PESTEL analysis of ASDA

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What is PESTEL analysis?

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.

PESTEL analysis of ASDA

The following is a PESTEL analysis of ASDA in the context of the UK:

Political environment

National, international and EU regulations and directives affecting 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.

Economic environment

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.

Social environment

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

Technological environment

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 environment

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 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 environment

ASDA must abide by the rules and regulation of the countries in which it operates, as any breach may result in punitive actions by relevant authorities. For example, ASDA cannot pay any employee less than the minimum wage in the UK. Likewise, the company cannot dismiss an employee unfairly. Should it happen, the employee concerned can take ASDA to an employment tribunal.

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 (RetailWeek, 2013).

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 (like as 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 ASDA 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:

PESTEL analysis of the UK

PESTEL analysis of the USA

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Last update: 04 June 2018

Further reading/references

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

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].

Photo credit: https://ohitsmerivera.wordpress.com/tag/pestle/

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).