Busines and busines environment

MAIN BODY

Pestle analysis

Political factor: It refers to the government policy and practice such as new legislation that influence or effect the industry or economy of the country. It includes laws related to labour, environment or trade restriction, tariff that effect business operation of company.

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• Positive impact: ASDA has expanded its business in Chinese market and at the same time can import certain product due to political factor.
• Negative impact: European regulation in national and international market has impact on Asda company policy, to its employee and war and instability has also effected the decision-making.

Economical Factor: This factor helps in determination of economic position of a country or performance, it effects the purchasing power of the customer and thus will impact the company performance in long term. So, in order to be success it is necessary to keep watch on its economic factors that are beyond the control of the company. It includes employment or unemployment, tax rates, exchange rates and inflation.

• Positive impact: due to recession in 2008 in UK, Asda revenue increased as customer shifted their shopping from expensive retailers to shop at cheaper rate which was offered by Asda company.
• Negative impact: due to recession the price of raw material price raised, credit crunch, more competition in the market so it impacts the pricing strategies of the company.

Social Factor: These factor includes the trends of the society such as their life style, culture they follow, income distribution, emphasis on health and safety. All these factor describe or represent the culture, customs value of people's in which the company operates its business.

• Positive impact: social factor help asda help the company to identify the increase demand for organic food thus asda ensure to offer organic food to its customer to satisfy their needs.
• Negative impact: increasing ageing population has increases in payment to their employee in terms of pension and apart from this these people's so less interest to work in the company.

Technological Factors: It includes level of development, technological changes and technological awareness among the market that may impact on the operation of industry. These may have positive or negative impact that are as follows:

• Positive impact: Asda with the help of advancement in technology is able to reduce the cost of labour thus it resulted in reduction of production cost and enhance the profit margin of the company.
• Negative impact: Due to development in technology companies are selling their product and service through e marketing and online retail so in order to take competitive advantage the company should also develop it technology.

Legal Factor: These are specific law that restrict and dictate the behaviour of business operation and customers.

• Positive impact: Asda by adhering to all rules and regulation can run its business smoothly without imposed to pay fines.
• Negative impact: Asda company discriminate on the basis of gender or does not adhere to consumer protection law it will decrease its brand image and loyalty among consumer.

Environment factor: These factors are important as resource are limited and scare they need to be managed effectively and the increasing awareness of impact company have on environment t has also forced company to consider such factors.

• Positive impact: Asda considered various important factor such as carbon footprint, omission of hazardous waste thus able to gain loyalty of customers.
• Negative impact: this factor may adversely affect the profit of the company as it has to spend capital in order to protect the environment.

SWOT Analysis

Its internal and external factor such as strength and weakness, threat and opportunities that effect the business and evaluate its current position in the market. Thus, its help company in strategic planning to gain competitive advantages in the market. SWOT Analysis of ASDA is given below:

Strength: It describes the thing in which the company excel or is best or special skill or any positive attribute that can differentiate the company from other's in the market. There are many things in which the ASDA company excel that are as follows:

• Wide range of products: ASDA deals in large varieties of product and services thus provide wider choice to its customer to choose among.
• Strong Brand Image: As ASDA is operating its business in the market from many years and had mainly focused to built good image of the company.
• Constant touch: As the company continuously connect itself with the customer through social sites and customer provided feedback within less time.

Weaknesses: This describes the weak point of the company where it needs to improve or change itself. ASDA company weakness are as follows:

• Global presence: The company not operate its business globally as compared to its competitor.
• Quality control: The company is not able to maintain quality at many stores due to less budget assigned to quality control department.

Opportunity: Is a situation or favourable time that gives the company to use its resource effectively in order to gain advantages. Opportunity of ASDA are as follows:

• Market its product online: The company should sell its product online as nowadays more and more customers prefer online shopping
• Globally presence: The company can expand its business all over the world.

Threats: It is indication of something unpleasant may occur that may likely cause damage or danger to the company. Threats of ASDA company are as follows:

• Competition: As more companies are entering into market it had lead increases cut-throat competition in the market.
• Political Instability: Due to uncertainty in the policy the business has to bear unnecessary costs.

Interrelation of internal and external factors

STRENGTH

• The company is able to maintains it brands image by considering the social factors such as customer taste, preference, age group thus satisfying the needs of the customer in the most effective manner and thus increasing the loyalty.
• By considering technological factor the company is able to get feedback of the customer within less time through social sites and thus also helps the company to keep close contact with the customers.
• The company by considering environmental factor is able to provide quality product or organic food to its customer to its customers thus able to cover large market share.

WEAKNESS

• As the company does not consider the economical, political and social factor of other countries in decision-making it is not able to expand its business worldwide and had to shut down its stores.
• The company is facing high employee turnover as highly educated employee are leaving the organization due to the company policy and culture so the company has not considered economical and social factor before making decision.
• The company has to face cut-throat competition as it has not considered technological advancement such as other competitor are selling their product online or through e -marketing.

Reflection

As per my analysis and evaluation macro environment factors greatly impact on the decision-making of the business. The company has to keep in mind various factor such as social, technological, political, legal, economical and environmental before expanding its product line or starting a new project. As per my opinion the company should expand its business around the global and sell its product online.

CONCLUSION

From the above report it can be concluded that it is necessary for ever business to considered its internal and external factor that effect smooth functioning of an organization. These macro environment can effect the company in positive or negative manner and the company should also conduct SWOT Analysis before it launch anew product line or project. At, last this report conclude that internal factor are related to external factors.

For more - HR7234 Business Marketing Level 5 University of East London

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