Business and Business Environment - Aldi Assignment

Business and business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Various types and purpose of organisation with legal structure...........................................1
P2 Size and scope of organisation...............................................................................................3
TASK 2............................................................................................................................................5
P3.Relationship between various organisational functions and link with organisational
objectives.....................................................................................................................................5
TASK 3............................................................................................................................................7
P4 Positive and negative impact macro environmental factor over business operations............7
TASK 4 ...........................................................................................................................................9
P5 Internal and external analysis of ALDI..................................................................................9
P6. Evaluate how strength and weakness interrelate with external macro factors....................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment refers to the combination of various elements that are present in
internal as well as external environment of the company which influence how an organisation
operates(Boons, and Lüdeke-Freund, 2013). ALDI is an international brand which is
headquartered in Germany, have over 10,000 discount supermarket retail stores present in more
than 20 countries worldwide. This report contains a description about types of organisations
along with the legal structure, size and scope. It also explains the functional departments that are
present in enterprise, their inter relationship with other units and organisational structure used by
companies. In addition to this project also contains the uses of analytical tools such as PESTEL
and SWOT which assists ALDI in identifying several factors that are present outside the
organisation and what threat & opportunities they contain with them. These tools help ALDI in
formulating strategies that contribute company's effort toward the achievement of organisational
goal.
TASK 1
P1. Various types and purpose of organisation with legal structure
There are various type of companies that having different purpose and legal structure.
These enterprise are as follows:
Private organisation:
Business which is owned and managed by independent organisation or private individual
and not being controlled by the government agencies. The main aim of private firm is to
maximize their profit(Cavalcante, Kesting, and Ulhøi, 2011). ALDI is the supermarket chain
established in UK is an example of private enterprise.
Purpose: The main purpose of ALDI is to provide quality products at lower prices. Company
utilises a lean approach for its business activity to provide quality products to their customers at
competitive prices. ALDI identifies the needs and wants of customer and do not compromise
with quality of products.
Legal structure of private organisation:
 Partnership: It is the formal arrangement where two or more party combine together to
control and manage a business. In partnership, partners contribute capital, resources,
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skills to operate business actions to achieve common objective. Partners have unlimited
liability as they share profit and loss.
 Sole proprietorship: It is a type of business where an individual or person owns and
manage the company and they are personally responsible for their debts. Sole
proprietorship does not has separate legal entity from the owner. It is most simple type of
business because there is ease of setup with nominal cost(Commander, and Svejnar,
2011). Limited company: It is type of corporation which limits the amount of liability that
undertaken by the company's shareholder. The share capital is restricted by the
memorandum of association and it is incorporated into legally distinct body.
Public organisation: It is type of business which is owned, controlled and operated by
the government and it is exist to offer services for citizens. Public enterprise raise funds from
variety of methods that are fees, taxes and financial transfers from other levels of government.
Nation Health Service is the best suitable example of public organisation. This company offers
various services related to health such as dental treatment, optical care, emergency services,
primary care and many more.
Purpose: The main purpose of National Health Service is that good health care should be
available for all. Company provides various services related to health such as optical care, dental
treatment, primary and emergency care. It remains free to use for all United Kingdom residents.
Legal structure of public organisation:
 State government: This is a unit of government which makes and enforces law for a
state. The responsibilities and power of state government are managed by the state
constitution(Ebert, 2011). This is responsible for control trade within state and also
establish different regulations for local corporation.
 Central government: This is a political authority that governs and manages the entire
nation. Rules and regulations are developed for state as well as local government by the
central government. Local government: This have only control over a specific area or region and don no
enforce laws which affects the wider area. Local government manages the public
administration of cities, towns, districts of a country.
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Voluntary organisation: This is a indispensable and performs number of activities for the
welfare for society, development of country and solidarity of nation. These organisation are
independent, flexible, secular and work for welfare of the society, not operates for profit
generation. Cancer Research UK is the suitable example of voluntary organisation which work
for cancer patients(Elliot, 2011). It provides information and increase awareness about disease.
Cancer Research UK conducts various research for prevention methods and treatment of disease.
