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Busines Strategy for Students

University: Kensington College of Business

  • Unit No: 32
  • Level: High school
  • Pages: 14 / Words 3527
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 218
Question :

This sample will let you know about:

  • How to do PESTEL analysis.
  • What is Porter's Five Force Analysis?
  • Explain Capability analysis of the company.
    Answer :
    Organization Selected : ASDA

    INTRODUCTION

    Business strategy refers to those plans of action which are devised and formulated by the management of the company to deal with the business issues and problems. It can be those strategies that are formulated by the management of the company to operate its business in competitive sector to gain rivals' benefits (Boyd and et. al., 2017). This assignment is based on ASDA which is a British supermarket retailer which operate its business in different nations with the help of its different products like grocery, general merchandise and financial services etc. This written document will discuss about the impact and influence of macro environment and assess the internal environment and capabilities. Further, will explain about Porter's five force analysis to evaluate competitive force. Different models, concepts and theories will also define to devise strategic planning for the company.

    1. PESTEL and Porter's five forces analysis to find out opportunities and threats

    PESTEL analysis

    It is a tool and framework which is used by the company7 to analyse and determine macro environment factors that affect and influence the business of a company (PESTEL Analysis. 2016). To analyse and evaluate the impact of these factors, management of ASDA can use this analysis and description of it is as below:

    Political- This factor consist government policy, political stability, corruption, trade restrictions, foreign trade policy, taxation policy and others. In context of ASDA, European Union has presented an effective growth option for respective firm because the company can make expansion of its business in EU markets cause of most of trade barriers have been removed. In UK, change are occurred in taxation policies so it affect the business of ASDA in unfavourable manner. Need Assignment Examples?Talk to our Experts!

    Economical- It include exchange rate, economic growth, inflation rate, interest rate, unemployment rate and others. This factor play and effective role in growth and failure of ASDA when economic condition of UK affect due to recession (Chen, Eshleman and Soileau, 2017). In UK people are preferring online shopping due to which employment is increased and maximisation also increase in sales which positively affect the company in term its economic condition. Corona virus negatively affect the economic condition of the nation in term of economic slowdown. Because due to this, people are not coming out from their home and do not prefer to shopping form stores like ASDA as comparison to normal previous time. Due to which the economic condition of different nations affect in negative manner.

    Social- This factor involve culture, beliefs, living standards, needs, wants, taste & preferences etc. In UK, people prefer online shopping because most the population of this nation is working. So this factor positively affect ASDA because the comp nay also use online way to deliver its product to its customers (Grayson and Hodges, 2017). Change in consumer demand is a factor which affect the business of respective firm. There is an increased demand for organic food because people are more health conscious so this factor influence ASDA in unfavourable manner. Corona Virus also create negative impact in social term and unfavourably affect the business of company like ASDA because business people and employees are not coming outside and prefer to meet customers which negatively affect the business of retail companies.

    Technological- It indicates to level of innovation. Technology incentives, automation, advance technology, use of artificial intelligence and research & development etc. ASDA use and adopt different technologies its business like online retailing and e-marketing so this factor favourably affect organisation. Because by using these kind of techniques, firm offer its products to its potential customer in amended way.

    Environmental- This component consist ecological and environmental components like climate change, weather, environmental offset and environmental act that are development by the national authorities like environmental act, pollution act and others. In order to assure that ASDA has positive effect because the firm usage recyclable materials in different substitutions alike in packaging of the products. This favourably affect the company because it effectively follow environmental act.

    Legal- It is the last factor of PESETL analysis and it consider those laws and legislations which are developed by the government of the country for the effective or legal business operations of organisations. This component consist employment act, discrimination act, heath and safety law and others. In UK, ASDA does not pay nay employee less than the minimum wage so this factor positively affect the business of the firm.

    Porter's Five Force Analysis

    It is a business management model that determine the strength and weakness of an industry. Also, it enhance the level of competition and profitability of a company in order to gain competitive advantage. It is used to measure the intensity of competition and attractiveness that play an important role in shaping the market (Iamratanakul, 2018). The manager of ASDA identify the strength and grab the opportunities but combat threats and weaknesses to increase the goodwill within the market. Porter five force help to identify the power and autonomy lies in a business so as to makes decisions accordingly by analysing various factors. The manager of ASDA has applied porter's five force model to ascertain its positioning within the confine of retail industry. It consist of various elements that includes threat of new entrants and substitutes and bargaining power of suppliers and buyers. The same is described as follows:

    Threats of new entrants: the extent of this force in retail industry is acknowledged to be low due to the reason of high capital requirements which provide opportunities to existing firms to ensure its growth (Kitsios and Kamariotou, 2019). In the context of ASDA, there are various strict government regulations in UK which creates difficult for new entrants to gain access into retail industry. Therefore, it is difficult to achieve the economies of scale which makes production costlier for new entrants and it become challenging to maintain a position in the market.

