ASDA has both internal stakeholders in the business and external stakeholders.
- Examples of internal stakeholders are managers and colleagues.
- Examples of external stakeholders are customers and shareholders.
Stakeholders may want different things as follows
Shareholders are the owners ASDA. They want ASDA to make profits and share prices to go up. Shareholders can influence the ASDA by the amount they invest in ASDA. Shareholders expect other stakeholders such as Suppliers and workers to be honest. Shareholders want a good return on their investment but they also believe in community involvement, as it makes good business sense.
Colleagues are motivated by being able to help the community. Employees Expect a good pay and safe working conditions from ASDA. They must feel by working to ASDA their jobs are secured and employees must be fairly treated if they will not be demotivated and go on strike. Strikes can affect ASDA’s image making big financial losses.
Suppliers are companies who supply products to ASDA. They can influence ASDA through the quality of goods Supplied. If they supply low quality goods to ASDA its image will be affected. Suppliers can also influence through the speed of delivery. Therefore ASDA must pay them on time and treat them fairly to keep the satisfied.
Customers are people who buy ASDA’s goods. The main thing is Customers want goods from ASDA at an affordable Prices, where and when they want them. Customers sometimes expect Advice from the ASDA before purchasing some goods and expect them to be treated politely and fairly. Customers can influence ASDA’s performance by the amount spend in ASDA outlet. Therefore ASDA must make sure that their customers are satisfied otherwise they will shift to the competitor.
- To provide a better service for customers : -
By providing a good customer service a firm is able to build up a good relationship with its customers to achieve this objective ASDA has appointed special team who constantly keep on monitoring whether customers are satisfied and how to improve its service.
(Above details according to ASDA. About ASDA Suppliers and ASDA. About ASDA)
02. Evaluate internal and external environmental factors on company growth.
P - Political factors
E - Economic factors
S - Social and cultural factors
T - Technological factors
L - Legal factors
E - Environment Factors
All these 4 factors are found in the environment of business. Changes in PESTLE factors can have an impact one every business If it may be a positive or negative.
Lan W, Chiris B (2006) defines, political factors are very important when a business is started. Every political factor, like terrorism, government policies on business, governmental leaderships affects the business. For an example if there were terrorism in the UK, ASDA management may not be able to continue ASDA normally and their nationwide supply will be damaged then finally management has to close ASDA or they have to increase price that will affect their customers.
Government mainly expects two things from a business. They are
1. Taxes to be paid on time.
2. Create more job opportunities.
Government can affect ASDA by increasing amount of taxes charged, if government charge high taxes ASDA's profit margin will fall. Government can also affect ASDA by the laws such as health and safety act.
Economic factors refer to change in interest rates, Exchange rates, Inflation, changes in the economic growth and changes in the tax rates. All these changes will have an effect on the business.
For example: - (according to Roger L, Roger T, (2007)
If the interest rates increase the cost of borrowing will increase and the ASDA may have to reduce on the borrowing or to buy all at lost. Then they have to increase price. When interest rates increase operating cost will increase and the ADSA may have to increase the fees of delivery and price of goods .This may affect ASDA's sales.
If taxation increases there will be a fall in profits. Dividends to ASDA shareholders will decrease and there will be fall in investment but if there is a reduction in taxation or duty free goods can be imported then ASDA can make higher profits.
· Inflation
If the rate of inflation increases there will be an increase in the cost on and ASDA will be compelled to increase the selling price. Their will become less competitive in the market, consequently volume of sales will fall therefore inflation affect sales.
From the above example, we can see that changes in economic factors may have favorable or adverse impact therefore it is necessary to constantly monitor changes in the economic factors.
According to Lan W, Chiris B (2006), social factors may have positive or negative impact on ASDAs’ demand. It depends on where the store or factory is situated. So ASDA has to consider the area and what type of people are living, their living standards and life style as well as their religion.
If ASDA wants to open up a new outlet in An Asian country like India, Pakistan it is not possible to sell all products which are being sold in UK market because Asian market is entirely different from UK market therefore ASDA must adopt local culture there
If an ASDA Wal-Mart Super Store is located in poor country, it will not profitable to ASDA so they have to open a small store like ASDA Essentials
- T Technological factors: -
Changes in technology may have an impact on the business. Technology has changed according to how services are provided to customers. To increase in internet has enabled People from other countries to Visit website and submit applications. This will help ASDA to attract more customers and skilled and talented employees. ASDA uses latest technology replacing paper communication thereby ASDA have been able to show better results of growth by using a better technology and ASDA can give an exhalent service using new technology like self service, fast till service for customers do not like to loiter at queues and on internet buyers can check availabilities of goods what they need. According to Roger L, Roger T (2007).
Roger L, Roger T, (2007) say ‘‘L refers to legal factors which affect the company base and Legal factors can affect company’s cash flow, image and its growth negatively or positively. This may impact employment, access to materials, quotas, resources, imports and exports, taxation etc as well’’.
For an example, if government pass an act to fine companies who don’t use recyclable packaging, the company has to invest more money on recyclables packaging that costs more money. A soft Drink company will need to review its strategy of using plastic bottles and look towards new package technology or the use of cans.
When a business is going to start according to PESTLE Analyze, environment factors should be considered like
- Culture within the organization.
- Culture in the community.
- Premises we have to use (buildings, layout and space).
- Impact on the environment
The aria where ASDA is going to open a new outlet is crowded and there has got a good demand on ASDA products, company must have to spend more money for buildings or it may be difficult to find a better place though that area is profitable.