Purpose : The main objective of Cancer Research UK is to reduce the number of deaths because
of cancer and also increase awareness related to this disease.
Legal structure of voluntary organisation:
 Unincorporated associations: It is group of people who come together for common
purpose and interest. This is not recognised as a law entity in the eyes of law. Liability of
this governing body is unlimited. Unincorporated association work for benefit of the
public.
 Incorporated organisation: This corporate body is recognised as legal entity in the eyes
of law. It is considered to be as separate body from its trustees. Directors of the company
are not personally liable for debts.
 Charitable company: These organisation are managed and controlled by charity
commission, it limited by guarantee and not by share. This is limited company developed
for attaining charitable objectives.
P2 Size and scope of organisation
There are number of organisation which operates in business environment and are
different in terms of there size and scope. It is essential to understand their purpose and scope in
order to achieve set objectives and goals. Every enterprise have different in size and scope which
are as follows :
ALDI:- ALDI is a discount retail supermarket chains having around 10,000 store in more than 20
countries based in Germany(Hamilton, and Webster, 2015).
 Product and services:- It deals in product like food, beverages, sanitary articles,
household goods.
 Mission and Vision:- Its mission is to provide greater satisfaction to their customers by
offering them product at relatively low price. Their vision is to provide better standard of
living by providing customers with high quality product at affordable price.
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 Size and objectives:- ALDI operate its stores world wide and present in more than 20
countries such as Australia, France, Germany, Italy, Poland, UK, US etc. It has workforce
of more than 20,000 people in United Kingdom (Hilton and Platt, 2013). There main
objective is to maintain quality in their product and services by using leaner and smarter
business processes.
National Health Service(NHS):- The National Health Services is a national healthcare system of
United Kingdom which get fund through public that means it is funded through general taxation
system.
 Product and services:- NHS provides number of health care services to England
residents such as emergency services, urgent cares, dental services, general practitioners,
primary care etc.
 Mission and Vision:- Their mission is to provide quality health care services to every
person each day throughout the communities.
NHS vision is to deliver better care by providing quick access to modern services, better
health by providing individual focused care to prevent them from illness and better value by
ensuring that money will spend only when needed. Size and objectives:- NHS has more than 1.25 million employees and stand at fifth
position all over the world in term of its workforce. The biggest part of NHS system is in
England which caters 54.3 million peoples. Other systems are present in Scotland, Wales
and Northern Ireland having its staff members 161,415; 84000 and 66,000 respectively.
Its major objective is to improve health status of community by providing quality health
care services to needy people.
Cancer Research UK:- It is a charity organisation for cancer research and awareness,
situated in United Kingdom which get its entire fund through public investments. It provides
information related to Cancer and conduct campaign to increase awareness about disease.
 Product and services:- It conduct research over the prevention methods, diagnosis and
treatment of diseases and provide services in area such as providing successful cancer
therapeutics, vaccines, diagnostics and required technologies and instruments for cancer
treatment.
 Mission and Vision:- Their mission is to establish a effective infrastructure to maintain
quality in transnational research for considering all aspects of cancer prevention, care &
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treatment and to establish a best possible mechanism so that every person and health
professionals can contribute toward cancer treatment(Hollenbeck, Noe, and Gerhart,
2018). Its vision is to bring a day when all the cancers can be cured.
 Size and objectives:- Cancer Research have an thriving network of research which
includes more than 90 institutions that are present in 40 cities and town throughout UK.
Its main objective is to minimize the number of death that occurs due to cancer.
TASK 2
P3.Relationship between various organisational functions and link with organisational objectives
For smooth running in an organisation, it is very important to having coordination in each
department of firm. There are various wings in an enterprise which perform their function to
serve their customers more effectively and perform their operations in efficient manner. There is
interrelationship among different department of company so it is very necessary to having
effective communication between manager of each sector.
Relationship between organisational functions are as follows:
 Marketing: This department plays important role that helps an organisation to
differentiate their product from competitors. There are various functions which is
performed by the marketing wing such as making marketing plan, product development
and market research. Another important function of this is to promote the products of
ALDI and position them in marketplace(Kian Chong, Shafaghi and Leing Tan, 2011).
