MACRO Environment

The aim of this paper is to discuss the essentiality of analysing the macro and micro environment of ASDA Stores Ltd. which is a British supermarket retailer. It is a part of retailer giant Walmart and mainly focuses on the core business of supermarket. Along with the supermarket business, the company also provides financial services as well as mobile phone products. The marketing promotions of ASDA chiefly focuses on the price structure. Unlike the parent company Walmart, ASDA is also operating under the slogan “Save money. Live better” (Asda.com 2019). This report will discuss the PESTLE of the United Kingdom in regards to ASDA and analyse the strengths, weaknesses, opportunities and threats. Based on these analyses, the paper will provide some recommendations which will help the company to expand their operations in the foreign markets in one hand and solve the internal issues without much effort.

PESTEL Analysis

The PESTLE analysis of the country where the company has been operating for more than 60 years is the United Kingdom. This analysis aims to address some of the very important political, economic, social, technological, legal and environmental factors that have either benefited the companies operating in this market or putting pressure on them for surviving.

• Political Factors:

It is related to government policy that can have an effect on business such as new legislation and regulatory shifts. For example, stable government of China has been attracting more business operators to enter the market.

• Positive Impacts

The United Kingdom consists of Wales, England, Scotland and Northern Ireland. This is one of the most powerful and influential countries of the world. The country is marked by political stability which has been a great strength for both the nation and the business. The country has been in a focus for foreign direct investment. The business tycoons around the world have directly invested in various Industries originated in the UK. Despite the fact that there is some hidden corruption in the political structure but these do not affect much on the policies of the country which can manipulate the business organisations.

• Negative Impacts

Due to BREXIT, there are some political issues which have affected the business organisations in a negative way. This has created uncertainties as well as political debate. To some BREXIT will create chaos but others state that it will definitely open doors to immense opportunities for the business organisation situated in this country. The company will be affected by the national and international regulations along with those of the European Union. These will affect the legislation, consumer rights of employment and taxes. Therefore, the decision-making process of the organisation will also be manipulated. Therefore, it must monitor the political environment of the country consistently and bring changes into the company policies to survive in this highly competitive market.

• Economic Factors:

High economic growth helps companies to attain more success in the market as economically strong market has consistent customers and employee. For example, with the largest economy of the world, the US attracts more business than any other countries.

• Positive Impacts

The UK has more and less stable economy and it is the fifth largest economy by the nominal GDP in the world. The decision of 2008 had created some uncertainties for the economic landscape of the country but the government had taken all the necessary steps to improve the situation. The government has announced to reduce the corporation tax. In 2020 financial year this tax will be 17%.

• Negative Impacts

The common household in the UK faces some challenges since 2017. The prices in the shops was rising fast as the value of pound was reduced. Over the cost of importing goods in the country was much high. Moreover, wages why not up to the line along with the increased prices. However, this situation has improved after 2017 as the inflation rate rose to 3.1%. Now the economic condition of the UK is supportive of business for ASDA (Beitelspacher and Rodgers 2018). The company needs to consider financial factors like cost of credit pay level or more competitive pressures, energy prices and civil supply and demand. This will definitely impact on the price strategy of ASDA.

Social Factors:

The countries where the population is highly educated and skilled and the standard or living is higher, cultural diversity increases. This helps the companies to work more competitive manner. India is highly diverse market along with its large in size therefore, many companies are entering this country for business.

Positive Impacts

The UK has a huge consumer market for which most of the International Organisation accumulate in this region. In July 2017 the national statistics published that the country has a population of 65.6 million in 2016 (Ons.gov.uk 2019). The diversity of culture is high in this region therefore the business organisations can get a lot of opportunities and get different segments of consumers. This create an opportunity for the business organisations to employ local skilled and experienced workers which will meet the need for human resource. Aging population, Healthy lifestyle and celebrity following in the market, the company will get the scope to introduce new and customised products as well as services in this market. This will also help it to develop segmentation strategies.

• Negative Impacts

The population of the UK is getting older soon which will have a negative impact on the labour market of the country as well as manipulate the Healthcare system. The living standard of the people of this country is high. Therefore, the companies produce high quality products and services to cater the demand of the consumers in the UK market (Dalgic and Bloemen 2015).

Technological Factors:

The recent business structures need investment in advancing technological infrastructure within the country which can offer the entrepreneurs opportunities for doing business. Japan has a highly technical market which makes it attractive for companies.

