Business and Business Environment Report: Asda Retail Sector Analysis

This report provides a comprehensive analysis of Asda, a major UK retail company, within its business and environmental context. It begins by defining business and the factors influencing it, then delves into different types of organizations, differentiating between public, private, and non-profit entities, with examples such as the London Fire Brigade and Child in Need. The report then examines the size and scope of organizations, categorizing them as micro, small, and medium enterprises, and provides relevant examples. The core of the report focuses on Asda, analyzing its organizational structure and functions, including HR, finance, marketing, and IT departments. Furthermore, it applies the PESTLE model to the UK retail sector, considering political, economic, social, technological, legal, and environmental factors. The report also incorporates SWOT and Porter's Five Forces models to evaluate Asda's strengths, weaknesses, opportunities, and threats, as well as the competitive dynamics of the industry. Finally, it discusses the relationship between strengths, weaknesses, and the external environment, highlighting how these factors influence Asda's performance. This report is a detailed exploration of Asda's business strategy and its interaction with the external environment.

BUSINESS AND BUSINESS
ENVIRONEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1 ............................................................................................................................................3
P1. Different types of organisations.......................................................................................3
P2. Size and scope of the organisations ..............................................................................4
TASK2.............................................................................................................................................6
P3. Organisation structure and function.................................................................................6
P4. Analyses of PESTLE model to the retail sector of UK....................................................7
TASK4.............................................................................................................................................8
P5. SWOT and porter's 5 forces model .................................................................................8
P6. Relationship between strength and weakness and external environment........................9
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10
.........................................................................................................................................................1

INTRODUCTION
Exchange of good and services for some value in a market place will be termed as
business. Every business requires enough capital and customers for their existence as ultimate
goal of every organisation is to satisfy customers’ needs and wants. Business is run in an
environment which is a combination of micro and macro factors. Organisation undertaken here
is Asda which is retail industry, founded in 1949 in UK. In this report, detailed analysis of
different types of organisations, their size, structure, purpose and roles will be discussed.
Furthermore, environmental scanning will be done as well.
TASK1
P1. Different types of organisations
There are different organisations operating in the business world. Every organisation has
its own purpose that is mission and vision for their existence in the market. Following are the
different types of organisations:-
Public organisations: organisations which are operating under the legal compliance of
government of the country with the primary benefit of wealth maximisation in the society are
called public organisations.
Example : London fire brigate is a public organisation with the primary aim to provide
world class fire rescue services in London. It conducts emergency preparation and execute fire
safety inspections and educations.
Private organisations : Organisations which are owned and operated by individual or
group of persons are called private organisations. Their primary aim of setting up business is to
earn profit and increase revenue.
Example : Asda is a Britain supermarket retailer organisation with a primary motive of
providing goods, merchandise , financial services, etc.
Non profit organisation : Organisations that are privately owned and do not provide
financial benefit to its members are called non profit organisations (Hilton, R.W. and Platt, D.E.,
2013). They are created for many different purposes like social, cultural, political, etc. Their
main motive is to not to earn profit from the activities they carry out.

Example : Child in need is a non profit organisation of UK which aims to determine the
needs of the children and assure that families are given proper assistance in enabling them to take
precautions regarding the safety of children and boost the child's well being.
Differentiation between profit, not profit and NGO:-
Basis Public Private NGO
Meaning These organisations
are governed under the
controlled by the
government.
These organisations
are governed by
individuals or group of
people.
These organisations
are governed
independently by the
people.
Motive Satisfying customer
needs.
Earn profit. Addresses social or
political issues.
Owned Government Individuals or group of
people.
Trustees.
P2. Size and scope of the organisations
Organisations vary in their size and scope depending upon various factors like capital,
raw material, labour force etc. Micro enterprises are those which are operating on a very small
scale. Small enterprises are those which employ small number of workers and does not have a
high volume of sales. Medium enterprises are those that employs more people then needed in the
organisation.
There are various organisations which are discussed further :
Basis Micro Small Medium
Maximum number of
employees
9 25 250
Maximum annual
turnover
2 million euros 10 million euros 50 million euros
Maximum annual
balance sheet total
2 million euros 5 million euros 43 million euros