Marketing function is dependent on finance wing as they needed funds to perform their
activities like positioning, promotion, after sales services and these funds are allotted by
the finance department.
 Finance: Another department that is very important of an organisation. This function
helps in developing future budgets and also allocation funds to others wing for various
activities. Manager of this division must coordinate with other departments so they have
proper information about the funds which is used by various department of an
organisation in performing their activity. It helps ALDI in managing cash flow, capital
investments and current assets.
 Human resource management: This department is very essential in an organisation as it
function is to manage and it also provides direction to the employees of company. Human
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resource management deals with various functions related to the staff member of
company such as recruiting, selecting, compensation, safety, performance, wellness,
benefits, training and motivation. Therefore, it is very important to coordinate with other
departments. So that they can identify the needs and recruit right person for the job.
 Operational function: It is the another type of function which is very plays very
important in an organisation. Operation function helps in managing process of developing
goods and services(Klem, 2013). It includes planning, organising, coordinating and
controlling all the resources that are required to produce organisation goods and services.
This division interlinked with marketing wing which helps in manufacturing products and
services as per the demand of the customers. It helps ALDI in generating consumer
demands and analysis the needs and wants of customers.
Various organisational structure are as follows:
 Matrix organisation structure: It is a types of company structure in which there are
more than one line of reporting manager. This structure helps an enterprise in achieving
quick market adaptation, higher efficiency, readiness and fast decision making. Matrix
organisation structure is more suitable for business who operates in dynamic
environment.
 Functional organisation structure: Another type of organisation structure in which
company divided its functions in various department such as IT, marketing, human
resources, finance, etc. In every department there are specialist which helps in improving
the operational efficiency and also increase the productivity of firm(Savrul, Incekara and
Sener 2014). ALDI uses functional organisation structure that helps company in gaining
greater operational efficiency it is because employees are grouped together according to
their skills and knowledge(Organizational Structure. 2018).
 Flat organisation structure: This type of organisation structure only has few levels of
management among the executive levels and front line employees. There is fast decision
making in flat organisation structures, it is because there has power given to their
employees also. Communication between upper manager and baseline employees become
easy and it helps in problem resolution. This type of organisational structure increase the
employees satisfaction and motivation as employees has authority to implement their
ideas and they also work as they want to attain the desired result.
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TASK 3
P4 Positive and negative impact macro environmental factor over business operations
Macro environmental factors refers to various forces that are present in external
environment of the organisation which may affect the operations and functioning of a
company(Schneider and Spieth 2013). These forces have both negative and positive impact
over the operations of an organisation so it is very essential for a company to formulate policies
and strategies in order to minimize the negative impact of these forces that may hinder the
growth of a company(PESTLE Analysis. 2018 ). Following are the external factors that must
consider by ALDI while formulation policies :-
 Political factors:- These factors are related to opportunities & pressure that are bought by
government and the degree to which these changes impact the business operations. It
generally includes government policies, trading policies, political issues etc.
Positive:- Majorities of ALDI stores are in Europe, Australia, U.S.A which are relatively free
from war and conflicts and thus company remains unaffected from such issues which help in
operating business activities successfully.
Negative:- Political instability have a negative impact over the business operations of ALDI, as
new government may impose new taxation and trade policies which may increases the risk of
high expenses for the company.
 Economical factors:- These factors are related to the economical structure and policies of
a country and its impact over business. Economical factor includes taxation, inflation
rate, economy trend, foreign exchange rate etc.
Positive:- At the time of financial pressure consumer move toward purchasing of products which
are available at low price. It is an advantage for ALDI as it provide quality products at affordable
price.
Negative:- As economy of UK is recovering from its recession period, it may affects the market
share of ALDI as consumers are moving from low cost stores to mainstream supermarket. So,
company must formulate suitable pricing policies in order to deal with such situations.
 Social factor:- These factors are related to attitude, beliefs and cultural value of the
individuals that lives in that society in which business operates. Social traits affects the
demand for the product and operations of the businesses(Smith, 2016).
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Positive:- ALDI has moved from narrow range of product to variety of product which provides
benefit to busy families as they get all stuff under one roof.
