Swot Analysis of the External Environment of Asda Wal-Mart
Use the stakeholder model of business environments to critically examine the external environment of Asda Wal-Mart as outlined in the case study.
No business can operate in isolation. All businesses operate in the wider business environment, which is described as ‘the external context in which organisations find themselves undertaking their activities’ [ (Capon, 2000, p. 8) ]. This essay will use the stakeholder model to examine the external factors effecting Asda Wal-Mart. It is recognised that there are many internal stakeholders this essay will concentrate on the external stakeholders. A stakeholder diagram will firstly illustrate the relevant stakeholder which will then be mapped onto a stakeholder matrix showing their power and influence using the model described Capon [ (cited in OU, 2009, p. 33) ].
The case study shows the following stakeholders in the external environment.
High Power / High InterestCustomers | High Power / Low Interest | Low Power / High InterestCompetitorsSuppliers | Low Power / Low InterestCommunities |
High Power / High Interest
Customers are a powerful stakeholder group as indicated in the case study. Wal-Mart is the largest retail chain in the world, and the second biggest supermarket chain in the UK. The retail industry is heavily customer focused and as such Asda Wal-Mart should closely consider the needs of its customers. This is shown by the fall in market share in 2005 when competitors will have offered customers a better reason to shop with them rather than Asda.
Low Power / High Interest
Competitors while unable to exert much power over Wal-Mart have a high degree of interest in them. The case study indicates that Asda concentrates on building market share on the back of low prices, any competitor in the low price segment of the market would have a high degree of interest in Asda. The rise in sales growth in non-food lines of 25% also shows that other retailers, not just supermarkets should also
No business can operate in isolation. All businesses operate in the wider business environment, which is described as ‘the external context in which organisations find themselves undertaking their activities’ [ (Capon, 2000, p. 8) ]. This essay will use the stakeholder model to examine the external factors effecting Asda Wal-Mart. It is recognised that there are many internal stakeholders this essay will concentrate on the external stakeholders. A stakeholder diagram will firstly illustrate the relevant stakeholder which will then be mapped onto a stakeholder matrix showing their power and influence using the model described Capon [ (cited in OU, 2009, p. 33) ].
The case study shows the following stakeholders in the external environment.
High Power / High InterestCustomers | High Power / Low Interest | Low Power / High InterestCompetitorsSuppliers | Low Power / Low InterestCommunities |
High Power / High Interest
Customers are a powerful stakeholder group as indicated in the case study. Wal-Mart is the largest retail chain in the world, and the second biggest supermarket chain in the UK. The retail industry is heavily customer focused and as such Asda Wal-Mart should closely consider the needs of its customers. This is shown by the fall in market share in 2005 when competitors will have offered customers a better reason to shop with them rather than Asda.
Low Power / High Interest
Competitors while unable to exert much power over Wal-Mart have a high degree of interest in them. The case study indicates that Asda concentrates on building market share on the back of low prices, any competitor in the low price segment of the market would have a high degree of interest in Asda. The rise in sales growth in non-food lines of 25% also shows that other retailers, not just supermarkets should also
References: Open University (2009) Analysing Business Cases: Resource Book 1, The Open University, Milton Keynes Capon, Claire (2000) Understanding Organisational Context, Financial Times/ Prentice Hall.