They can be understood by following examples:
London fire brigate
Size: This operates in London with 5 divisions, 103 stations, 157 engines, 11 trucks and
ladders and with an annual budget of 389.2 million euro(Kew, J. and Stredwick, J., 2017).
Aim : provides world class fire rescue services in London.
Scope: It is public organisation and with innovation in rescue measures they provide
facilities of fire escape hoods, drones, breathing apparatus, etc.
Vision : It produces equipments which will help people during fire explosion to gain
conscious quickly and ensures safety.
Asda
Size: It is a privately owned retail company of UK with its operations in 635 places all
over the world. It is worlds largest retail chain and have a revenue of 21,689 million euro.
Aim : Its aim is become worlds largest retail industry by providing grocery, general
merchandise and financial services to the people.
Scope: Expansion of its business through out the world and be the largest retail chain
and to earn profit.
Vision : To meet the general merchandise, grocery and provide financial services to the
customer at one place which will save the time of customer, pool lot of people and contributes in
its growth world wide.
Child in need
Size :Non profit organisation which is operating in UK and can get in touch with other
nations through online. It is funded through donations and charity. Profit share can't be justified
as it is a non profit organisation and aim is to do societal benefits rather then earning money.
Aim: To provide specific proposal and information on children, family and education
laws to parents, guardians and young people.
Scope : Its market share is limited as it operates in UK only but people can get in touch
with them through internet.
Vision : It is UK's one of the largest charitable organisation which provides child law
advices, works for the welfare and safety of children as children are future of the nation.

TASK2
P3. Organisation structure and function
Every organisation is required to perform certain set of functions for proper and smooth
operation in business world(Sena Ferreira and et. al., 2012). Different department performs
different functions and each function is interlinked with other functions. Following are the set of
functions performed by an organisation :
HR department : This department is a decision maker in an organisation regarding
recruitment, salaries, wages , safety, etc. It is linked with finance department as goal of both the
department is to achieve higher level of profitability. HR manager will always consider the cost
and expenses to be incurred for recruiting and training.
Finance department : This department will be held liable to know whether adequate
funds are available or not for functioning of business operations. This department will be
responsible for meeting day to day expenses of an organisation. This department sets budget for
the activities being conducted in all other departments relating to marketing and research,
product promotion, recruitment, etc. It is a time consuming process, lot of burden and stress is
there on finance manager, complexity in operations.
Marketing department: This department analyses the market needs and demands of
customers. Primary function of this department is to deliver the goods and services to the final
customer. It will work with production department to know market needs, research and
development, items to be manufactured, etc. It will work with finance department to ensure that
adequate budgets are allotted for the distribution and promotion activities(Klem, 2013). In this,
high cost is involved in research and development, time consuming, lack of creative and
innovative personnel.
IT department : It consist of system operators like hardware, software and other
technical issues in an organisation is handled under this department. It helps finance department
for preparing reports and storing financial data effectively and efficiently. Different software and
tools help marketing department to create graphic, designs, pictures, advertisements, etc.
Installation involves heavy amount of investment, break down can affect the entire work, etc.
Asda which deals in UK's largest retail industry follows the functional structure. Large
proportion of workforce is employed in this company. Top level management is responsible to
take decision and and communicate information to other departments.

(Source:Organisational Chart,2016)
TASK3
P4. Analyses of PESTLE model to the retail sector of UK
Organisations are surrounded by various factors both inter and external. Analyses of
external factors of UK's retail sector are :
Political forces: Many of the retail companies of UK are operating all over the world
where they may face political issues relating to various laws and regulations.(Harrison, 2013).
This enhances the organisation to sell its products in another country but modification and
alteration in governmental policies can restrict its operations.
Economical forces: These factors will contribute to the generation of revenue but high
taxation and import duties can result in reduction in sales and profits (Pest Market Analysis Tool,
2018).
Social forces: These forces helps to identify the need and demands of society and aims at
maximum customer satisfaction(Sørensen, 2012). UK's retail is operating world wide and is
successful but in some areas where people does not have knowledge about the products, may
have negative influence on organisations.
Illustration 1: Organisational Chart