Negative:- Competitors of ALDI are offering 24 hour services for increasing their market share
which is not currently used by this company. It has an adverse effect over the profitability of the
ALDI.
 Technological factors:- It includes factors such as emerging technologies, obsolete
technology, research & innovation, intellectual property issue etc. These factors have an
huge impact over the survival of the company.
Positive:- technological infrastructure is a very essential component of supply chain, that may
help ALDI in enhancing the performance and attracting more customers.
Negative:- Increasing popularity of online and mobile shopping affecting the market share of
ALDI as this option is not available with the company's customer.
 Legal factors:- Legal factors are related to the several legislations, laws and regulations
that may affect the functioning of the business. It includes regulatory bodies, employment
law, healthy & safety law, tax regulations etc.
Positive:- There are number of laws and regulations which a company have to follow for
performing its operation in a particular area. If a company perform its activities as per imposed
laws than it will have an positive impact over the goodwill of the ALDI.
Negative:- ALDI is an international brand having its stores throughout the world as a result of
which it has to follow different laws and regulations that varies across various geographical area.
This has negative impact over the company because it increases the cost of operations(Weske,
2012).
 Environmental factors:- These factors are related to the ecological and environmental
aspects which may affect the demand for the company's product. It includes
environmental regulations, reduction of carbon footprints, changes in weather condition
etc.
Positive:- As peoples are becoming more aware about environment safety and like to prefer
product which consumes less energy, don't harm environment and are easy to recycle. So, ALDI
should offer environmental friendly products which help company in achieving competitive
advantage over other and in increasing their market share(Wetherly 2014).
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Negative:- Use of plastic bags and increasing wastage of food product causes a negative impact
over the environment, this may create legal issues for company and also affects the image of the
company.
TASK 4
P5 Internal and external analysis of ALDI
Analysis of internal as well as external environment is very essential for ALDI as it help
in formulating strategies for achieving the organisational goal and minimizing the issues that are
present in firm's surrounding and can affect its growth. SWOT is an analytical tool which can be
used in order to analysis the business environment ALDI(Veit and et. al., 2014). This analysis
generally consider four elements such as Strength, Weakness, Opportunity and Threat, which
have an huge impact over the growth and survival of the enterprise. It help company in
identifying the threat & weaknesses that may affect its operations and in formulating plans for
minimizing their effects and in accessing their strength and opportunities so that it can be used to
enhance the operations of the company. Following is the SWOT analysis of ALDI:-
Strength Weakness
 ALDI enjoys higher brand value and
broader network of branches that
covers major developed market
throughout the world.
 Major strength of ALDI is it provide
high quality product at relatively low
price which attract large number of
customer and also help in raising
standard of living.
 Company has 10000 stores throughout
the world.
 Its market share has been raised by
12% and a result of which is around 1.1
million new customers visited their
stores(Jones, Wicks and Freeman,
 Staff level of ALDI is relatively low
which affects the reputation of
company as staffs are failing to handle
the customer footfalls.
 ALDI does accept credit card in their
England stores, which is the greatest
weakness as it increases the customer
turnover.
 Interior ambience of their stores are not
appealing they look alike warehouses,
company doesn't invest in packaging,
stocking and transportation.
 It uses competitive pricing strategy and
increasing competition leads the
company to reduces its product price
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2017). which in turn affecting the
profitability .
Opportunity Threat
 Economical slowdown, inflation rate
and higher unemployment rate
increases the demand of cheaper and
inexpensive products which provides a
greater opportunity to ALDI, as it sale
product at low price.
 Greatest opportunity present for ALDI
is to open express stores over streets
which are smaller in size but includes
essentials that are required by
customers.
 Recovery from economical recession,
urbanization, burgeoning of population
etc. has increases the sale of discount
retail stores like ALDI.
 The major risk which threaten ALDI is
increasing demand of online shopping
that has taken the majority of grocery
market share from the company.
 Not able to serve customers who are
looking for complete shopping
experience at one place.
 Increasing changes in customers
consumption habit and preferences
threatening the company at large.
