This sample will let you know about:
- Define SWOT Analysis.
- Define PESTLE Analysis.
Business strategy play a crucial role in success of the business firm because it assists firm in taking different actions and paths by using which problem can be solved in proper manner. Business firms time to time evaluate business operations and accordingly take steps to handle conditions. ASDA was founded in 1949 at London. Mentioned firm in the current time period have totally 165000 employees and is operating its business from 633 locations (About ASDA, 2020). The report will apply framework for analysing impact and influences of macro environment and their impact on business and its strategies. This will analysis internal environment and capabilities of company for perform task. This will analysis competitive advantage of company by using Porter five force model. At the end, report will cover strategies and plan for introducing new strategy to increase growth and sustainability of business in effective manner.
Analysing the impact of the macro environment.
ASDA is the British supermarket chain of UK which operates at several locations. The company offers different kinds and types of product and services to their customer for satisfying needs of customers. Company is follows Hierarchical functional organizational structure for providing guidance for completing work (About ASDA, 2020). Macro environment is the environment which used to impact organization which exists in the economy as a whole, rather than in a particular sector or region. This also will allow managing director at the top of this chart to make the biggest decision to complete business task in effective manner. ASDA has mission, vision and objectives which are discussed as follows:
- Vision: Main vision of the ASDA is to provide goods and services at cheaper price to the general public so as to support them.
- Mission: Main mission of ASDA is to become one of the best retailers and exceeding customers’ expectations in terms of availability of goods at the workplace.
- Objective: is to reducing packaging and considers every option to achieve their goals in proper manner.
Business strategy provide effective opportunity to ASDA for get success at marketplace (Evans and et.al., 2017). Firm is operating in the industry in which already there are well established players like Tesco and Aldi etc. There is tough price competition in the market, and it became very important for the ASDA to prepare competitive price strategy. Micro and macro environment need to be considered before preparing any strategy in the business because these factors heavily affect firm business. For analysis the macro environment affects to business, here is select PESTLE analysis and stakeholder analysis:
PESTLE analysis describes a framework of macro-environmental factors used in the environmental scanning component of strategic management
Political factor: Political factor greatly affect any business performance. Political environment basically refers to the political party’s business policies. In some nations party in power have clear majority or less majority. In case party have less majority, it cannot take big decisions easily. In the UK ruling and opposition parties both are business friendly and due to this reason ASDA on this front do not have any problem.
Economical factor: Economic environment refers to the economic condition of the nation and global economy. In the current time period global economy is not in good condition and is still striving to recover from economic jerks. Domestic economy is also not doing well and on this front UK is facing serious problems. GDP growth is very low, and inflation is also very low (PESTLE analysis of ASDA, 2019). Hence, due to less demand ASDA is facing lots of problem in increasing its profit in the business. Moreover, cost cutting is very difficult task as firm already take lots of steps of cost control. Hence, on this front firm is facing lots of problems and it need to take lots of steps to improve its condition. Order assignment help from our experts!
Social factor: The social factor is also affected to company and its growth factors which is consisted with taste and preferences of customers that are changed as per current trends. For example: as the customers become a more informed, there is increase demand of organic food which can give negative impact on company, if ASDA is not provided organic food to customers. On the other side, if ASDA is provided organic food to customers who are keen on organic foods are created various benefits for company (Buckley, 2020). this impact to strategies of company because management have to make decision for new planning of food.
Technological factors: Nowadays technology is more advanced, which affect to ASDA because their various customers are uses advanced technology to reach out customers. For example: company is not adopted e-marketing for fast shopping. In this case customers are moved to another company because customers are like to shop online. On the other side, if company use e-marketing and online shopping apps then customers easily booked their orders and increase sales which is beneficial for company. This can give negative impact on company strategy because add this technology in their strategy for meet the needs of company.
Legal factor: Legal factors are consisting with various laws and regulations which affect company and its growth. ASDA operates in UK, in that company have to ensure about various regulations puts in place by UK government for not fine are imposed and company have proper knowledge to working with that and take advantage of this. Like: employee is injured at time of work than company have to provide compensation to employees against of their injuries. If company is not providing this, then it can affect to business and strategies because company have to take decision as per health and safety act for employees. Struggling with your dissertation, get Business Dissertation Topics from our experts!
Environmental factor: Environmental factors also can affect to company and its growth factors. Present day's wastage management and recycle material is happing (Banda and et.al., 2019). For example: company can step where it recycles products, or it can gather such kind of product and send it to the firm that recycle such kind of waste. If company is not focused on recycle then it reduces customers. For that company need to make focus on recycle products and share some part of the profit in CSR.
Those factors are giving impact and influences strategies of company in negative and positive manner. For that here, is also used stakeholder analysis of company are as follows:
Employees are the major stakeholder of ASDA because they are main who are give hard contribution within the company tom achieve goals and objectives of company (Brown, 2018). Another important stakeholder are consumers, and they are interested in product and services which ASDA provides. They are the strong stakeholder because if customers are not happy then they are not purchase products and this affect to profits.