Technological forces: Adaptation of innovative and creative techniques will enhance its
production like M&S design only western clothing so they can design ethnic in countries where
needed. Use of old technique will affect the retail sector adversely.
Legal forces : Organisations should follow the guidelines issued by government as this
will help them in maintaining quality of products. If they will not work in accordance of the
guidelines then they will have to pay penalties, etc.
Environmental forces : Retail sector should have the ability to adapt itself in changing
environment with fluctuating needs and demand of customers(Shenkar, Luo and Chi, 2014). If
company lacks this ability then it will lead to poor brand image of organisation.
TASK4
P5. SWOT and porter's 5 forces model
SWOT identifies the strength, weakness, opportunities and threat of an organisation.
Organisation undertaken here is ASDA which is a retail industry.
Strength
 Clear brand image
 Variety of products
Weaknesses
 Limited presence worldwide
 government policies of some countries
restricts them
Opportunities
 Entering in new product lines like
jewellery, etc.
 Entering in new countries
Threat
 Competitors TESCO,etc.
Application of Porter’s five forces model in ASDA
This is done to determine the level of competition and profitability of an industry.
Threat of new entrants: It is a established brand in UK. New entrants will need heavy
investment in retail sector to compete in the market.
Power of buyer : Asda provide their customer with low price, good quality and client
services in the store(Welford, R., 2013). This enhances to attract more customers towards them.

Power of supplier : Asda has numerous suppliers which are supplying products to them
and they are fulfilling customers demand at Asda stores.
Threat of substitute products : Asda has many competitors like TESCO , Sainsbury etc.
so they should offer products which differentiate them in terms of monetary, quality, service,
names, etc.
Competitive rivalry : Asda has many competitors so company should differentiate its
products in terms of quality, price, etc. they should establish new schemes to compete in the
market like discounts, promotions etc.
P6. Relationship between strength and weakness and external environment
Macro environment and strength and weakness are closely related to each other.
Political : If government introduces such factors like trade policy, taxation, etc. which
will increase the strength for Asda and vice versa.
Economic : If labour cost and manufacturing cost of Asda will be low then this will be
treated as strength for the organisation. But if cost is high then this will affect the sales.
Social : Analysing and meeting customer needs will contribute in its growth and it will be
treated as strength as it will gain clear brand image of Asda in my of people. At the same time
customer needs fluctuate with changing environment and if company is not able to fulfil their
needs then it will lose customers and this will be treated as weakness.
Technological : Innovative and creative will be treated as strength of Asda whereas it
lacks distribution channel worldwide which will be treated as weakness for the company.
CONCLUSION
As from the above report it can be concluded that Business environment consist of
internal and external forces which affects the organisation stability and existence. Every
organisation is required to do proper market analysis of both micro and macro forces. Porter's
five forces model analyses the intensity and competition level. All functions of department are
interlinked with each other. There is a strong relationship between SWOT and PESTLE analysis
of organisation.

REFERENCES
Books and Journals
Hilton, R.W. and Platt, D.E., 2013.Managerial accounting: creating value in a dynamic business
environment. McGraw-Hill Education..
Kew, J. and Stredwick, J., 2017.Business environment: managing in a strategic context. Kogan
Page Publishers.
Sena Ferreira and et. al., 2012. Framework for performance measurement and management in a
collaborative business environment.International Journal of Productivity and
Performance Management.61(6).pp.672-690.
Klem, J.B., 2013.System and method for tracking information in a business environment. U.S.
Patent 8,583,514.
Harrison, A., 2013.Business environment in a global context. Oxford University Press.
Sørensen, H.E., 2012.Business Development: a market-oriented perspective. John Wiley & Sons
Ltd.
Shenkar, O., Luo, Y. and Chi, T., 2014.International business. Routledge.
Welford, R., 2013.Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Online
Pest Market Analysis Tool. 2018. [Online]. Available Through:
<https://www.businessballs.com/strategy-innovation/pest-market-analysis-tool/>.

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