Question :
This assessment will cover following questions:
- Evaluate the impacts of the micro environment has on ASDA and the business strategies.
- Business Strategy is the set of the plan, actions and goals which analyse products and services to compete in the market. Generate the business internal environment and its capabilities.
- Business strategy helps in understanding the strengths and weaknesses of organisation.Explain and implement the outcomes of an of the analysis using Porters Five Forces model to a given market sector.
- Implement model, theories and concepts and assist with the understanding and interpretation of strategic directions available in ASDA.
Answer :
INTRODUCTION
A business is an institution that performs a variety of activities for the exchange of goods and services to earn profit and achieve the objectives of the business. Various strategies are prepared by the company to achieve its objectives of the company in effective way. ASDA is a British supermarket retailer company that provides financial services and mobile phones. This report covers the impacts and influences of the macro environment on an organization and its strategies. It analyzes the internal environment and capabilities of ASDA using the appropriate framework. It identifies the competitive position of ASDA in the market by using Porter's Five Forces. Using various theories, models, and concepts assists in understanding and interpreting strategic decisions for an organization.
P1 Pestle Analysis
Pestle is a marketing tool that is used by the marketer to analyze and monitor various factors of the environment that affect the functioning of the organization. This tool is used by the marketer at the time of the launch of a new product or expansion of market share for the effective achievement of company goals.
Political factor: It describes the level and extent to which government interferes in the economy of a particular country. A company has to consider all such policies, rules, and regulations of the government before launching of new product or expanding its business in the new market (Venkatachalam, 2018). As ASDA is operating its business around the globe it needs to consider the political factors of different countries. ASDA is operating its business UK which is facing political instability due to the withdrawal of the UK from the EU and UK was one of the trading partners of the EU. So, this policy has adversely affected the trade of ASDA, its functioning, and its profit margin.
Economical Factor: This factor helps in determining of performance of the economy in the country such as interest rate, exchange rate, unemployment rate, purchasing power of customers, and its growth. UK's economy is facing a situation of recession that has been an advantage to the ASDA as it sells products at lower cost. Thus, influencing customers to prefer the product of its company instead of the competitor's product and thereby increasing the profit margin of the company.
Social Factor: It represents custom, beliefs, value and demographic structure of the population in which company operates its business. Company had to effectively analysis and evaluate all such factor before expansion or new launch of product as it help in identifying customer's needs and the way they it can be satisfied (Putter, 2018). ASDA is effectively able to maintained and increase its market share by understanding customer's demand for organic product and including it in product blends.
Technological Factor: It refers to present level of technology, various technological innovation and its research and development department in order to bring economy of scale for achievement of organizational objectives. Through innovative technology the company is able to effectively manage its resource and timely supply of raw material to reduce delay in offering products to customers. Thus, ASDA is able to provide effective personalized services and convenient shopping to its customer's with the help of innovative technology.
Legal Factor: They are similar to political factor but yet they differ such as employment laws, health and safety law, consumer protection laws and discriminative laws made by government tin order to protect consumer and employees of the organization. All companies have to abide by legal rule in order to achieve objectives of business in ethical manner. ASDA has adhered to all rule of government while operating its business thus have build strong brand image and competitive position in the market.
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Environmental Factor: This issue has recently forefront due to increasing scarcity of raw material and awareness for environment conservation among consumers (Satalkina and Shpak, 2018). ASDA has to ensure various environmental factor while operating and manufacturing of its product to maintain its brand image and increase its market share. ASDA by offering organic product in its product range is able to protect environment and satisfy the needs of customer's in effectively way.
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P2 Swot Analysis
Swot analysis help in planning business strategies on the basis of its current position in the market. It also helps in identifying the areas in which the company excel and where it needs to improve itself at the same time protect company from various threats and avail various opportunities. Thus, swot analysis is very essential in determination of the company position and achievement of company objectives.
Strength: It explains the company positive attribute or the area in which the company excels that is essential in success of the company. Every company strength lies in its resource and capabilities to perform functioning effectively and to get competitive position in the market (Pandya, 2017). It may be patents, strong brand image and innovative technology of the company that differentiate it from other company in the market. ASDA strength lies in innovative technology as it able the company to bring economy of scale by reducing cost, maintaining quality and increase profit margin. Management of the company is also strong that help in effective delivery of services to its customer's and thereby maintaining customers loyalty.
Weakness: The areas in which company is lacking and need more improvement to achieve objectives of the company and for gaining competitive advantage. It may be weak brand image, lack and ineffective utilization of resources and ineffective distribution channel. ASDA is not able to position its product in minds of customer's as they think that it does not provide qualitative products as other brand in the market. ASDA is not able to expand its business in international market as compare to other competitor and it mainly depends on UK market for sales.