    Bargaining Power of Suppliers: In the context of ASDA, the bargaining power of suppliers is regarded to be low as there are large number of suppliers that have less control over the prices. The products that these suppliers provide are less differentiated and they have low switching cost. ASDA should purchase raw materials from those vendors at low cost to increase the bargaining power. Also, the respective firm can develop close relationship with suppliers that provide greater advantage of purchasing raw materials in a cheaper rates.

    Bargaining power of Buyers: The magnitude of this force acknowledged to be low. This is due to the reason that buyers are less sensitive to the prices as quality is more important to them. As compared to its competitors that are Tesco, Oscado, Morrisons etc. ASDA is providing good quality offerings at an affordable prices. ASDA could focus on innovation and product differentiation to gain large access of customers as buyers are not able to switch easily to other products. Thus, they enjoy large economy of scale that increases the productivity of organisation.

    Threat of Substitutes: The threats of substitutes are regarded to be low because the alternatives that are available are of good quality which makes the products expensive. ASDA provides products of standard quality and less costly as compared to its competitors as buyers could not easily switch to other retail companies (Lawton, 2017). Thus, it gain large access to customers and goodwill in the market which increase the efficiency of an enterprise. ASDA should focus on market research so that it provides unique products to meet the needs of customers and remain competitive in the market.

    Competitive Rivalry: The competitive rivalry in the context of ASDA is regarded to be low. Although the competitors of ASDA are several such as Dixons Carphone, M&S and Argos, Iceland Foods and so on but they provides products of high cost. In this relation, the respective firm develop products which incur less cost and of standard quality. The offerings produced within retail industry are unique that provide satisfaction to a customer which ensure growth and sustainability. This provide growth opportunities to a firm which ensure success within the market (Leischnig and et. al., 2017). The strategies prepared by firm are diverse and also the fixed cost are high that allows company to reduce their prices when demand slackens. As ASDA is one of the leading retail industry that focuses on new customers rather just winning only existing customers. Order assignment help from our experts! 

    2. Capability analysis of the company

    To analyse the capability of an organisation to analyse the future growth and development of it, management of companies conduct capability analysis. The administration of ASDA can use VRIO framework to determine the capability of the firm. The brief description of this analysis is described as beneath:

    VRIO Analysis

    It is a strategic analysis tool and technique which is designed to assist companies uncover and provide protection the resource and capabilities that provide them a long them competitive benefits (VRIO Framework. 2020). VRIO analysis of ASDA is as follows:

    Resources

    Valuable

    Rare

    Inimitable

    Orgnaisable

    Brand image

    Yes

    No

    No

    No

    Financial capability

    Yes

    Yes

    No

    No

    Technological resources

    Yes

    Yes

    Yes

    No

    Human resources

    Yes

    Yes

    Yes

    Yes

    Form the preceding explain information it can be monitor that Brand image of ASDA plc is valuable to organisation because it familiar customers with the company and its products and services which is offered by it. It is crucial for firm because it assist in expanding its business and maximising its profit margins (Leonidou and et. al., 2017). Financial resource is valuable and rare to the company because it help in running the business in competitive environment. This resource is rare because every firm invest finance in its business as per their capability for business expansion. Techniques that are used by ASDA are rare, valuable and inimitable because each company implement different technology in their business in term of production distribution and promotion etc. the respective company use online retailing and e-marketing which is valuable for the company because with the use of them they deliver their products to their customers. It is imitable because it is not too easy to copy everyone. Human resource is valuable, rare, inimitable and organisational to ASDA because employees are important resource to operate business activities and this resource is rare because each person has different skills and competencies that can not be copy by others (Linder and Williander, 2017). By formulating effective plan of actions and policies employees can be mange and organise by the management of respective firm.

    3. To analyse internal environment conduct SWOT analysis

    SWOT Analysis of ASDA

    Itis a planning tool that help the firm to identify the positives and negatives of an industry to achieve the goal of an organisation effectively and efficiently. In other words, it is a framework that provides strategic planning to gain a position in the market. The business environment in which company carry out its operation is regarded as dynamic (SWOT Analysis of Asda. 2020). It provide vast growth opportunities to a business by analysing the various factors in a internal environment while strength and weakness are internal factors and threats and opportunities are external factors. ASDA is one of the leading retailer in UK which provide wide range of services like groceries, clothing, insurances and many more (ASDA SWOT Analysis, 2020). The SWOT analysis in context of ASDA are presented below:

    Strength

    Weakness

    • ASDA has high skilled workforce as it invest huge financial resources on providing effective training to their subordinates.
    • It provide new and innovative products to gain large access of customers.
    • ASDA has strong cash flows that help the company to expand into new projects.
    • The concerned firm has not been able to compete with the leading players in the market in terms of uniqueness in products (Madhushree, Kumar and Aithal, 2018).
    • The firm need to invest more on latest technologies to expand the scale of operations within the confine sector of UK.
    • The company is not been able to handle challenges as this results in loss of market share.
     

