• The motive of this presentation is to give an analysis of ASDA and its environmental factors affecting its operations. The report will be mainly concerned with PESTLE analysis which remains one of the most reliable analytical tool and entails;
  • Political
  • Environmental
  • Social
  • Technological
  • Legal
  • Environmental factors

Political

• ASDA has taken advantage of the good business environment offered by the European Union to expand its markets all over Europe as a result of removal f all trade barriers. Further expansion in the ASDA markets has also been noted especially in China which recently became a member of the World Trade Organization (WTO).
• The government increases in taxes on alcoholic drinks have been a great challenge for the pricing strategy at ASDA as it must ensure that they maintain their policy of maintaining low prices and remain competitive.

Economical

• One of the most common economic factors which have been of great concern to many organizations is the great economic recession of 2008. This period had great impacts on consumers spending power thus significantly reducing sales in several outlets. However it is worth to note that during that period ASDA experienced increased revenues as the company’s policy is to offer low prices.

Social factors

• Social changes can bring about significant change in demand especially for the ASDs food and non-food products.
• Change in consumer demand is ever increasing as a result of increased information on healthy food. As a result demand for organic food has increased and therefore necessitating the ASDA to offer organic foods which has become compatible with such organic foods.

Technological factors

• New technology is the order of the day in the modern dynamic business world. For instance, at ASDA online shopping and computer aided designs are the major improvements noted in the recent times which have increased efficiency in doing business. Strong Information technology system has been put in place which has supported the organizations operations such as procurement and sales.
• ASDA has also been involved in e-marketing. Use of this technology has significantly reduced costs, improve quality and lead to innovation. This has been beneficial to both the consumers and ASDA which has especially been able to save money and keeping low costs.

Legal factors

• ASDA has based its operations in UK and therefore must ensure that they follow strictly rules and regulations as they have been put in place by the government. Failure to conform to such rules and regulations can lead to heavy court fines which is detrimental to the profitability of the firm.
• Taxes, licenses, business permits, annual financial reporting, and labor laws are the main regulations that the company is expected to follow strictly.

Environmental factors

• It is the obligation of every business venture to have great concern on the impacts of the firms operations to the environment. For instance, ASDA has been very supportive in reducing carbon emissions. It is even believed that asda emits 50% less carbon dioxide than a standard new build store. ASDA has taken this a notch high by using recyclable materials in various situations like in packaging of products.

ASDA enters foreign markets

• The modern business has been so dynamic and thus needs effective measures that will ensure competitiveness of the firm. One of the most common strategies adopted by several business entities s the expansion of markets by going global. However, it is important to understand that an organization must understand the different factors that determine the entry mode and how to set the operational strategies. Cultural differences, political influences and the legal structure in different countries plays a vital role in making such decisions.
• Decisions to enter overseas markets must be well thought after to ensure that the business has a clear purpose as to why it needs to go global. most of the reasons are listed below;
• Saturation in the home market
• Need to restructure the global brand image.
• Grabbing more market
• External initiatives to spread the product abroad.
• The company has entered most of the foreign markets through foreign direct investment (FDI). The company has been very successful in UK, Canada, America, South Korea and other parts of Europe. Most of these markets had been penetrated through foreign direct investment.
• ASDA has also been able to penetrate in the global market through mergers. It is known that ASDA merged with Wal-Mart stores inc. which is also a renowned global chain of supermarkets. After such a merger, the company has been able to penetrate to new markets especially in USA where wal-mart is already a recognized brand. Wal-Mart has a friendly legislature and government policy which is in accordance to the company policies and methods. As a result of this friendly relationship, it said that Wal-Mart which is part of ASDA has received 1.2 billion from US government in terms of subsidies and grants.
• Another entry strategy in the foreign market as adopted by ASDA is by joint venture which forms another great avenue for internationalization. In 1991, the company was involved in a joint venture exercise with Citra, S.A. de C.V, which is the Mexico’s largest retail store. By concluding this venture, the management of this company argued that there would be expanded market and extra market just in case of market saturation at home.
• It is important to understand that ASDA did not use single strategy to enter in different countries. The mode of entry was mainly based on the basis of business, competitive and economic environment that exists in the target market. ASDA made its presence in most markets by first considering the uniqueness of each market and then by altering business model to suit that market. For instance, its entry in the Chinese market was based on analyzing the business environment in china which seemed to be positive. The high population of the republic was also a key factor in making such decisions.

References

Cassidy, A., 2006. A practical guide to information systems strategic planning (2nd ed.). Boca Raton, Fla.: Auerbach Publications.

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Cook, S., 2012. Complaint management excellence creating customer loyalty through service recovery. London: Kogan Page.

Gottschalk, P., 2005. Strategic knowledge management technology. Hershey PA: Idea Group Pub.

Gregory, A., 2010. Planning and managing public relations campaigns a strategic approach (3rd ed.). London: Kogan Page.

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Haynes, B., &Nunnington, N., 2010. Corporate real estate asset management strategy and implementation. Kidlington, Oxford: EG Books

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