Contemporary Business Environment of ASDA

Abstract – Contemporary Business Environment of ASDA

ASDA is one of the largest organizations worldwide in case of number of employees, revenues, and organization’s structure. Organizational behavior is that it is related to the behavior and attitude of the employees, employers in the organization as individual or as a group.  Economic environment, Natural environment, Demographic Environmental and cultural environment have huge impact in organization behavior to all the parties in business internally or externally regarding the fact of Contemporary Business Environment of ASDA.  Organizational environment is the forces or factors surrounding an organization and these factors influence the resources, performance, competency, manpower, and procedure. It also composes of the factors existing outside the organization and likely to affect it such as consumers, competitors, rules and regulations, suppliers and government. The management of an organization must understand the environment inside out of the organization to successfully run it. To have better understand the factors affect Walmart are divided into internal and external factors defined by SWOT analysis. Similarly, PESTEL analysis defines the impact of organization behavior of ASDA externally as a whole.

 

1.0 Introduction

This report will focus on the environmental impact on the organizational behavior within the environment of economic environment, natural environment, demographic environment, cultural environment regarding the fact of Contemporary Business Environment of ASDA. Organizational environment is the forces or factors surrounding an organization and these factors influence the resources, performance, competency, manpower, and procedure (Harper, 2012). I have chosen ASDA to enlighten the stated environments and how they shape the behavior of ASDA and it will be discussed by focusing on the ASDA organizational behavior also that is effecting the business at which aspects. In addition, it will focus on the SWOT analysis with PESTEL analysis where it will apply the analysis on ASDA also.

The definition of organizational behavior is that it is related to the behavior and attitude of the employees, employers in the organization as individual or as a group (Hersey, Blanchard and Johnson, 2017).  The four fundamental aspect of organizational behavior as that people, Technology, Structure and Environment. Here, people are the soul of the company, structure is the body of the company, and technology is the tools for servicing or operating efficiently and environment is the whole scenario of the organization in which they work and it has huge influence in business operation to achieve the collective goals, mission and vision set by the management (Hersey, Blanchard and Johnson, 2017). There are business, cultural and natural environment which affect an organization at most.

1.1 Company Background

ASDA is one of the largest retailers that has strong financial resources to serve its customers. It is one of the largest organizations worldwide in case of number of employees, revenues, and organization’s structure. It has strong established image value as well as satisfying corporate culture that helps ensure to deliver the products and services to its customers and sustain in the market. The Wal-Mart family has brought the ASDA.  ASDA is founded in 1949 with the Associated Dairies & Farm Stores and the business expansion of ASDA recognized it as a largest retailers in UK. The ability of creating a basic business infrastructure for ASDA is their success path. ASDA is taking the place of 2^nd largest super market in UK in which they capture 15.4% market share from 2018 to 2019. The sales turnover in 2019 of ASDA is increased up to 3.1% from 2018 to 2019. Major competitors of ASDA are Sainsbury, TESCO, ALDI, Waitrose & Partners, Dixons Carphone etc. The current situation with employees is that ASDA has strong human resource department to recruit its employees and provide them attractive incentives, salary etc. ASDA has human resource management and it supports human resources to please business expectation, demands. They also figure out the aspect how employees can have contribution in the ASDA in larger scale and how they conduct their job with utmost satisfaction. ASDA also takes consideration the employees’ needs and compensate accordingly. It has effective human resource management. The impact of Brexit for ASDA is that the uncertainty of Brexit affecting the customer and therefore the uncertainty of sales falls created whereas sales fells 0.3% for ASDA (SARICA, 2014).

2.0 Literature Review

2.1 ECONOMIC Environments AND ITS IMPACT ON ORGANISATIONAL BEHAVIOUR

2.1.1 ECONOMIC POLICIES

Regarding the fact of Contemporary Business Environment of ASDA, Economic policies whereas monetary policy controls the money supply in the market and fiscal policy adjusts the government spending with the government revenue from tax and vat collection from people or business (Kempner, 2006).

Consumer laws:  Every country has some consumer laws to protect buyers’ products and services. It includes rules, regulations that are created to maintain an equitable balance and prevent vendors from adopting unfair means. The law basically save the consumer interest as they could not be harmed by using the product of company, if they are harmed then they can sue against the company as their legal right (Baron, 2013).

Monitor Prices and Tariffs, duties on imports and export: A tariff and duty is kind of tax that is charged by government on value of freight, insurance of imported products. Imposing tax or duty on products increases the cost of products price and thus reduce competitiveness in the market (Baron, 2013).

EU Laws

As Brexit starts to take effect, the aspect of EU law needs to know as it covers everything related to the European Union and the legislative power it holds over members and it plays important role on international scale.