    Opportunities

    Threats

    • The free trade agreement provided by government create an opportunity to enter into a new emerging market.
    • The new taxation policy can open new opportunity to ASDA to increase the profits.
    • In a dynamic environment, there are new trends of customer behaviour which provide opportunities to ASDA.
    • There are currency fluctuations as ASDA is operating in numerous countries which possesses the threats.
    • There is high demand of products during peak season and any unlikely event could impact on the profitability of a firm (Moseley III, 2017).
    • Also, increase in the prices of raw materials posses a threat to the ASDA profitability.
     

    1. Evaluate different types of strategic directions available to the companies

    For the success and growth of the company the management of the organisations adopt different kind of strategic directions. These strategic directions also known as growth strategies that adopt by firm to make development in their business. In context of ASDA, the administration can adopt Ansoff Matrix to make development in the business of company. The brief description of this concept in context of respective organisation is as below:

    Ansoff Matrix

    This model is developed by Igor Ansoff to provide a strategic direction to a company so that it can operate its business in particular sector. This analysis is also beneficial for strategic marketing planning of a company (Nagy and et. al, 2018). This models consist four growth strategies, they are as under:

    Market penetration- In this approach, the company make focus on maximising sells by by selling its existing products in existing market. If the management of the company adopt this strategic direction then, there is less risk because the offer its current products in known market (Peng, 2017). By adopting this strategy, make changes in its pricing strategies and use different promotion tools so that thy can make development in their business.

    Product development- In this strategy, new products are selling in to existing market to acquire a rival's product and capture a wide market to maximise market share and revenue. This strategic direction can be adopt by ASDA and the firm can offer new products to same people or customer of a same market. This approach is risky more than market penetration because it does not sure that new goods are liked by existing customers.

    Market development- Here, the management of company target new market to increase sales and profitability. This strategic direction can be adopt by the administration of ASDA to enter in to new market. For this, firm use different sales channels like online sales, direct marketing and through agents or intermediaries. This strategy is risky more than product development because the company enter in to new market with its existing product so it is not clear that these goods and commodities are liked by new market or not.

    Diversification- It is the last strategic direction of this analysis which is more risky because in it the company enter in to new market with new products with the purpose of growth so it is not sure that these products are adopted by new customers of a new marketplace.

    2. Justify and recommended the most appropriate growth strategy for organisation

    From the above information it can be recommended to ASDA that the management of the company should adopt product development strategy for the growth of company. The management of respective company can also offer clothing products in its business. It will help in maximising sales, profit and market share because clothing and apparel sector is a developing industry (Shuen, 2018). This will also help in capturing large customer base because fashion and trend change rapidly so customer also have need of trendy cloths.

    3. Produce a strategic management plan

    Strategic planning is an activity of making strategic or meaningful plan for the business of the company to make growth and development. The planning procedure include information about the success of firm by utilising product development strategy. It also consists vision, mission, objectives and plan of actions that are developed for the growth of company.

    Overview of ASDA- ASDA is a British supermarket retailer which is headquartered in West Yorkshire, England. This firm was incorporated in 1949 by peter and Fred Asquith and Sir Noel Stockdale (Yuliansyah, Gurd and Mohamed, 2017). It operate its business with the help of its different products like grocery, general merchandise and financial services in different nations of the world with the help of its number of stores. Order Finance Homework Help from our experts! 

    Mission- The mission statement of the company is to become Britain's best value retailer by fulfilling consumers requirement always by offering products as per their needs.

    Vision- The vision of this company is to offer products and services to its potential clients at more affordable prices.

    Objectives- The business objectives of ASDA is as below:

    • To increase sales of the company up to 5% within 1 year by offering new products of clothing and apparel.
    • To maximise profit of ASDA approx 10% in 2 years by offering quality products and services.

    Strategies- It refer to those plan of action and tactics that can use by the company to accomplish its set business objectives and resolving issues inn its business. When the management of ASDA offer its new product like clothing in market then it can adopt STP model and segmented product as per their customer. It can offer its product to male and female, college students, professionals and target middle and upper class people (Boyd and et. al., 2017). The firm can provide its products both online and offline mode through retail store and company website or mobile application etc. Apart form it they can use different promotional channels like social media, print media, web advertisement etc. to provide information about its new products. They can use competitive pricing strategies for their new products segmentation.

    CONCLUSION

    From the above information, it has been summarised that business strategies like PESTEL analysis and Porter's five force analysis is beneficial to the business to provide information about the impact of external factors of business environment. VRIO and SWOT analysis is effective to analyse the capability of resource and provide information about influence of internal factor of business respectively. Ansoff Matrix is effective to provide strategic direction and strategic marketing planning for the development and success of the firm.

    For more - Financial Management for Organisation

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