Business Environment of Organization Analysis 2022

MANAGEMENT

MANAGEMENT 1
The procedure of evaluating, analyzing and summarizing the business environment of
the organization is known as strategic management. The procedure of strategic
management requires the tools or models from which the analyses of business
environment have been done by the organization. There are numerous strategic models
that an organization used to examine the internal or external factors and these are
resources based view, generic strategies, PESTLE Analysis, Value Chain Analysis,
Porter’s Five Forces Framework, SWOT Analysis and the others. These tools assist the
corporation to take the right decision or to develop the strategies for the growth as per
the environment (Ansoff, Kipley, Lewis, Helm-Stevens, and Ansoff, 2018). The paper is
based on the topic “strategic management models”. In this paper, the practical example
will also be discussed by implementing these tools on the organization. In this paper,
Aldi has been taken into consideration as an practical example for the analysis. Aldi is
the common brand of two families of German that is owned on discount supermarket
chains with the 10000 stores in 20 countries. It has been evaluated that the combined
turnover of the company is more than €50 billion. The firm was split into two separate
groups such as Aldi Nord, and Aldi Sud. The company is operating in the retail industry
and offers the products such as food, beverages, and household essential. It operates
in 11234 locations (Aldi, 2018a).
SWOT Analysis is a strategic framework that analyzes the internal and external
environment of the organization. This tool is used by the company to improve the
weaknesses and use the strength to grasp the opportunity. SWOT Analysis is used to
evaluate the specific areas to operate smoothly and efficiently. Strength, Weaknesses,
Opportunity and Threat are the four areas on which the SWOT Analysis is based
(Phadermrod, Crowder, and Wills, 2019). It is observed that the company operates the
business smoothly after evaluating these areas. This tool is implemented in Aldi to
evaluate the areas and those are discussed below:
Strength: Strength refers the ability or capability of the company that supports to gain
the advantage in the market. In the case of Aldi, high brand image is the major strength
of the company. Another point of strength of the company is its strong pricing value. It is

MANAGEMENT 2
observed that the organization provides the discount or offers the low prices as
compare to others in order to attract them.
Weaknesses: Weaknesses defines the areas of improvement. It is require for the
organization to evaluate the weaknesses areas for the improvement. Low margins, poor
penetration in high income groups, and poor employee satisfaction are the areas where
the organization needs to focus to improve (Aldi, 2018a).
Opportunity: Opportunity defines the areas that the organization has to grasp to enjoy
the advantage. According to analysis, it is observed that Aldi has the opportunity to
grasp the online market by investing more time or money on it. The other opportunity for
the company is to implement the pricing premium strategy to earn the high revenue as it
offers the product in low prices.
Threat: Threat refers the factors of risk. In the case of Aldi, In Aldi, it has been
examined that the business has the high degree of threat of its competitors and those
are Woolworths, and Coles. In the online market, Amazon is also a main competitor.
Porter’s Five Forces Framework is a strategic model that is used to evaluate the
arrangement of the industry. The main aim of using this tool is to analyze the
competitive environment of the company (Mind Tools, 2018). It assists to evaluate or
measure the competitive position in the competitive market. The porters five forces
framework analyze the key drivers such as competitors, suppliers, customers, substitute
and new entrants. This tool is implemented on Aldi:
The threat of new entrants: It has been seen that the degree of threat of new entrants
of the corporation is high. It is observed that there is low capital is required to enter the
retail industry so that the any new firm can easily establish the business. The other
factor behind the new entrants is price strategy. In this market, the company who offers
the low price that can easily grasp the market share and beat the existing competitors.
The threat of competitors: The threat level of competitors is high for Aldi as there are
numbers of companies that delivers the similar services to consumers. Lidl, Penny