Opportunities: This is the situation of external environment that provide opportunities to company to expand its business and promote profit and growth of the company (Phadermrod, 2016). ASDA has an opportunity to expand its business in global market as it provide quality products at reasonable cost. It can also make use of social media, build its own website and pages to sell its product online as the customers feels ease and comfortable while making purchase through online.
Threats: Any change in external environment may affect the company function adversely so it helps in identification and protection of various threats of the company. ASDA is facing tough competition from other competitor such as ALDI and LIDI who are known for good discount provider. Thus, increasing competition compel the company to reduce its cost of product and therefore affecting its profit margin.
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P3 Porter's Five Force model
Porter's Five Force Model helps in evaluation of competitive forces of retail industry in which ASDA operates its business. It helps in determining level of competition, identify structure of industry and thus help in enhancement of long term profit of the company.
Competition Rivalry: It helps in determining number of competitor in the market and the product and service the company offers. ASDA is operating in retail industry which is facing tough competition due to various aggressive price and targeting strategies of competitors (Gansand Ryall, 2017). Rivalry among existing competitor is high as there are number of competitors in retail industry, customers easily switch from one brand to another and the economy in which ASDA is operating has less growth rate.
Power of supplier: This factor help in identification of number of suppliers in the industries, availability of input and its uniqueness. Thus help in determining the bargaining power of supplier in the market and effect in cost of the product and profit margin of the company. The market in which ASDA operates supplier have low bargaining power as number of supplier are less, company have sufficient knowledge and is highly price sensitive. It helped ASDA by providing inputs continuously, at lower cost thus increasing profit margin of the company.
Power of buyer: It helps in identification of number of customers, their age and preference thus determine power of buyer to drive price lower. Power of customer's in the market ASDA operates its business is high as the switching cost low, number of seller are high and consumer are highly priced sensitive (Murphy, 2016). Thus, ASDA in order to get competitive position in the market had to reduce its cost which decreases its profit and increases competition.
Threats of Substitute: It refers to such product or service that can be used in place of company product by consumer thus affect company overall sells and profitability. Threats of substitute product is low as the industry in which ASDA operates have less substitute product and company that provide substitute have also low profit margin. So, it helps in ASDA in expanding its market share and maximize its profit.
Threats of new entry: It helps in determination of potential new entry in the market the company operates by identifying cost of entry into market, number of competitors (Gandrita and Rosado, 2019). ASDA by bring economy of scale in retail industry able to create barrier for new entry, capital requirement is also high and political instability. Thus, ASDA has low threats of new entry in the market it operates and high chances of expansion of its business.
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P4 Strategic planning of ASDA
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Objectives: ASDA objectives is to provide quality product at reasonable price to attract large number of customers and to get competitive advantages. Strategies: To achieve the objectives of the company various strategies plan are made by ASDA such as it has to improve its process and technology for manufacturing product at lower cost. Company strategies is to bring economy of scale thus reducing the cost of manufacturing the product (Hersperger and et.al., 2019). The company also want to expand its market share by operating its business across the globe and increasing its profit margin.
KPI Revenue of the company: ASDA can effectively evaluate its strategy plan by measuring its total revenue generate during the financial year. Customers satisfaction and loyalty: It is also an indicator of successful implementation of strategy plan by determining retention and increase in customers of the company. Profit margin: It is also an indicator that help in determining effectiveness of strategy plan by analysis and evaluating profit margin of the company. Sales: Increase in sale of ASDA company will indicate the successful implementation of various strategies to increase sales of the company. |
CONCLUSION
This report concluded from the above report that Pestle analysis help the company in understanding various external factor that impact on its functioning. It also explains that Swot Analysis help in identification of opportunities that are available in the market at the same time protect the company from various threats. It also helps in identification of competitive position of ASDA in market by using Porter's Five Force Model. At last this report by using various models, theories and concept is able to effectively prepare strategies plan for the company. Thus, ASDA on the basis of evaluating and analysis of various factor is able to expand its market share and profit margin.
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REFERENCES
- Gandrita, A. and Rosado, D. P., 2019. The Effect of Incorporating a Human Capital’s Analysis into Strategic Planning. Journal of Reviews on Global Economics.8. pp.206-225.
- Gans, J. and Ryall, M. D., 2017. Value capture theory: A strategic management review. Strategic Management Journal. 38(1). pp.17-41.
- Hersperger, A. M. and et.al., 2019. Understanding strategic spatial planning to effectively guide development of urban regions. Cities. 94. pp.96-105.
- Murphy, C., 2016. Competitive Intelligence: Gathering, Analysing and Putting it to Work. Routledge.
- Pandya, S., 2017. Improving the learning and developmental potential of SWOT analysis: introducing the LISA framework. Strategic Direction.
- Phadermrod, B., 2016. Mining survey data for SWOT analysis(Doctoral dissertation, University of Southampton).
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