With the help of this company is able to know about their stakeholders which are important for company for introducing new strategies for growth and sustainability as well as achieving current strategies of ASDA.
Analysis internal environment and capabilities of organization
Micro environment refers to the environment that is directly in the business organization and can directly influence the regular business activities
The internal analysis is composed with various elements like employees, management and structure of company. This help to design employee’s behaviour and direction for achieving mission and vision of company. SWOT analysis is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning. For analysis the internal strength and weakness of company, here is use SWOT analysis of company are as follows:
The main strength of ASDA are that it has wide network of the numerous stores through UK which has ensured that company have strong brand name (Shiwakoti, Iqbal and Funnell, 2018). In addition to that, the company have more than 136 retail stores which means that company have economies benefits. ASDA have strong financial position which is created higher profit advantage for company in effective and valuable manner.
The main weakness of ASDA is cheaper retailer which might at the time which the company sells poor quality of products and services to customers (SWOT Analysis of Asda, 2019). Company have lack of proper financial planning, which is leading to certain circumstances where there is not enough cash flow as required for unplanned borrowing.
There are number of opportunities in the market that ASDA can explore to grow its business at rapid pace. Technology development is another opportunity for ASDA because it will benefit company a lot in beating its arch-rivals. By using automation technology to great extent cost can be reduced in the business.
There are number of threats in the retail market in the UK and one of them is presence of the large-scale retail chains like Tesco and Sainsbury etc (Brennan and Tennant, 2018). Also, noted bargaining power of suppliers increased over the years by decreasing number of suppliers. This means cost of inputs are increase.
In order to analysis, internal capabilities of ASDA company here is use VRIO analysis model. This model is reflecting complete capabilities and capacity of company to perform their effective performances at marketplace. Get Assignment Examples.Talk to our Experts!
VRIO analysis is the analytical technique for evaluate the resources and thus competitive advantage of company (Alpsahin Cullen and Archer-Brown, 2019). This framework helps in analysing resources and capabilities of ASDA.
- Valuable: ASDA have a great financial resource which are highly valuable as these help in investing into external opportunities which are arisen. The type of resources which are of value to ASDA are employees, financial resources, cost structure, and research and development department. The financial resources are valuable because without finance no work can be done. R&D is a valuable resource because there are many changes in environment, and this can be managed by R&D only.
- Rare: the financial resource of the company is also rare which is found through VRIO analysis model (VRIO Analysis of ASDA, 2018). the rare resource of company is patent, financial, cost structure. Patent are rare because these can used by other competitors as well.
- Imitate: It refers to the situation where core competency of the firm can imitate by the rival. In case of ASDA there is nothing that can not be imitated by the rivals like Tesco. Firm business model is not so unique which other firms find it difficult to copy in their business. Hence, within specific area firm should try to innovate its business operations to maximum possible extent.
- Organization: Financial resources of ASDA are organized to capture value which is identified by the VRIO analysis of ASDA. The resources which are properly organized for effective use are distribution network, finance, cost, employees and research and development. The finance and cost are most organized resources as if these will not be organized then whole working of ASDA will be effective.
Porter five force model to evaluate competitive force
Porter's Five Forces Framework is a method used for analysing competitive advantage of the business. As it shows the performance of company on basis of five different force.
Porter five force is the business analysis model which help to explain sustainability of business at different level (Jansen, 2017). In respect of that company need to analysis competitive forces. For that here is use porter five force analysis model are as follows:
Bargaining power of suppliers (LOW)
ASDA offer number of products to the customers and within single product line multiple companies offer their products. Thus, it can be said that there is less bargaining power of the suppliers in the market.
Threat of new entrants (LOW)
As per these customers are look for the differentiated products (ASDA Porter Five Forces Analysis, 2018). The company have strong emphasis on advertisement and customers service. Through that customers are easily moved towards company as per that threat of new entrants a weak force within the industry.
Bargaining power of customers (HIGH)
Bargaining power of customer is gives impact on business because customers have higher switching cost when they are not received effective and best quality of product and services., 2020). Bargaining power of the customers is very low because in the retail store already products are available at relatively very low price. Hence, product is already available at reduced price and due to this reason customer cannot bargain for price. Thus, customers have no bargaining power.
Threat of substitute product (LOW)
The availability of substitute products and services are lower which make competitive environment more challenging for ASDA and for other existing players. Number of substitutes of the single product are available in the market. Hence, one product that is available at ASDA is also available in the other market and due to this reason ASDA earn low profit in the business. Thus, threat from substitute is very high in the market.
Competitive rivalry (HIGH)
The competition is very high in this industry among the existing company shows the number of the competitors which are given high impact on the business (Constantiou, Marton and Tuunainen, 2017). The competitors of ASDA such as Tesco, Morrisons etc.
