantage.

In context to ASDA Stores Ltd, out of all the four strategies of Ansoff’s Matrix it
should use ‘Market Penetration Strategy'. This strategy will help the company to increase
its market share by increasing number of stores in its existing market. It offers its products at
a low prices already. Therefore, it should not let new competitors to enter and should lead the
market in best possible ways (Ekhator, Miller and Igbinosa, 2021).
Stakeholder mapping
This detailed analysis of Stakeholders of Asda main aim is to examine internal and
external stakeholders of Asda. It is also identify of Asda communicates with their
stakeholders and gain more profit for the growth in different manners. With the help of
stakeholders analysis is a process that actually identify the project begins and communicate
throughout in different manners.
 High power, high interest: They are the most important stakeholders such as Asda
have their owner, management, trade union and employer association. They are
manage closely to the company and understand the value of the company.
 High power, low interest: They make an influence in the company which satisfied
the need of the people. They have high power to influence the decision of the
company but low interest. Just like Customer, they have power to change the
strategies of the company but they have very less interest in the company.
 Low power, high interest: This segment is basically related to different factors that
are associated to low power, high interest (Fernández-Rovira and et.al., 2021). Just
like the communities of Asda, they have very low power but high interest to the
company’s profile and strategies.
 Low power, low interest: This is the last segment of the matrix that include the low
power and low interest for the company. Government and local authorities are having
low power and low interest in the Asda profile.
Analyse the internal environment and capabilities of a given organisation
For the development of basic understanding, analysis of internal capabilities are used
and analysed that is important to necessary segments. The internal use of analysis are used for
organisational competencies, cost position, competitive marketplace and viability. This can
be discussed with internal analysis of the company:

SWOT analysis
It is a crucial tool for identification and analysis of the overall strategic position of the
business that can aid the organization in increasing awareness while developing strategies.
The higher authorities of Asda use SWOT analysis in order to develop strategies that assess
internal and external factors, as well as assist in identification of current and future potential
leading to decline in threats, which are as follows:
Strengths: -
Customer service: With around 1,65,000 highly motivated work force Asda provides
its customers with not only quality goods at an affordable price but also implacable services
such as self-checkout and effective placement of products (Frick and et.al., 2021).
Product affordability: Asda has established its own factories that eliminate the
middle men, providing the consumer with quality good at an affordable pricing especially in
goods related to dairy and meat.
Online presence: Restrictions of COVID-19 have popularized buying groceries
online leading to Asda increasing its sale through its online presence and brand image.
Weaknesses: -
Public backlash: Being involved in various scandals, Asda has faced public backlash
that has damaged their brand image which in-tell has also resulted in decline in profits and
public relations.
Price differential: Asda not being able to provide its customers with goods at the
same price range at different location, puts them at a disadvantage compared to their rivals.
Static strategy: Although achieving global success Asda has witnessed failures, due
to its ineffective operations in various countries. This has not only damaged its revenue but
brand image as-well.
Opportunities: -
Smart expansion: Entering untapped market through an effective strategy. Asda can
successfully expand its operation by identifying the need and want in the particular region.

Supportive campaigning: Asda should consider making alliance with other small
retailers in order to expand its operations and workings. This will increase their brand image
and profitability.
Aggressive advertising: With customer base shifting from the physical world and
entering the online world, Asda can increase its brand image through various platforms and
become a larger advertiser of their goods (Islam and et.al., 2021).
Threats:-
Competition: Being tenth in the world standing of the largest retailer, Asda is
surrounded by competition who are constantly pushing towards grabbing the market share.
Brexit: several trading issues have surrounded Asda after the exit of UK from the
EU. These threats have impacted the profits of the company and its operations globally.
Porter’s generic forces
This model defines gain of competitive advantage across its selected potential market
segments. In addition to this, it focuses on both the broad and niche sections of market to gain
leverage over competition prevailing at marketplace. In context to Asda, this strategy
provides company with a competitive advantage that will assist in gaining growth and
profitably (Jawula, 2021). The model involves four strategies that is mentioned below in
context to Asda:
Cost leadership: - This strategy defines attempt by companies in capturing the market share
through price reduction in their products and services. Giving companies a comparative edge
with an increase in customer base. The higher authorities of Asda can achieve cost leadership
by reducing their product pricing relative to their competition which will lead to an in hike
profits and customer base.
Differentiation: - This strategy describes how companies can make products distinct and
more appealing as compared to their rivals in the same market segment. The management at
Asda can focus on criteria considered by the consumers such as product uniqueness and
pricing. This ensures development of exclusive products and services for those customers.
Cost focus: - This strategy seeks to develop a lower-cost advantage in a narrow market
segment by understanding dynamics of the market and requirements of customers to ensure
cost remains low. The management authorities at Asda can achieve cost focus by pricing