• ECONOMIC SYSTEMS

Regarding the fact of Contemporary Business Environment of ASDA, Economic system consists of traditional economic system, command economic system, free economic system and mixed economic system.

Traditional economic system: It is very old and ancient system where the factor of surplus is rare (Doyle, 2005).

Command economic system: It has central power by Government for developing a healthy economy with proper planning to redistribution of resources (Doyle, 2005).

Free economic system: It has no government intervention and firms are free to produce goods or buy raw materials for production (Doyle, 2005).

Mixed economic system: It is the mixture of command economic system and free economic system where it must have government in some specific and core cases and there have no government intervention for resource allocation to some extent.

All these systems have the impact on the following issues:

Inflation rate: in business has huge impact in response to buying raw materials from suppliers at high rate and then it effects on product pricing (Kempner, 2006).

Taxes: The amount is deducted from the income or profit to have public services is called tax. Tax can be corporate tax, wealth tax, income tax etc.

Interest rates: Interest rate is an amount to be paid against some principal amount in due date for taking loan (Kempner, 2006).

Taxation: It is deducted from a person’s income or company’s profit to provide public services. A part of income or profit is given to government. There are two types of tax such as direct tax and indirect tax. Direct tax is known as income tax, wealth tax and corporate tax. On the other hand, indirect tax refers to sales tax, Value added tax (VAT), service tax, toll etc. Over charging of Tax increase the cost whereas company cannot afford it sometime (Baron, 2013).

Trade restrictions:  It is man-made control over the goods or services traded between two or more countries. Barrier to trade often is known as protection of the business or goods or products. Its purpose is to protect a particular industry or segment of an economy. The impact of it in business is that business cannot trade unfair goods that would be harmful for human (Baron, 2013).

• ECONOMIC CONDITIONS

Regarding the fact of Contemporary Business Environment of ASDA, there have huge implication of economic condition –

Brexit regulations:  Britain is on the process of exiting from European Union (Holgersen, 2014).  To have smooth exit, running further operations, competing in the business, utilizing benefits, avoiding obstacles in future etc. Britain made and is adopting some regulations to maintain proper balance to perform business operations at home and worldwide (Baron, 2013).

Manufacturing goods or commodities: Commodities are raw material, food, metals and mining goods like gold, coal metal etc.  It is a tangible product that is exchangeable or can be bought or sold for some value or products. It is a basic goods that is put in commerce. Policies regarding commodities have impact on organizational behavior whether it defines the firm must have to produce safe product to serve the customer (Baron, 2013).

International trade: International trade is the distribution of goods and services between countries. It allows a company to expand their business operation outside the countries. It leads to greater competition and is able to offer competitive prices thus gets cheaper products to the customers. The impact of it in business to increase sales over the world and expand market globally (Baron, 2013).

Employment: Employment is agreement between employee and employer where employee is paid for the work he is hired for. Employees work for payment and also they enjoy bonus, incentive, provident funds etc (Kempner, 2006).

Virus and Diseases: Now this moment, economic condition is not in favor due to Corona virus spread all over the world, especially in China and Italy. But, now days, UK is also found some victim of Corona virus. Therefore, it is resulted that the global economic condition is slowing down as international business as well as international trade is not going well.

Tourism and Travel: The success in tourism and travel depends on how the organization behaves but the economic condition in recent time is not going well for tourism and travel, as there have been put so many restriction in travelling from one country to another just because of Corona Virus.

ASDA in the light of Economic Environment

• ASDA offers various kinds of products with the exchange of price, which is known as commodities in economy. It offers fish, meat, rice, flour, metal products etc. They try to offer their products or goods; services in a cheaper rate maintain quality as Britain has strict consumer laws who do not permit suppliers to adopt unfair means.
• Britain is on the process of getting out of European Union and so it is adopting regulations, rules in favor of performing business operations with Brexit Issues. Therefore, the sales of ASDA decreased 0.3% in last year.
• Furthermore, ASDA is operating in more than 560 stores across UK countries where various goods, services are provided. so tariffs, duty is imposed on products and goods in terms of international trade.
• They also provide corporate tax to enjoy their rights, performing their public services.
• They are trading across the world and providing the goods at a possibly low price.

NON-ECONOMIC ENVIRONMENT AND HOW IT SHAPES ORGANISATIONAL BEHAVIOUR

• DEMOGRAPHICS Environment

Demographic:  Regarding the fact of Contemporary Business Environment of ASDA, It includes customers’ age, occupation, status, incomes, education etc. To run business operation business researches the components of demographic environment and offer products accordingly.