• Positive Impacts

The United Kingdom is one of the most advanced countries which has adopted Technology in every possible manner. London is the capital where there are numerous financial as well as technological institutions. The government has invested in advancing technological infrastructure within the country which can offer the entrepreneurs opportunities for doing business in the UK. Businesses will be frequently developing new technologies for giving the best solution to the customers (Colicev, Malshe and Pauwels 2018).

• Negative Impacts

The UK based companies can meet the demand of the overseas customers through online business but in case of the supermarket like ASDA, it does not have proper infrastructure to use super-fast broadband and mobile app facilities that can allow the customers to collect delivery services faster than ever.

Ecological Factors:

Recently changing ecological factors in the world is manipulating the companies to change their production strategies. The issues like green economy, carbon footprint and pollution have created barrier in entering the market of Australia.

• Positive Impacts

The economic activity of the country completely impact on the environment however the government has made some significant improvements to reduce the negative impact of business on environment. The local councils, charities, media and the government have taken initiative to create an environmental awareness among the citizens as well as the business organisations. The country of emphasis extreme weather conditions but this do not affect any type of business in this country.

• Negative Impacts

Green economy, carbon footprint, pollution, hazardous wastes and promotion of organic foods have become important for the supermarket organisations (Lancaster and Massingham 2017). Unlike other companies, ASDA has also felt pressure to operate in an environment friendly way.

Legal Factors:

The legal factors like change in the taxation policies, fair trade deals and rights of the employees and consumers affect the business of the companies greatly. The rigidity in the legal sections of the county like North Korea, no business aims to enter its market.

• Positive Impacts

There are various legal procedures and policies which the business organisations are asked to follow. These include the policies regarding employee rights, licencing for doing business, quality assurance and consumer empowerment regulations. ASDA therefore must obey these rules and regulations as any type of bridge can result in punitive actions by the relevant authorities (Laverty et al. 2018).

• Negative Impacts

The company will be affected by the national and international regulations along with those of the European Union. These will affect the legislation, consumer rights of employment and taxes.

LO4: Micro Environment

• Briefly explain what micro environment is and what is its role or importance to a business success.
• Brief state what are the SWOT factors (S: Strength, W: Weakness, O: Opportunities, and T: Threats)

SWOT Analysis

• Internal and external analysis (SWOT) in order to identify strengths and weaknesses.

SWOT Factors	Chosen Organization
Strengths	ASDA is a British Supermarket retailer which has the present organisation Walmart. It has created a positive image to their customers for their convenience, wide variety of products and value for money. Like the parent company Walmart, this company also focuses in saving money of the clients and always keep the costs lower than the competitors. This company has coal quality associated with the uses of Information Technology for supporting operations. The technology is used for monitoring the performance store by store and make the delivery method easy. The information technology has supported its efficient procurement. As the company focuses on providing best quality products to their customers, it invests money and time for the employee training process and developing their skills (Moatti et al. 2015). As Walmart is the parent company, ASDA has also focused on the non-food items in their stores. It has quadrupled the non-food offerings to more than ten thousand general merchandise lines. The social factors of UK has provided the company with skilled labours along with supply chain who know the expectations of the customers best.
Weaknesses	The main problem of this company while operating in the UK market is the unavailability of smaller supermarkets as well as convenience stores. The UK has placed restrictions on the constructions of bigger stores in the suburb area as well as the rural area. Despite the fact that Walmart is the parent company of ASDA, there is a huge lack of control which main effect the business of this company and leave it weak (Chen 2018). Walmart is the world’s largest grocery retailer but it has sold products across different sectors like food, stationery, clothing and many others. Asda being a part of Walmart does not have flexibility like the other competitors.
Opportunities	Being the part of Walmart, ASDA has gained the opportunity to harness the enormous buying power especially on the general merchandise. Despite the fact that the profit margin of clothes or accessories have gone down but food still accounts for the most important part of the company’s turnover. Moreover, the low pricing model followed by ASDA has who held its sales. ASDA has the opportunity to form strategic alliance, take over and merge with other international retailers that can be focused on growing food as well as non-food markets. In order to solve the issue of small supermarket, ASDA has bought Netto supermarket. This is all to the issues of small Store format by converting all the Netto locations into ASDA stores (Pantano et al. 2017).
Threats	The competition level in the retail grocery market has been increasing with the advent of Tesco and Morrisons in the UK market which causes a great threat for this company to operate. Due to recession the UK family disposable income has been lowered which leads to moderate food price inflation in the grocery stores. The issue of employment uncertainty also can lead ASDA to feel tremendous pressure in the UK market.

