PESTEL analysis of ASDA

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PESTEL analysis of Asda

This is a detailed PESTEL analysis of Asda. PESTEL analysis is a very important framework for strategic planning. It is used by strategic planners to analyse the macro-environmental factors that affect a business. PESTEL stands for Political, Economic, Social, Technological, Environment, and Legal. The article ‘PESTEL analysis and its application’ provides more information on how to apply PESTEL analysis in a given context.

Political factors that impact on Asda

National, and international regulations and directives concerning employment, legislation, consumer rights, taxes etc. impact on Asda like any other organisation. Likewise, war and instability also impact on organisations’ decision-making. Consequently, organisations monitor political environment constantly.

Asda benefits from a relatively stable political environment in the UK. However, Brexit has created a lot of uncertainty. Asda like any other organisations must think of future-proof supply chain in response to Brexit (Marshall, 2020). It is worth noting that the recent deal between the UK and the EU has been a source of hope for both parties and many organisations.

Economic factors that impact on Asda

Asda needs to consider economic factors such as pay level, cost of credit, competitive pressures, labour supply & demand, energy prices etc. These economic factors impact on the pricing strategies of the company significantly. Likewise, due to economic lockdown in 2020, many people lost their jobs and therefore, reduced their shopping activities.

Social factors that impact on Asda

Social changes e.g. ageing population, celebrity following, and healthy lifestyle are important for Asda. Understanding social factors helps it introduce new products/services in the market. It also helps the company develop its segmentation strategies.

The demand for organic, vegetarian, and vegan food is growing very fast. The demand for certain ethnic foods is also high in the UK and many other countries where Asda operates. It is worth noting that Asda sells a huge number of products that cater to a good number of ethnic groups (Asda, 2021).

Technological factors that impact on Asda

Technology is the next issue to discuss in the PESTEL analysis of Asda. As the use of technology is ever growing, superfast broadband and mobile apps along with click & collect delivery services are extremely important for Asda. All big supermarkets are constantly working on how best to make use of technology in their favour.

Environmental factors that impact on Asda

Green economy, pollution, carbon footprint, hazardous waste, organic foods are important for Asda. As people are now-a-days very aware of the impact organisations have on the environment, there is a significant amount of pressure on all companies to operate in an environmentally friendly manner. Therefore, Asda must demonstrate that it is an environmentally friendly company.

Legal factors that impact on Asda

Asda must abide by the rules and regulations of the countries in which it operates, as any breach may result in punitive actions by relevant authorities. For example, it cannot pay any employee less than the minimum wage in the UK. Likewise, it cannot dismiss an employee unfairly. Should it happen, the employee concerned can take it to an employment tribunal. It should be mentioned that Asda was fined £300,000 for food safety breaches at its north London home delivery depot (BBC, 2017).

Concluding statement

Asda, which operates as a retail supermarket, is now experiencing huge changes in the grocery sector. Some of the significant changes are pointed out below:

Smaller size operators like Lidl and Aldi have shaken the whole industry through their disruptive innovation.

ASDA is no more the cheapest supermarket although ‘always low prices’ is their unique selling point. In fact, Lidl and Aldi are well-known as discounters.

Online shopping markets (e.g. Ocado) are increasingly becoming popular to customers with busy schedules.

Due to a range of other changes in the external environment, Asda needs to develop new strategies to survive and retain its customers. It came into media recently that Asda is ready to trigger a supermarket ‘nuclear’ price war to end all price wars. Is the price war going to be enough for it to beat competition? Time would tell. Let us wait and see.

We hope this article on the PESTEL analysis of ASDA has been useful. You may also like reading PESTEL analysis of Subway  and SWOT analysis of ASDA. Other relevant articles for you are:

Stakeholders of Asda (An analysis of Asda’s stakeholders)

Marketing mix of Asda

PESTEL analysis of the UK

PESTEL analysis of the USA

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Last update: 10 January 2021

Further reading/references:

Asda (2021) World foods, available at: https://groceries.asda.com/aisle/food-cupboard/world-foods/asian/112058 (accessed 10 January 2021)

BBC (2017) Asda fined over dead mice and flies at Enfield depot, available at: https://www.bbc.co.uk/news/uk-england-london-39179652 (accessed 10 January 2021)

Johnson, G., Scholes, K. and Whittington, R. (2006) Exploring Corporate Strategy: Text and Cases, 7th Edition, UK: Prentice Hall

Marshall, J. (2020) Beyond Brexit – Time to act: Future proof your supply chain, available at: https://www.pwc.co.uk/the-eu-referendum/beyond-brexit-insights/trade-and-export-time-to-act-supply-chain.html (accessed 10 January 2021)

RetailWeek, 2013. Analysis: Is ASDAs five year strategy the right one? [Online] Available at:  http://www.retail-week.com/sectors/food/analysis-is-asdas-five-year-strategy-the-right-one/5054989.article [Accessed 21 July 2016].

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Author: Dr. Sewel Sodry

Dr. Sewel Sodry is an internationally acclaimed author and teacher of business management. He is also a specialist coach, trainer and educationalist. He holds a Master of Business degree from Victoria University, Australia and a PhD from King’s College (University of London).