This assessment will cover the following questions:
- Analyze the impact of government on the structure and operation of a business organization.
- Identify the impact of changes in the business environment on the business organization and activity.
Global Business Environment covers all the aspects, elements, and factors that are surrounding an organization and are directly or partially impacting and influencing the decisions of the company (Wetherly, 2014). Based on CW1, this report is related to Asda, which is one of the most recognized retail organizations in the UK. The assignment would address the interpretation of information relevant to the analysis of the firm’s business environment, along with an assessment of the impact of government on the structure and operations of Asda. Moreover, the assignment also covers understanding of the impact of changes in the business environment on the firm and its activities. This is would be done through a SWOT analysis, as well as the impact of key drivers of previous PESTLE analysis impact areas such as Marketing and R&D.
SWOT Analysis is an appropriate tool to determine the internal strengths and weaknesses of an organization, along with its external opportunities and threats. It is a highly necessary framework that allows the firm in judging its core competencies.
Hence, with respect to Asda, the SWOT analysis is performed below:
- Product Diversification: One of the main strengths of Asda is associated with its product diversification. As it could be interpreted through a PESTLE analysis, the firm is currently focusing on expanding its product portfolio by including organic goods that are currently in demand.
- High-End Technological Usage: The company is using digital scanners, EFTS, and EPOS, which allows the firm to stock and syndicate the goods in an effective manner, hence, decreasing the cost of inventory which automatically enhances revenue (Adekola and Sergi, 2016).
- Sales Decline: The firm is currently facing the issue of a reduction in sales. The reason for this is that the organization has decreased flexibility which is causing disadvantage to the firm to cope up with the ambiguity related to Brexit.
- Weak Positioning: The company has a very weak positioning of its product as compared to its competitors like Sainsbury’s and Waitrose, which provide better quality, as well as affordable pricing to the customers (Savrul, Incekara and Sener, 2014).
- Technological Advancements: This opportunity is associated with the advancements in the technological front within the country. UK is one of the most prominent nations where access of technology is quite evident. Moreover, as per the interpretation from PESTLE analysis, the firm is already working towards using latest technology in its stocking and syndicating functions. Hence, opportunities related to this include using technologies like Artificial Intelligence and Automation technologies, within stores, which would allow the company to provide more effective services to the customers.
- Rising Environmental Concerns: Another opportunity for Asda is that there is an ongoing environmental concern at global level regarding the climate change issue which is affecting the natural landscapes, as well as health of individuals at a global level. Therefore, the company has this opportunity to mould its practices and products to support the environmental practices within the country, which would help the firm in gaining government’s support, as well as acquisition of customers within the organisation.
- Brexit: One major threat that Asda is currently facing is related to the uncertainty surrounding Brexit. This is because the regulations, policies and government rules are changing rapidly and there is a high uncertainty within the political environment. It is a threat to the firm to set up its long term strategies due to political instability.
- Unemployment: Another threat for Asda according to the PESTLE environment analysis is regarding the high unemployment standards within the UK, which is reducing its sales level quite drastically (Kasemsap, 2014).
EXAMINATION OF IMPACT OF EXTENRAL ENVIRONMENT DRIVERS
All the key drivers mentioned in CW1 have a certain level of impact on all of Asda’s functional areas. However, there are two prominent areas upon which these factors would have major influences on. Thus, the impact on key drivers on these departments is elaborated below:
The business environment surrounding Asda is drastically changing and according to the key drivers, the firm is diversifying its product portfolio which has a major influence upon the marketing unit of the company. The reason for this is because in order to sustain the competition from companies like Waitrose and Sainsbury’s, Asda is required to cope with the changing business environment and must mould its marketing methods to ensure competitive advantage within the marketplace. For this purpose, the company could use digital and social media marketing as its effective tools to communicate its organic offerings to the people. Moreover, Search Engine Optimisation (SEO) must also be utilised by the organisation so that its popularity amongst masses enhance appropriately and ensure effective acquisition and retention of customers within the firm. In addition, this functional area would also be influenced by economical factor, as strengthening marketing environment would allow Asda to generate appropriate and effective jobs within the organisation to contribute towards solving the situation (Tallman, Luo and Buckley, 2018).
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Research & Development
Another functional department where the impact of these drivers could be showcased upon is the R&D unit of the company. Factors such as social, technological and environmental are influencing the firm to include better technologies to satisfy the criteria in an effective way. For instance, as per the trend, Asda is planning to add organic products to its portfolio, for which food manufacturing technologies are required to ensure better production of offerings. Moreover, technological and environmental changes are influencing the company to adopt technologies that could suit the organisational functions, as well as allow the organisation to appropriately reduce the generation of CO2 emissions from their factories.
Thus, it is concluded from the report above that it is necessary to analyse business environment of an organisation to determine internal and external factors impacting upon the practices of the company. It is important to interpret information from the external environment in order to determine their impact upon the organisation and its internal departments. Lastly, SWOT analysis is an effective method in order to determine the competencies of the company, along with determination of various strengths and weaknesses that the firm might face from the external environment.Related Sample: Impact of Macro Environment on Business Performance
- Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural perspective. Routledge.
- Kasemsap, K., 2014. The role of social networking in global business environments. In Impact of emerging digital technologies on leadership in global business (pp. 183-201). IGI Global.
- Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a globalizing business environment. Procedia-Social and Behavioral Sciences. 150. pp.35-45.
- Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global Strategy Journal. 8(4). pp.517-535.
- Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford University Press.