Explanation  

• The economic and political situation of the UK is welcoming and support the FDI which give full support to the company. 
• The social factors of UK have provided the company with skilled labours along with supply chain who know the expectations of the customers best.
• The hike in petrol prices have increased the demand of the logistics and transportation which is threatening ASDA to enhance their product prices (Blanco and Cohen 2017).
• The legalities in the UK is more or less flexible but the company faces many customer grievances in these least few years. 

Recommendation

• ASDA if wants to gain competitive advantage in the market and overcome all the issues, must follow some startegies which include-
• Firstly, selling off some idle assets of company that do not focus on core business of providing the customers with the basic grocery requirements.
• Secondly, approaching the monetary institutions which have rested on the business and restructure the debt by re-mortgaging specific aspects of business.
• Thirdly, restructure the ways in which the company’s products and services are given by the use of real-time marketing analysis as well as in-time delivery from the distribution centres.
• Fourthly, the senior management needs to enhance their monitoring on each store in a regular rotation.
• Fifthly, the company needs to create a best practice team and implement mentorship program.
• Sixthly, create customer feedback method over the internet and any online process so that they can be connected with the company in most possible manner.
• Seventhly, the company must have an open-door policy so that the senior managers have access to the resources of the company to sae with their subordinates.
• Finally, to motivate the employees the company must introduce incentive and rewards programs

Conclusion:

Therefore, it can be concluding that through proper analysis of political, economic, social, technological, legal and environmental factors that manipulate the external forces of the company are important. These either support the growth of the company or work complete against the growth. Through proper analysis of the strengths, weaknesses, opportunities and threats can be pointed out easily. These factors present in the market where the ASDA aims to operate and expect to develop itself to be one of the most important retail organizations, put pressure on it for surviving the tremendous competition present. There are some internal issues also which create barrier for the company to flourish completely. Hence the company must follow some very important strategies so that it can grow in the market of the UK in one hand and expand its business on the other.

List of References

Asda.com (2019). Asda.com – Online Food Shopping, George, & more.

[online]

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Beitelspacher, L. and Rodgers, V.L., 2018. Integrating Corporate Social Responsibility Awareness Into a Retail Management Course. Journal of Marketing Education, 40(1), pp.66-75.

Blanco, J.M. and Cohen, J., 2017. Macro-environmental Factors Driving Organised Crime. In Using Open Data to Detect Organized Crime Threats (pp. 137-166). Springer, Cham.

Chen, C.M., 2018. A review and analysis of service level agreements and chargebacks in the retail industry. The International Journal of Logistics Management.

Colicev, A., Malshe, A. and Pauwels, K., 2018. Social Media and Customer-Based Brand Equity: An Empirical Investigation in Retail Industry. Administrative Sciences, 8(3), p.55.

Dalgic, T. and Bloemen, H., 2015. Internationalisation of the Eurofood Retail Sector with Special Reference to Foreign Market Entry Modes. In Proceedings of the 1993 World Marketing Congress (pp. 176-177). Springer, Cham.

Lancaster, G. and Massingham, L., 2017. The development of a strategic approach to marketing: its culture; internal macro-and external micro-environmental issues. In Essentials of Marketing Management (pp. 11-42). Routledge.

Laverty, A.A., Thompson, H., Cetateanu, A. and Filippidis, F.T., 2018. Macro-environmental factors and physical activity in 28 European Union countries. The European Journal of Public Health, 28(2), pp.300-302.

Moatti, V., Ren, C.R., Anand, J. and Dussauge, P., 2015. Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry. Strategic Management Journal, 36(5), pp.745-757.

Ons.gov.uk (2019). Overview of the UK population – Office for National Statistics. [online] Ons.gov.uk. Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/november2018 [Accessed 23 Jan. 2019].

Pantano, E., Priporas, C.V., Sorace, S. and Iazzolino, G., 2017. Does innovation-orientation lead to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing and Consumer Services, 34, pp.88-94.

Pantano, E., Priporas, C.V., Sorace, S. and Iazzolino, G., 2017. Does innovation-orientation lead to retail industry growth? Empirical evidence from patent analysis. Journal of Retailing and Consumer Services, 34, pp.88-94.