ASDA in light of Demographics Environment

• ASDA got vast responses from young to adult customer, females customers are intended to buy from ASDA.
• The employees of ASDA are well trained to deal with various age level customer and they are successfully doing it to increase sales.

2.2.2 NATURAL ENVIRONMENT

Regarding the fact of Contemporary Business Environment of ASDA, Raw materials mainly come from nature. Moreover, natural disaster such as drought, flood etc. affect a business at large. The organizational behavior could be shaped with the changes of natural environment (Camillus, 2011). The following are the factors under natural environment that effect on organizational behavior:

• NATURAL RESOURCES

Regarding the fact of Contemporary Business Environment of ASDA, Resources like Water, fuel or Gas very important to run or operate a business. Weather calamity is also a vital factor to consider while running business. In that case, business must have to think about the natural resources to be prepared to take necessary with all these resources without any breakdown of activities (Lee, 2014).

• GEOGRAPHICAL FACTORS

Factors prices, customer types, population, culture, customer and employees interaction all these things under geographic factor effect a business activity (Lee, 2014).

For Example: Prices should be set in competitive way as people can buy it as well as company can sustain.

• TOPOGRAPHIC FACTORS

Factors like sunlight, rain direction, wind speed all these things under Topographic factors affect the business (Lee, 2014).

ASDA being enlighten under Natural Environment

• ASDA sells products according to the response of nature. For example, when the weather is severe hot in UK or any other they focuses on selling air cooler, air conditioner while there is cold they move to home heater, geyser etc.
• In addition, In ASDA, tuna, hard drinks are available at large and but it is quite unfound in some country due to unavailability of natural resources and restriction.
• Sometimes, ASDA suffers and affected largely due to natural calamities. For instances, wild fires, flood happen and people visit less or buy no products or shops get damaged by the calamities.

• Organizational Culture

Regarding the fact of Contemporary Business Environment of ASDA, Cultural environment consists of institutions and other forces affecting the belief, norms, basic values, perceptions, behaviour and preference set by a society. The forces of cultural environment are attitude, beliefs, language, customs, rituals, behaviour, faith/ religion, food, art/drama/music etc. They described below:

1. Attitudes and Behaviour: It includes how the society or customers or employees response to the foreign goods or services or offered products and services. It is connected to economic activities. Behaviour is how a person behaves towards something and someone. Behaviour is learnt from family first then from various institutions. Attitude is always predominant of human behaviour so it should be researched with special care (Canaday, 2018).
2. Beliefs, Values and Religion: Belief and values are connected with religion. It shapes human behaviour, views and perceptions (Canaday, 2018).
3. Language: Language includes particular group of people who shares same feelings, solidarity, values and one can understand in which culture or society he belongs to while communicating. It is used as a medium of interacting values, customs, belief etc (Canaday, 2018).
4. Customs, Rituals: Every society has specific customs, rituals. It varies from society to society and country to country. It is the law of social life that maintains a social harmony that ignoring them may be considered manner less or upsetting the customers (Canaday, 2018).
5. Food: It is another important component of cultural environment. It is generally determined based on religion, attitudes, beliefs, values and customs (Canaday, 2018).
6. Art/Music/Drama: These three forces are found in every society according to their taste, choices. It also determines the society’s views, perspective. It also indicates social norms, actions, policies, standard etc (Canaday, 2018).

ASDA in light of Cultural Environment:

• ASDA is serving in excess of 100 million per week (Bellot, 2011).
• It is being operated in India, china, Africa, Canada, Argentina, Central America, Chile, Japan, Mexico, UK etc.
• It serves products and services to the customers according to their demands, needs, consuming pattern and buying pattern (Bellot, 2011).

3.0 Discussion and Analysis

3.1 SWOT Analysis

SWOT

To have better understand the factors affect ASDA are divided into internal and external factors. Internal factors compose of entities, event and forces in an organization that put impact on choices and actions (Garipova, 2019).

Strength:

• ASDA’s strength is its strong corporate image in providing quality of products and services.
• They contribute in research and various development tasks to create maintain the created image and intensify the standard of ASDA in the market.
• It is able to sell their offerings at cheapest price with bulk amount (SARICA, 2014).
• They have the largest onsite green power generator and thus playing an environmental sustainability.
• They maintain the largest website that are visited by up to 100 million visitors per month according to comScore.
• It has High efficiency of supply chain and global supply chain (Garipova, 2019).

Weakness:

• Though they are market giant in case of e-commerce business still they have lack of training and skills in developing good market sales.
• Another weakness is that it has lack of innovation in product diversification (SARICA, 2014).
• Lastly though they have competitive advantage over price but has disadvantage against high-end specialty vendors, as there are customers who are less sensitive to price in terms of high-end quality products and working environment somehow is not friendly (Garipova, 2019).

