Impact of Macro and Micro Environment on Asda Stores Ltd: Report

This report provides a comprehensive analysis of the business environment surrounding Asda Stores Ltd. It begins with an introduction to the concept of the business environment, distinguishing between internal and external factors and their impact on a business's performance. The report then delves into a detailed examination of the macro environment, outlining the positive and negative impacts of political, economic, social, technological, legal, and environmental factors (PESTLE) on Asda. A PESTLE analysis is presented, categorizing and assessing the influence of these macro-environmental factors on Asda's decision-making processes. The report further explores the internal and external analysis of Asda, identifying its strengths and weaknesses and interrelating them with external factors. A TOWS analysis is used to evaluate Asda's strategic position and aid in decision-making. Finally, the report concludes by discussing the impact of both macro and micro factors on the company's decision-making processes.

BUSINESS AND
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
Table of Contents.............................................................................................................................1
INTRODUCTION...........................................................................................................................1
ASSESSMENT 1.............................................................................................................................1
ASSESSMENT 2.............................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Impact of Macro environment – Positive and Negative........................................................1
1.2 PESTLE model of Asda Stores Ltd. in reference to macro environment..............................3
2.1 Internal and external analysis of Asda in order to Strengths and Weaknesses......................4
2.2 Strengths and weaknesses interrelated with external factors.................................................5
2.3 TOWS analysis of Asda in order to taking decisions............................................................5
2.4 Impact of Macro and Micro factors upon Decision making..................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The business environment include all the factors that affect the business activity
internally as well as externally. So the environment is consist of internal and external factors.
Because a business is surrounded by these factors, so the environment should be favourable as
per the business for performing efficiently and effectively. The report is based on Asda Stores
Ltd. which is a retailer in British market. As Asda Stores Ltd. is an organization, it is also
influence by the business environment. It comes under public sector organization. This report
describes the size, scope, structure and purpose of different types of organizations. It explains the
interrelation of structure, size and scope of organization with the products and services providing
by the organization. It also briefs about the link between functional department with the
objectives and structure of the organization. In the given report, the influential factors of macro
environment on business operations and its interrelationship with strength and weakness of
business has also described.
ASSESSMENT 1
Enclosed in power point presentation.
ASSESSMENT 2
TASK 1
1.1 Impact of Macro environment – Positive and Negative
Macro environment factors affect the businesses most. These are uncontrollable in nature
and are not in the hands of businessman.(Teece, 2010) These can not be changed as per the need
of the business. The business itself has to work according to the changing macro environment.
This environment includes the following factors:
1. Political
2. Economical
3. Social
4. Technological