MANAGEMENT 3
Market, Walmart, ASDA and the others are the main competitors of the corporation that
offers the similar services to consumers (Bhasin, 2018).
Bargaining power of suppliers: It has been assessed that the negotiating power of
suppliers is high. The goods deliver by the suppliers of the company is easily available
in the market and the retail industry also earns high revenue that is why; the large
number of suppliers attracted towards the industry. As there are huge number of
suppliers in the market that is why; the organization has options to change with the
other suppliers (Aldi Suppliers, 2018).
Bargaining power of buyers: The bartering power of customers is high as there is
huge number of companies in the industry that operates the business in retail industry.
As discussed above, the companies provide the low prices just to attract the consumers
towards their services due to which the consumers have numerous options to purchase
the product. The consumers purchase the product by evaluating the good deals.
The threat of substitute: The level of threat of substitute is low for the grocery market.
It is observed that there is no food item that can replace the food items (Aldi, 2018b).
These are niche food products and in any case supplement foods does not replace
these products that is why; threat of substitute is low.
Porter’s Generic Strategies are the strategies that support the organization to gain the
competitive advantage in the market. Porter’s generic strategies contain the three
strategies such as diversification, cost leadership and focus strategies.
Cost leadership strategy: Cost leadership strategy defines the low cost of producers
in the industry. In the case of Aldi, it has been seen that the company implement this
strategy at the workplace just to attract more or more consumers. As per the above
discussion, the company provides the services in low prices as compare to the other
companies. It also provides the discount to consumers or organizes the big sales off so
that the more or more will come to purchase the products of the organization.
Diversification strategy: Diversification strategy describes the unique product that the
organization provides in the market. In the case of Aldi, it has been seen that the

MANAGEMENT 4
company provides the retailing products such as food, household products, grocery and
the others (Aldi, 2018a). The product provides by the company is not differ as compare
to the other companies such as Walmart, Lidl and the others. The competitors of the
company also delivers the similar products to consumers due to which the negotiating
power of consumers is also high that is not beneficial for the company. It is
recommending that the organization has to implement this strategy at the workplace in
order to diversify the product/services in the market. It is observed that the organization
also has to provide the beauty products, footwear, or clothes to more diversify their
services. This strategy helps to gain the competitive advantage in the market as the
demand of consumers will increases in the coming future just because of different
products (Madsen, and Walker, 2015).
Focus strategy: Focus strategy refers that the organization has to focus on the
particular product/services or to develop the product attractive. In Aldi, it is observed
that the company focuses on the staff or employees just to enhance the quality of
services. The company provides training to employees so that they perform their
services efficiently and effectively. Enhancing the performance of employees helps to
provide the quality of services to consumers. This initiative taken by the company helps
it to build the strong brand value in the market. The other factors in which the company
mainly focuses is promotion technique. The promotion technique of the organization is
also attractive due to which it gain the competitive advantage in the market. Although,
the company implement this strategy as it focuses on its services due to which it enjoy
the advantage. But it is recommending that it has to more focus on its similar products
that is also provided by the company to develop its different so that the more or more
people attracts towards it (Almost Aldi, 2014).
At the end, it is concluded that the strategic management tool or model is necessary for
the company as it helps to analyze the macro or micro level of business. According to
the analysis, it is observed that the organization can gain the competitive advantage in
the market. By implementing the SWOT Analysis, Porters Five Forces and Generic
strategies on Aldi, it is observed that these strategic management tools assist the

MANAGEMENT 5
corporation to evaluate strength or weaknesses so that it will develops the strategies to
operate effectively.

MANAGEMENT 6
References
Aldi Suppliers. (2018) Our Supplier Relationships. [online] Available from:
https://www.aldisuppliers.com.au/supplier-relationships [Accessed 20/08/19].
Aldi. (2018a) Aldi History. [online] Available from: https://corporate.aldi.us/en/aldi-
history/ [Accessed 20/08/19].
Aldi. (2018b) Shop the Everyday Collections. [online] Available from:
https://www.aldi.co.uk/about-aldi/corporate-responsibility/supply-chain-resources
[Accessed 20/08/19].
Almost Aldi. (2014) Signs, signs, everywhere the signs: How to read ALDI price tags.
[online] Available from: https://www.almostallaldi.com/signs-signs-everywhere-the-
signs-how-to-read-aldi-price-tags/ [Accessed 20/08/19].
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., and Ansoff, R. (2018)
Implanting strategic management. Springer.
Bhasin, H. (2018) Top 17 Aldi Competitors. https://www.marketing91.com/top-11-
aldi-competitors/ [Accessed 20/08/19].
Madsen, T. L., and Walker, G. (2015) Modern competitive strategy. McGraw Hill.
Mind Tools. (2018) Porter's Five Forces. [online] Available from:
https://www.mindtools.com/pages/article/newTMC_08.htm [Accessed 20/08/19].
Phadermrod, B., Crowder, R.M. and Wills, G.B. (2019) Importance-performance
analysis based SWOT analysis. International Journal of Information Management,
44, pp.194-203.