PESTEL Analysis Political, Economical, Social, Technological, Environmental and Legal Factors

Organizational Introduction

ASDA is a bid super store chain in United Kingdom and offering both tangible and intangible products to the potential customer since many decades and with the passage of time ASDA is also updating its business operation with regards to all thing which includes range of products, range of services, range of quality of services and products and playing its role being social responsible for the progress of United Kingdom and for the betterment of public.

Current Business Position

Mostly PESTLE analysis is used by the researchers to analyse the current situation of any business anywhere.

Political Factor

According to Acemoglu and Jackson, (2011) that the customers are paying a lot of money to the government in terms and in shape of value added tax and increment in the employee’s wages. Being the social responsible the ASDA tried it’s best to offer products at reasonable prices to the potential customers, whereas political factor has put a negative impact of organization on the superstores industry in United Kingdom.

Economical Factor

According to the Benfield, (2008) that increment in wages of labour, electricity, fuel, tax rate, profit margins these all factors play role in economic situation and per capita income also represent the nation’s lives status. In this era customer are really worried about their income levels and about high prices and current economical situation is not so good and there are bad impacts on the ASDA customers and business is so slow.

Social Factors

Obviously due to high prices more tax rates people are not happy and they are price conscious rather than quality conscious and they are willing to buy low price products and services.

Technological factors                                                                                        

According to Byars, (2005) that latest technology play its effective role in cost minimization and organizations can get advantages of latest technology and can also take advantages over the competitors. ASDA has adopted latest technology and offering low cost to the customers. Due to advance and latest technology the ASDA has advantage of low cost in all areas of business activities.

Environmental Factors

According to the Capron and Glazer, (2003) that due to weather conditions sometimes the imports are delayed and it has bad impression on the customers and organizations suffered from this delay. In United Kingdom tourists visited the country they buy food, clothes and all other stuff online as well as physically visits to ASDA and increase the revenue.

Business Planning and Strategy


ASDA has the following main objectives which are discussed below and relevant strategy to achieve them is also discussed. ASDA has an objective to capture more new clients and retain the old and will capture market share this year about 88%.

ActionInitiativeResourcesDate of completion
Identify clients requirementsAdvantages for the clients must be declaredEmployees  November 2013
As per client’s requirements developments in the quality and services and designing products as per client’s requirementsConduct surveyEmployees  November 2013
Expansion, review Product, price, placement and promotional activities as wellNew ideas to offer and deliver message and making new commitmentsEmployeesNovember 2013
Focus on high quality products and services, and low pricePromotions as per high quality and low pricesEmployeesNovember 2013
More quality and value added features, benefits and advantagesPromotional campaign, limited offers, reviewsEmployeesNovember 2013

Source: Author


Marketing ASDA services and products to the targeted customers

ActionInitiativeResourcesDate of completion
Conduct the survey to make it sure that the product’s features and services are designed as per customer’s requirements.Select the effective media channel to start the marketing and make it sure that the message is clear and there is no ambiguity in the messageEmployeesNovember 2013.
Communicate with all other departments for coordination and make it sure that all other departmental work will remain smooth.To make it sure about the current business situation the conduct the analysis to know about the organizational strengths, opportunities, weaknesses and threats.  Employees  November 2013  

Source: Author


Get customer’s feedback and increase the quality of products and services

ActionInitiativeResourcesDate of completion
Get feedback from customers and employees, involve the employees in decision makingOffers, promises must be made by the organizations  and commitments and offer features, advantages, benefits over the competitorsEmployee  November 2013  
All the features, advantages and benefits of the products and services as compared to the competitorsIdentify the customer’s expectations and manufacture the products as per customer’s needs and wants  Employee  November 2013  
Periodically update the clients about products and services informationStart campaign about the promotion by offering some offers to attract new customersEmployee timeNovember 2013  
Select the best one media channel according to the targeted customersSelect the alternative media channel listEmployee  November 2013    
Use different channels to communicate with customers  By using the media channel start promotions and the best media channels are emails, letters, text messages  Employee  November 2013  
Plan and implementAfter review the performance make alterations  Employee  November 2013  

Source: Author

Assess Opportunities

ActionInitiativeResourcesDate of completion
Assess the opportunities available for the organization to improve the business condition for achieving organizational objectivesResearch and development department will conduct a survey and will make it sure about the available resources to avail opportunities  Employees of concerned departmentNovember 2013

