Analyze the internal and external environment of UK company ASDA
Table of content
Introduction
Success in the ever-changing retail
industry of today depends on a company's ability to recognize its internal
strengths and weaknesses in addition to the external possibilities and dangers
it faces. To provide a complete image of Asda's surroundings, this analysis
explores the UK's largest grocery chain using several frameworks. Through applying SWOT, VIRO,
Porter's Five Forces, and PESTLE analyses, we aim to elucidate Asda's strategic
positioning and pinpoint prospective directions for future expansion.
SWOT analysis
Figure 1: SWOT Analysis
Source: (Nishant saini,
2024)
Strength:
Asda is famous for its
strong management. They attract their customers by their extensive network with
low costs and competitive prices. Weaknesses: Compared to the market
competitors, its products have lower perceived quality and a lower variety of
products. It is also based on online with low category customer relationships
and more debt burden. Opportunities: Increasing the demand of the online
grocery market can boost the company. Based on the online, easily leveraging
the customer's data and creating personalized promotion focus on
sustainability. Eco-friendly issues can help to more prioritize than other competitors.
Threats: Intense competition with the rising cost of supply chain
disruptions. Rapid growth of the e-commerce business and changing customer
preferences are concerns for the company. Government regulations changing also
threats for operating costs and new requirements.
VRIO analysis
Figure 2: VRIO analysis
Source: (EPAM
SolutionsHub, 2023)
Value:
Build strong brand recognition by fostering customer trust and loyalty.
Extensive store network with vast customers. They also supply their brand
products at lower costs and efficient way. Rarity: Asda's size enables cost advantages
through bulk purchasing and stronger supplier negotiations. They can analyze
data for targeted customers and product development. They also attract their
customers with the vast size of the logistics network. Imitability:
A sizable portion of UK consumers
find Asda's value promise appealing, which fosters brand loyalty. A strong
supply chain makes a longstanding relationship with its customers. They are
capable of developing their products because they have a vast of customer preference
information. Organization: Organizational structure processes are
designed for smooth operation and resource optimization focuses on operational
efficiency. They can minimize cost easily because their products are own
branded. To promote its value proposition and reach its target audience, it
also employs marketing methods efficiently.
PESTLE analysis
Figure 3: PESTLE analysis
Source: (Mukherjee, 2023)
Political force: A
stable political environment and govt regulations allow to focus on long-term
planning and investment. Economic force: Rising inflation can increase
the cost of goods and decrease the profit margin. Social: Consumer
awareness and focus on health care influence Asda’s product development and
organic options. Technological: E-commerce, automation, and data
analytics can potentially improve supply chain efficiency and reduce costs. Legal:
Competition law and environmental regulation help to avoid unfair
practices. Food safety regulations must be maintained for standard quality and
safety. Environmental: Extreme weather can disrupt operations, impact
the availability of raw materials, and have to consider environmental issues.
Porter’s analysis
Figure 4: Porter's Analysis
Source: (PlaniumPro Team, 2021)
Threat of new entrants: Large capital, existing well-established competitors and govt regulations are a barrier for new entrants. Bargaining power of suppliers: Asda’s large size gives the purchasing power and switch to other suppliers. Bargaining power of buyers: The presence of the same competitor's discount and low switching costs gives significant choice and bargaining power. Threat of substitutes: Convenience stores and farmers markets can attract customers and then impact Asda’s certain purchases. Competitive rivalry: Fiercely competing for market share, price wars and product differentiation put pressure on profit margins.
Conclusion
Asda’s strong brand, efficient supply chain and value proposition make it different from others. Intense competition, rising costs and customer presence are managed properly to compete in the market. For the growth of the online market, they have to analyze properly to find out targeted customers and provide quality products. Asda is capable of navigating the changing UK food industry and maintaining its position.