As per the above analysis, here is understood that bargaining power of suppliers, threats from new entrants and threat from substitute products are weaker force which are created lower impact on the business. On the other side, company affected by competitive rivalry and bargaining power of customers because those are created higher impact on the businesses. Those are the factors which are related to the porter five force analysis. This represents all those factors which impact to ASDA with higher and lower forces are.
This model is a strategic marketing planning tools which is used for analysis and generate four alternative directions for strategic development of business (Nußholz, 2017).
- Market penetration: this refers with some changes and make new strategy to increase sales of company in effective manner. In this firms by innovating their product lines try to increase their market share at fast pace. In current time period there are large number of firms that are following this strategy because already their market is in saturation stage and either then can enter into the new market or make innovation in their current market so that revenue can be enhanced. This is the reason due to which now a days most of firms develop R&D centres in their business so that business revenue can be increased at fast pace.
- Market development: This consists with enter new market or country without introducing any new product and services at marketplace (Harding, 2017). in this companies are target to existing product to new market segments. In this strategy firm search new target audience and serve products to them. With slight changes firm try to satisfy needs of the customers in the market. Hence, it can be said that it is the one of the best strategies that any company can follow in its business.
- Product development: In this company make various strategies which are reflects the development in existing products and services of company. In that company can include improve quality of product, review of packaging, ask with customers about some changes and influencer for feedbacks etc. in these firms develop new product into existing market segment.
- Diversification: It refers to the situation where a business firm add new product in its product line or enter into the new market in order to tap opportunities that are available in the new market. In this company need to introduce new product and services for attracting more customers toward company in effective manner. In these companies are diversified into new businesses by developing new products for new market.
This model is help to analysis product and services strategy of company (Prendeville and Bocken, 2017). As per this, the best options and direction for ASDA is market development because through that company have chance to target new customers towards company.
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Theories, concept and models, strategic planning.
From the above analysis of all the questions find out the various threats which are important to overcome by ASDA for gaining the highest competitive advantage for company. In respect of that here is included Bowman strategy clock model:
Bowman strategy clock:
This model is exploring the options for strategic position of company. The main purpose of this model is to illustrate the business will have variety of options to know the position product. The explanation of these strategies are as follows:
- Low prices and low value added: For ASDA this strategy is not appropriate because in industry retailers are making available quality products at low price. Customers will not accept low quality product at low price in the market. This strategy will not prove good for ASDA because in this price of product is lower, but value is as well. As per that, this is not strategy for company.
- Low prices: In this strategy company can set lower prices of product and offers to customers. This help to attract more customer as per their lower price of product (Buckley, 2020).
- Hybrid: In this strategy company make available differentiated product at low price and of good quality. This option is best and effective for company ASDA to use.
- Differentiation: the main aim of this strategy is to offers the highest level of perceived value to customers. This is the effective opportunity for ASDA to producing product by considering new trends which are happens at marketplace. For that company need to increase investment on research and development department because through that ASDA is able to analysis the complete market and find out those new trends which are comes within the industry.
- Focused strategy: This another strategy which have aim to position of product is high at marketplace (Evans and et.al., 2017). This strategy can have adopted by using premium price through targeted segmentation, promotion etc. this help to company for leading highest profit margin.
- Monopoly pricing: In this strategy firm make available its product at very high price because already there is no competitor in the market.
- Loss of market share: In this strategy firm make available mid-range of products which are poor in quality. In UK retail sector this strategy will not work out because people already get good quality product at high price in the market.
Porter generic strategy model
- Cost leadership: In this strategy firm try to control cost of production in its business so that goods can be made available to the customers at cheaper rate. This strategy is already followed by Lidl and Aldi in the market. Through that company have to implement an advisory board which is help to best control cost and proper management. With the help of this management get feedback about decision before taking decision actions and getting additional tax advantage to ASDA.
- Differentiation: This involves the new marketing product and services in different from and more competitive advantage. In To adopt advanced technology and increase investment on research and development department. Through that operations can be automated to reduce cost (Bolton and Hannon, 2016). through that company have analysis new trends for business growth.
- Focus strategy:Cost focus: Under this strategy attention is paid on the cost of the product so that by reducing its customer base can be increased in the business at rapid pace. Cost reduction assist firm in developing more reliable customer base in the business.
Differentiation focus: In this strategy firm focus on product differentiation and add new product in its product line or innovate its existing product line. By doing so it serves customer’s needs in better way then rivals.
Recommendation for ASDA to adopt strategy new market identification as porter generic strategy model. ASDA must also be looking for commencing its operations in the new market so that more areas of income generation can be created in the business. Through the bowman strategy, ASDA should make online shopping apps for offering online shopping facility to customers for attract customers towards business.
Strategic management plan
Strategic management plan is help to ASDA for promote growth and sustainability of company at marketplace in effecti