Source: Author

Improve Employee’s skills and Competencies

ActionInitiativeResourcesDate of completion
Construct and design the trainings objectives and time of training and associated cost  Start the procedure step by step and initiate the procedure after planning his or her personal development planStaff membersNovember 2013  
Set the leadership qualities and its objectives  Define the objectives Define the leadership scheduled time Evaluate the positions  Leadership TaskNovember 2013  
Scheduled the training objectives and define its goalsDefine the evaluating process steps   Gauge the performanceLeadership Task ForceNovember 2013  

Source: Author

Financial statement of ASDA

There are the following KPI’s of ASDA to know about the fiscal performance and about the progress and about the main objectives of the ASDA, these financial indicators are given below one by one.

Financial Indicator

Different financial indicators are called the financial indicators which are used to gauge the financial achievements of superstore from 2012 to 2013 (

2012/2013                   (4.0)

2011/2012                               (3.4)

2010/2011                                           (3.0)

These above mentioned figures showed that every year the financial growth is gradually start from 2010 to 2011 and the figure was 3.0 million pounds, whereas in 2011 to 2012 it was 3.4 it showed that there was an increase of 0.4 million and in 2012 to 2013 it reaches up to 4.0 means 0.6 million increment in one year (


As explained above that in coming 6 years ASDA has objective to capture 88% market share and it means that ASDA will achieve more 22% margin in next 6 years which is a huge amount and is challenge for the employees.


To achieve the above financial objectives ASDA management has designed the following action plans to achieve above stated objective

Resource allocation at right time to right person

Maximum resource utilization

The business strategies are designed and developed in such a way to attract about 88% of market share in coming six years

Customer Indicators

ASDA has belief in that the revenue can be generated and can be enhanced by only creating loyalty and satisfaction among the clients and this satisfaction and happiness is based on the features and quality of products and services to achieve its overall objectives.

Key Performance Indicators

Basically the main key performance indicator is the reference group which we call it recommended customers.

2012/2013                   (82)

2011/2012                               (76)

2010/2011                                           (66)


To increase the customer’s recommendations the super store has decided to improve the quality of products and services.


Create happiness and satisfaction among the clients and increase the level of loyalty

To achieve organizational objectives the super store has decided to improve the quality of services and also measure the employee’s skills and performance and improve the skills and abilities by giving.

Business Indicators

Here main objective of the superstore is to create loyalty and satisfaction among the client to enhance the revenue of the superstore.

Key Performance Indicators

There is a gradual increment in this sector starting from 2010 up to 2011 it was 54 and then from 2011 till 2012 it was calculated as 65 means that there was an increment of 09 million great British pound and from 2012 to 2013 it was recorded as 79 means 14 million increment (

2012/2013                   (79)

2011/2012                               (65)

2010/2011                                           (54)


ASDA has planned to get 70% as new target


To achieve above mentioned target ASDA management team has decided to take following steps to achieve above mentioned goals.

To get proper recorded feedback from customers and make contact with them and handle their problems and provide them solution as soon as possible, the ASDA has decided to install proper latest procedures and technology to minimize the cost.