P6. Evaluate how strength and weakness interrelate with external macro factors
Strength and weakness of organisation are linked with external environment factors. It
can be identified with the help of PESTLE analysis. It is very necessary for the manager of ALDI
to evaluate strength and weakness of macro environment which helps in formulate strategies &
policies and also take better decisions(Foss, and Saebi, 2017).
Interrelationship between strength and weakness are as follows: Political factors: This element involves all political factors such as tax policies, trade
restriction, employment law, environment regulations, tariffs, political stability, trade
reforms which affects the actions of an organisation. When there is changes in these
components than it affects the strength and weakness of ALDI.
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Strength: As the stores of ALDI are majorly located in Europe as well as in Australia, China,
USA and are free from conflicts, disputes. Confit free retail supermarkets of ALDI is the strength
of company and this leads to increase in effectiveness and efficiency of an organisation.
Weakness: Due to huge competition, ALDI reduces the cost of their products and services which
negatively affects the image of company in the eyes of manufacturers and suppliers. It is because
when company decreases the price of products than they paying less to their suppliers(Findlay-
Thompson and Mombourquette, 2014). Economic factors: This component is related to interest rate, economic growth, interstate
taxes, inflation rate, recession, minimum wage rate, unemployment, credit availability
and many more.
Strength: As Britain is voted to leave EU, this has works in ALDI's favour. It is because prices
of products increases and cost of imported items being pushed up . ALDI provides discounts and
various offers to their customers and this results in increase the growing rate of ALDI.
Weakness: Economic slowdown in developed countries and Euro zone cries may impact the
business greatly because customers who has less income than they have forcefully buy cheaper
and retailer owned goods. Social factors: Elements related to cultural expectations, population dynamics, healthy
consciousness, global warning, norms, etc. that affects the community socially and
market. If there is changes in taste and preference among customer and it has great
impact on ALDI.
Strength: ALDI is highest supermarket in United Kingdom as they provide on time payments to
their employees and also give higher wages to them. It is the strength of ALDI because when
employees are highly paid than they are more satisfied and there is very less employees turnover.
Weakness: Consumers taste and preference are changing more frequently so it the weakness of
Aldi because it is very difficult to cope up with consumers changing demand. Technological factors: Components that includes the rate of technological innovation
and development which may affects the business and market. When there is use of
advance technology than it influence the actions of ALDI and also have impact on
strength and weakness of an enterprise.
Strength: There is advantage of Aldi is company also uses online platform to sell their products
and services. By this firm is connected with there customers and also aware them about
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introducing new commodity(Dima, Grabara, and Modrak, 2014). This results in increase in
profitability and productivity.
Weakness: Increasing number of customer in supermarket, there is weakness of ALDI is they
are not adopt self service checkout from grocery and this results in consumers only buy few
products due to the long line in the supermarket. Environment factors: It takes into consideration environmental and ecological aspects
that could be either social and economic in nature. This includes natural calamities,
temperature, monsoons, etc.
Strength: Major strength of Aldi related to environment factor is that all its of its stock
purchased from local farmers which help company in providing organic products to their
customers and in avoiding legal issues.
Weakness: Company uses plastic packaging material which can not be disposed easily and
greatly affects the environment. Legal factors: Elements related to legal aspects such as quotas, taxation, resources,
exports, imports that affects the business operations. If there is some changes in legal
factors than it greatly impacts the strength and weakness of ALDI.
Strength: Major strength of Aldi is that it follows all the laws and regulations which results in
increase in brand image and goodwill of the firm.
Weakness: As ALDI is multinational company and located worldwide. So it is very difficult for
firm to follow all laws and regulations. Every country has different import and export policies so
company faces the problem of understanding the policies of various countries.
CONCLUSION
From the above report it has been summarized that analysis of business environment is
very essential for the proper functioning and growth of the company. This analysis can be
performed using SWOT, a tool which help in identifying strength, weakness, threat and
opportunity that an organisation have. Another analysis tools that can be used by ALDI is
PESTEL analysis that will provide information about the positive and negative impact of macro
environmental factors over the operations of the enterprise. By using these tools company can
formulate strategies and policies which assist ALDI in minimizing the threats and maximizing
the profitability of the firm.
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