basic essential good at nominal rates which ensures customer base remains loyal relative to
their competitors (Oguji and Owusu, 2021).
Differentiation focus: - This strategy defines how companies can develop product
differentiation in a niche market segment and provide products and services to a specific
section of the customer base. In relation to Asda, it can accomplish this by keeping their
quality of products higher and pricing them at the market average which ensures
diversification relative to the adversary and developing a devoted customer base.
By analysing the above strategies, it is determined that differentiation is a key
strategy that will be advantageous for Asda in effectively attracting large customer base and
also aid in acquiring competitive advantage at marketplace (Ordonez-Ponce and et.al., 2021).
Applying Porter’s Five Forces model evaluate the competitive forces
Porter’s five forces is an important model that helps in determining the competition
level. This model further helps in business understanding the situation where the power lies.
Asda, focus on the five forces model that helps in analysing the profitability, it is explained
below:
 Threat of new entrants: It will be helpful for new entrants for new market share and
potential customer that purchase their different products. This stage show high
entrance is very high because of high bargaining power of the buyer.
 Bargaining power of suppliers: It is related to make supplier for market of inputs
such as raw material, labour and services for the growth in Asda. The company has
high bargaining power of suppliers is high in the stiff competition in the growth of
market. This will helps in retain the suppliers so to ensure consistent flow of
competition.
 Bargaining power of Buyer: It is related to measure the performance of buyer in the
role of purchasing the products. It has the significant role in purchasing the products
and take customer’s pricing strategy (Purba, Fransisca and Joshi, 2021). There is low
bargaining power of the customers of good quality in different sectors of the firms.
 Rivalries among existing players: Competitors of the company plays an important
role in retail industry. Asda have many competitors with rivalries like Tesco,
Sainsbury etc. All of these have their own competitive advantage through the process
of innovation in UK market.

 Threat to new substitute: This is the product, also threat for existing market player
in the retail industry. It is Asda, product the price for the growth of customer for the
range of budget. Very high competition in the market that are related to the budget in
different manner. It has the unique feature and affordable prices that aid to increase
their attention products and services of the products.
Applying a range of theories, concepts and models
Bowman Strategy
This is the strategy that help the company to get effective awareness about the
products and positions of the market with their competitors. This theory show that the
company make effective products and services in the market responsiveness.
 Low Add Value: Here, the price of the company’s products are low for competing
within the market. This is the stage of attracting customers and gain profitability
within the market. Asda use this strategy when they are introducing their new
products into market.
 Low Price: Here, the company produced large amount of products and make re-
valued within the products in the targeted market. Asda, produce high quantity of the
retail products which they sell to their customer at lower value in different manner
(Rajesh, 2021).
 Hybrid: This is the strategy where products in different manner and gain higher
value. It will be helpful for serving quality products at lower the benefits and make
effective organisational aspects with lower the prices and quality.
 Differentiation: Here, Asda can try to use some differentiation or innovation within
their products and gain competitive advantage in the services products and services to
the customers. This will be helpful for the company to gain competitive advantages in
the market.
 Focused differentiation: Here, the company mainly focusing on differentiation in the
special products to the customers. Asda main focus should be unique and attractive in
different products and services for the growth by customers (Van Looy, 2021).
 Risky high margins: Here, the Asda Company can make the high price charging of
their products and margin of products. This is basically regarding as a risky strategies
amount from the customers in the market that helps in decreasing of profits and
revenue.

 Monopoly prices: Within the organisation, in the growth of markets, in different
products and services to the growth of customers according to the needs. There is no
fear of competition in a market to analyse systematic changes (Sarpaneswaran and
et.al., 2021).
 Loss of market prices: Most of the customers do not gratify the growth in products
and make a cost in different advanced services. The organisation make some
systematic changes that are in different manner in the different market place for the
growth of the customer.
Balance scorecard
It is a tool that helps the company for performing the metric and helps the
organisation in identifying the major internal and external options. It would be helpful for
making past effective performance and provide them the feedbacks in a more effective ways
and manage the benefits to work with profitable nature. The major four perspective of
balance score cards:
 Financial perspective: The main objective of the company is to earn by make
effective return on investment for managing the risk to run the business (Sloyan,
2021).
 Customer perspective: Here, the company needed to be work on the customer
experience to the customers and make experience as well. It will be helpful for most
challenging with organisational products and services.
 Internal business perspective: This is balance scorecard to company and make
products and services to determine in order to run the business in an effective way. It
will be helpful for most challenging in different manner.
 Organisational capacity perspective: This will be helpful for optimizing the goals
and objective for growing performance to achieve favourable results. The main
perspective of the Asda Company is to gain more effective organisational capacity
and gain apprentice practice in the time management.
Asda, is using the organisational capacity perspective for developing skills and growth in
business culture in more appropriate ways. It would be helpful for most challenging in
different growth and make findings for the growth. Organisational capacity will be helpful for
the company to achieve significant challenges in different perspective (Van Buren III and
et.al., 2021).