By being environmental friendly ASDA can create good image among its customers. ASDA had achieved this objective by having recycling plants and recycling 20% waste. They also hope to increase it to 100% in 2010. To achieve this objective ASDA has appointed a special team to find out new ways of reducing waste. ASDA has also reduced its road miles to reduce carbon emissions. The Wal-Mart president Mr. Lee Scott in his speech also said that they are taking action on energy efficiency by making energy intensive products. According to Lan W, Chiris B (2006).
03. Illustrate the relationship between the market forces and organizational responses at least with 2 examples.
Demand
According to Lan W & Chiris B (2006), Demand can be defined as desire to buy goods and services accompanied by a purchasing power. Changes in demand are caused by changes in price it is called as extension or contraction but price is not the only factor that causes changes in demand. There are other factors like.
1. Changes in income level.
2. Changes in consumer’s taste.
3. Prices of other goods.
Increase in demand
In the above diagram demand has increased but price has not changed therefore changes in demand is caused by other factors. In this situation ASDA can respond to increase in demand by increase in prices.
Decrease in demand
In the above diagram demand has decreased but price has not changed therefore changes in demand is caused by other factors. In this situation ASDA can respond to decrease in demand by decrease in prices.
Supply
Supply can be defined as the quantity the firm is willing to supply the market at a price. Usually when supply is high supplier supply more and when price fall supplier will reduce the supply
Increase in supply Decrease in supply
- Discus the role of competition commission and regulatory bodies.
They are doing an important role of business as they are controlling the market. For an example, ASDA, Sainsbury’s and Tesco are leaders in UK retail market. So they can organize well and they can destroy all small retail shops and business by reducing prices of goods and make monopoly in market. After that, they can increase price and make profit.
Competition commission and regulatory bodies are working to protect the market from this type of thing and to protect consumers and small business.
04. A.
Discuss the importance international trade and global markets on your chosen organisation.
International Trade: -
International trade is the exchange of goods and services between countries. This type of trade gives a push to the world economy and For the sake of international trade; ASDA and all others have been able to expand markets for both goods and services. Otherwise we may not have been able to buy a huge range of products. As a result of international trade, the market contains greater competition and more competitive prices which bring a cheaper product to the consumer.
International Trade is very important not only to ASDA but also each and all companies in the UK. This is a one of reasons why ASDA has became one of leading super markets and the cheapest seller in the UK. For example, in Halloween festival there is a big demand for devil masks and et cetera. If Tesco, Sainsbury’s and others import them from Malaysia, ASDA can import them from China at cheaper as China’s labour and manufacturing is lower than Malaysia. In this case, ASDA can easily face current market competition.
04. B. Impact of two policies of EU on the business you have identified: -
What is EU: -
The EU was formed in 1958 with six founder members France, Germany, Netherlands, Belgium, Italy and Luxemburg, UK, Ireland and Denmark joined in 1973 and by 2005 the economic union expanded to a membership of 25 countries. There are several advantages for the UK by being a member of EU.
The most significant advantage was that the market for British goods and services expanded British goods services, Another advantage is that cheaper resources from other EU countries can reach the UK as there are no trade barriers
Common Agricultural Policy (CAP): -
CAP was introduced in 1962.CAP guaranteed minimum price for producers of its member countries by imposing high tariffs and quotas on products imported from outside the European Union. The main objectives of CAP is to
1. Increase productivity
2. To ensure continuous supply
3. To ensure fair standard of living for farmers
4. To provide agricultural products to market at an guaranteed minimum price
Since CAP is an EU policy it impacts in ASDA as well. Because of Cap, ASDA is sure about continuous supply of farming products at a guaranteed price. Therefore ASDA's management can plan their future very easily because they are sure about continuous supply at a guaranteed price.
The main principles of the CAP can be stated as follows,
A single market means that it must be possible to exchange agricultural products between the EU countries freely and without barriers.
Community preference according to this, agricultural products produced in the EU take priority from products imported into the EU from third countries and the EU's agricultural products must be protected from fluctuations on the world market and products imported at low prices from third countries.
Financial solidarity means that all expenses on the common agricultural policy must be financed via the EU budget.
So these types of policies are vital for ASDA. Why; ASDA now can import many agricultural products from Denmark less than other countries.
-
The Common Fisheries Policy (CFP)
The Common Fisheries Policy (CFP) is the fisheries policy of the European Union. It sets quotas for which member states are allowed to catch what amounts of each type of fish, as well as encouraging the fishing industry by various market interventions.
This policy allows fisher men to catch any amount of fish and any type of fish. So policy encourages fisher men and they are trying to catch more fish. So this is a rare chance to ASDA to sell fish at cheaper or they can import fish as no tax between E.U Countries.
References
Book References
Jhon Black, (2001) Dictionary of Econ 1sted. Oxford:Oxford Press.
Lan W & Chiris B (2006), business Environment 5th ed. London:Pearsone Education Ltd.
Mullins, J (2001) Business Economics 2nd ed. London:Pearson Education Ltd.
Roger L & Roger T, (2007) BTEC Business 2nd ed. London:Nelson Thones Ltd.
Web references
ASDA. About ASDA [On line] available from http://www.about-asda.co.uk accessed on 05.07.2008
ASDA. About ASDA Suppliers [On Line] available from
http://www.about-asda.com/sustainability/local-suppliers.aspside-asda/our-history.asp accessed on 05.07.2008
The Times 100 (2008) ASDA. Meeting stakeholder needs through community involvement. [online] available at
accessed time 11.38 on 18.07.08