Opportunity:

• They are consistently emerging new market. They are innovating and developing new websites, apps like Online Grocery Pickup, Next day shipping to save time and money of customers and they also openedcom and growing the portfolio of e-commerce sites.
• Moreover they are expanding in developing countries, developing human resources practices to have competitive advantage in the labor market and also developing the quality of standard (Garipova, 2019).

Threats:

• Competitors are considered main threat. It has many competitors around the world such as Sainsbury, TESCO, ALDI, Waitrose & Partners, Dixons Carphone etc,
• Secondly, inconsistency results from suppliers may turn the business down to tackle the competition.
• Thirdly, diseases like Coronavirus may poses threat as well (SARICA, 2014).
• Fourthly, Economy crisis, Inflation and Brexit is considered vulnerable for it.
• Poor management of time and communication creates inefficient teamwork and it becomes a threat when the teamwork is not doing well (Garipova, 2019).

PESTEL and SWOT example and analysis

PESTEL:

1. Social: It includes population, growth rate, age, distribution etc. To run business operation ASDA must research the components of social environment and offer products accordingly (Kampanje, 2012).
2. Economic: Economic environment consists of inflation rate, economies policies, trade cycle, corporate profits, employment, economic conditions (demand and supply), consumer income, gross national products etc (Grier, 2014).

For example: if inflation increases, ASDA will face problem in product pricing.

3. Technological: Recently technology has drastically changed the business environment in terms of production, design, packaging and quality of goods. ASDA is bringing new machinery, equipment that help produce larger amount of products within shortest period of time at minimum cost. ASDA is able to use attractive design and package for products with the help of technology.
4. Political: It involves legislature, executives, and judiciary. Legislature involves in law making, executive involves government bureaucracy and implements the government’s decision and judiciary checks if the decision make and implemented are in accordance with the constitutional framework. It also affects the business very much (Kampanje, 2012).
5. Environmental: Raw materials mainly come from nature. Moreover, natural disaster such as drought, flood etc affect an business at large (Kampanje, 2012).
6. Legal: A country sets some rules, regulations and laws to run the operations effectively. A business must follow its rules, regulation and law to ensure smooth operation (Kampanje, 2012).

PESTEL analysis in case of ASDA

• ASDA is one of the largest and successful retailers in the world that satisfyingly is serving their customers. They provide their customers with right products and services through identifying the customers’ needs, expectation conducting consistent research (LIU and LI, 2017).
• ASDA also is providing the best products and services with minimum prices utilizing proper technology to have competitiveness and retain the customers and increasing their market growth across the world.
• ASDA is maintaining better relationship with their suppliers to buy qualitative raw materials and other supplies in the lowest price to offer the services at possibly low price. Even they need to keep rapport with many supplies to have reliable and consistent source of supply.
• ASDA has to abide by the government’s rules and regulations, provides taxes, and has share market value. However, it sometimes severely affected by the government’s turmoil, instability.
• There are agents who helps ASDA to have their raw materials and other supplies and distribute the final products to its consumers. There are media, advertising firm who also do their respective jobs on behalf of ASDA (Kampanje, 2012).
• ASDA provides various kinds of products and services according to people’s age, occupation, income etc (LIU and LI, 2017).
• ASDA is being able to provide products and services with the attractive package and design as well as using the updated technology to provide bulk amount of products with possibly minimum prices.
• ASDA has legal advisors to deal with the political and legal issues around the world. Also they run their business in accordance with the constitution and rules and regulations. Otherwise it is not possible to operate any kind of business without following constitution, rules and regulations.
• ASDA follows the laws of labour management, worker compensate, consumer protection, the company acts, factories acts, environment protection act etc. Natural calamities sometimes disturb their business operation around the world from time to time through drought, flood, wild fires and so on (LIU and LI, 2017).

4.0 Conclusion

Policies regarding commodities, Consumer law basically, Brexit regulations, Tariffs and duties on imports and export, Taxation, Trade restrictions, International trade had impact on organizational behavior regarding the fact of Contemporary Business Environment of ASDA. ASDA were equally affected on the changes of these policies. Various kinds of economic system had also impact on ASDA business to increase or decrease market share. Even though cultural environment were in control of ASDA and for natural environment they have different stages to handle it with emergency (SARICA, 2014).

References

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LIU, X. and LI, J. (2017). SWOT and PESTEL Analysis on the Coordinated Development of New Urbanization and Agricultural Modernization in Heilongjiang Reclamation Area. DEStech Transactions on Economics, Business and Management, (eced).

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Written by

Md. Shadequr Rahaman

Email: circlebiz96@gmail.com