Financial Ratios

Following are the financial ratios for ASDA Super Store

ASDA in United Kingdom
Liquidity Ratios
1.Current Ratio = Current assets /Current liabilities26740 / 37400 =0.70 times23460 / 41420 =0.56 times
2.Quick (Acid Test) Ratio = Current assets – stock/Current liabilities26740 – 980 / 37400 =0.68 times23460 – 1270/ 41420 =0.55 times
3.Operating Cash Flow To Maturing Obligation = Cash Generated from Operations/Current Liabilities3310 / 37400 =0.088  times1330 / 41420 =0.032 times
Gearing Ratios
1Gearing Ratio = Long-term (non-current) Liabilities/Share capital + Reserves + Long-term Liabilities(79730 / 2880 + 6920 + 79730)*1000 =88 %  (81420 / 2880 + 4300 + 81420)* 1000 =90%
2Interest Cover ratio= Profit before interest & tax/Interest Payable-5310 / 1360 = -3.88  times-4010 / 1770 =  -2.29 times
Profitability Ratios
1Net profit margin = Net Profit before interest & after tax/Sales(-4250 / 79940)*100 = – 5.31%(-3580 / 89920)* 100 = – 3.98%
2Return on shareholders’ funds = Net Profit after tax /Ordinary Share Capital + Reserves(-4250 / 2880 + 6920)*100 = – 43%(-3580 / 2880 + 4300)*100 = – 49%
3Return on capital employed = Net Profit before interest and tax/Share Capital + Reserves + Long-term Liabilities(-5310 / 2880 + 6920 + 79730)*100 = -5.3%  (-4010 / 2880 + 4300 + 81420)* 100 = -4.52%
Efficiency Ratios
1Asset utilization ratio = Sales/Capital Employed Capital Employed = Current Asset+ Fixed Asset- Current Liabilities79940 / (26740 + 79730 – 37400) =1.157 times89920 /(23460 + 81420 – 41420) = 1.42 times
2  Average settlement period for debtors = Trade Debtors/Credit Sales x 365No Information about Credit Sales provided so Assume sales on CashNo Information about Credit Sales provided so Assume sales on Cash
3Average settlement period for creditors = Trade Creditors/Credit Purchases x 365 Credit Purchases = Cost of sales+ Closing Stock-Opening Stock(6230 / (2900 + 980 – 1270))*365 =  871days(6660 / (3690 + 1270 – 11200 ) )* 365 = 633days
Working Capital Management
1Working Capital = Current Assets – Current Liabilities26740 – 37400 = -106623460 – 41420 = – 1796
2Working  Capital Turnover = Sales / Working Capital79940 / -10660 = -7.4989920 / -17960 = – 5.0066
  3Inventory Turnover = Cost of Goods Sold / Inventory2900 / 980 = 2.963690 / 1270 = 2.91
  4Days Inventory = 365 Days / Inventory Turnover365 / 2.96 = 123.3 Days365 / 2.91 = 125.43 Days
Solvency Ratios
1Current Liabilities to Net Worth Ratio = Current Liabilities / Net Worth Net worth = (Total Asset – Total Liabilities)(37400 / (106770- 85640))*100 =  177%(41420 / (104880-86420))*100 = 224.37%
  2Current Liabilities to Inventory Ratio = Current Liabilities / Inventory(37400 / 980)*100 = 3816%(41420 / 1270)*100 =3261 %
  3Total Liabilities to Net Worth Ratio = Total Liabilities / Net Worth(85640 / (106770-85640))*100 = 405%(86420 / (104880-86420))*100 =468 %
  4Fixed Assets to Net Worth Ratio = Fixed Assets / Net Worth(79730 / (106770-85640))*100 =377 %(81420 / (104880-86420))*100 = 441%

Source: (

References and Bibliography

a.        Books and Journals

Acemoglu, D. and Jackson, M.O. (2011) History, Expectations, and Leadership in the Evolution of Cooperation 2nd ed, Oxford: McGraw Hill publishers

Benfield, E. (2008) The Moral Basis of a Backward Society 3rd ed, London: Free Press

Byars, L. (2005) Strategic Management, Formulation and Implementation, Concepts and Cases 2nd ed, New York: HarperCollins.

Capron, N. and Glazer, R. (2003) Marketing and technology: a strategic coalignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21.

Cooper, L. (2004) Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15.

Jan, Y. (2002) A three-step matrix method for strategic marketing management, Marketing Intelligence and Planning, Vol. 20 Issue 5, pp.269-272.

Johnson, G. and Scholes, K. (2003) Exploring Corporate Strategy 3rd ed, Hemel Hempstead: Prentice-Hall

b.        Websites [Accessed on 3rd February 2013] [Accessed on 3rd February 2013] [Accessed on 3rd February 2013] [Accessed on 3rd February 2013]

c.         Bibliography

Kotler, J. and Schlesinger, L. (2001) Choosing strategies for change, Harvard Business Review, 3(12), pp.24-29

Kotler, P. (2008) Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.

Locke, R.M. (2002) Building Trust in A Flora 5th ed, Manchester: Pearson publisher

Putnam, R.D. (2003) Making Democracy Work 3rd ed, Princeton: Princeton University Press

Robinson, S., Hichens, R. and Wade, D. (1988) The directional policy matrix-tool for strategic planning, Long Range Planning Journal, Vol. 11, pp.8-15.

Thompson, J. (2002) Strategic Management, 4th Edition, London: Thomson Press

Published by MALI

Writer is post-graduated in Computer science, Business Administration, Marketing and Innovation. He has 10 years of business academic research writing experience.

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