5. Legal
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6. Environmental
The above mentioned factors are dynamic and not fixed. The business has to comply with
these. As Asda Store Ltd. affected by macro environmental factors.
Positive impact: When everything is going very well and the factors of macro
environment are in favour of the business like Asda Store Ltd. then the impact of macro
environment is positive.
For example, policies made by the government are beneficial for the business, government is
promoting the business in which Asda Store Ltd. is dealing with, then it proves good for the
business, the interest rates are comparatively low so that loan can be taken easily, the climatic
condition is favourable, etc (Cantwell, Dunning and Lundan, 2010).
Negative impact: The factors for macro environment affects negatively when they are not
in favour. It may affects the profitability of the business. It may also happens that business have
to face huge losses.(Iskanius, Page, and Anbuudayasankar, 2010)
For example, if taxation rates will be high then it will affects the profitability of the
business, profit will go down, if government increases duties on imports, if interest on loan will
go high then become difficult to take loan. This will negatively impact on the diversification and
expansion plans of the business, etc.
1.2 PESTLE model of Asda Stores Ltd. in reference to macro environment
The factors of macro environment affects the Asda Stores Ltd. which includes tax rates,
interest rates, government policies, trade tariffs, changes in law, geographical changes, climatic
conditions.(Xue, Shen, and Ren, 2010) These factors will affects the management of Asda in
taking decision regarding expansion, diversification, modification etc. For analysing the macro
environment factors, the managers of Asda has categorise these into following:
1. Political factor: Political factors include policies related to trading, corporate rate of
taxation, employment law. As Asda is a large retail sector organization so the impact of
taxation is more. If the rate will go up then the company has to pay more taxes and the
profit will go down.(Chow, 2012) Company has to comply with the amendments in the
employment law.
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2. Economical factor: Economical factors are consist of interest rates, inflation, recession,
foreign exchange rates, growth rate, business life cycle. If inflation rate rises then sales
of the Asda will affect and go down.(Chavis, Klapper, and Love, 2011) When business is
at the maturity stage then it should go for further expansion or diversification. If the
interest rate is low them company can take loan easily for expansion or for any purpose.
3. Social factor: Social factors involves living standard of people, customs, traditions,
welfare etc. With the changing trend in fashion Asda has to fulfil the requirements of the
people in the retail sector so the customer are connected and may increase. Company has
to cop-up with the societal changes in the competitive environment.
4. Technological factors: With the coming of advanced technology Asda can do better. It
may happen that new form of techniques can emerge new form of products. It also
focuses on IT sector which is now on boom.(Osterwalder, and Pigneur, 2010) Every
business is going for online. Asda can also grow with the online business. So the
customer can get their product easily.
5. Legal factor: All legal things come under this. The company must follow these
otherwise any legal action can be taken against the company for the avoidance of law.
(Wheelen, and Hunger, 2011)
6. Environmental factors: Under this factor company has to comply with the rules and
regulation related with the environment. Asda stores has installed carbon reduction in its
plant. They are also working for carbon emission while production.
If environmental issues were not taken seriously by Asda then it could have face the bad results
for its reputation.
Task 2
2.1 Internal and external analysis of Asda in order to Strengths and Weaknesses
Strengths:
 Asda is having wide range of products and services.
 It is popular for its marketing strategies.
 Asda is continuously in contact with its customer through social networking.
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 It is complying with social responsibilities.
 It has over 500 stores with more than 140000 employees.
Weaknesses:
 It does not having more global presence in comparing with other competitors.
 Restricting in taking entry into few countries due to fear of competition with local seller.
Internal analysis includes board members, managers, employee, workers, management, etc.
These are the elements which affects the business internally. They are controllable in nature. The
owner is having power on these.
External analysis includes customers, suppliers, competitors, debtors, stakeholders. The owner
does not having power on these. Business is also affects by these elements.
2.2 Strengths and weaknesses interrelated with external factors
Strengths and weaknesses of Asda has discussed above, the strengths of the company
interrelate with external factors can help to grow in the competitive environment. By doing
Corporate Social Responsibilities(CSR) then political and legal factors will going to help. As it is
having more than 140000 employees then it has to follow the legal requirements related to the
employment law.(Aterido, Hallward-Driemeier, and Pagés, 2011) The weaknesses of the
company relate with the external factors that it is lacking behind in global market.
2.3 TOWS analysis of Asda in order to taking decisions
Strengths Weaknesses
Opportunities Strengths
+
Opportunities
Weaknesses
+
Opportunities
Threats Strengths
+
Weaknesses
+
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Threats Threats
TOWS/SWOT Matrix
Threats:
 The changing policies of the central government.
 Forcing for cut down the prices.
 The price war among other retailers.
Opportunities:
 Expansion in the new fields of pharmacies, jewellery, opticians and photo department.
 Start venture projects into markets which are growing like India, China etc.
Strengths:
 Asda is having wide range of products and services.
 It is popular for its marketing strategies.
 Asda is continuously in contact with its customer through social networking.
 It is complying with social responsibilities.
 It has over 500 stores with more than 140000 employees.
Weaknesses:
 It does not having more global presence in comparing with other competitors.
 Restricting in taking entry into few countries due to fear of competition with local seller.
By doing the TOWS/SWOT analysis of Asda, managers are now able to take appropreate
decisions regarding the future plans of the organization.
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2.4 Impact of Macro and Micro factors upon Decision making
Micro Factors: Micro environmental factors include suppliers, resellers, customers, competitors,
general public. These are the factors which affect the decision making. Manager has to consider
above mentioned factors while taking decisions related to setting price of the product, customer's
expectations, making of strategies etc.
Macro Factors: Macro environmental factors include political factors, economic factors, social
factors, technological factors, legal factors, environmental factors. These are totally
uncontrollable in nature.(Welford, 2013) So the manager must having proper understanding of
these factors, which will going to help in taking important decisions. Like Asda is planning for
further expansion so the managers should have proper knowledge of analysing the macro
environmental factors.
CONCLUSION
From the above report, it has been concluded that the purpose of organization depends
upon its type and structure. Besides this, it can be inferred that the functional departments are
based on the structure of the organization.
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REFERENCES
Books and Journals
Aterido, R., Hallward-Driemeier, M. and Pagés, C., 2011. Big constraints to small firms’
growth? Business environment and employment growth across firms. Economic
Development and Cultural Change. 59(3). pp.609-647.
Cantwell, J., Dunning, J. H. and Lundan, S. M., 2010. An evolutionary approach to
understanding international business activity: The co-evolution of MNEs and the institutional
environment. Journal of International Business Studies. 41(4). pp.567-586.
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Chow, A. T., and et.al., 2012. Computer readable medium with embedded instructions for
providing communication services between a broadband network and an enterprise wireless
communication platform within a residential or business environment. U.S. Patent 8,155,155.
Iskanius, P., Page, T. and Anbuudayasankar, S. P., 2010. The traditional industry sector in the
changing business environment–a case study of the Finnish steel product
industry. International Journal of Electronic Customer Relationship Management. 4(4).
pp.395-414.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range
0planning. 43(2). pp.172-194.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
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