Business Environment Analysis for Aldi

This project report provides a comprehensive analysis of the business environment for Aldi, including a PESTLE analysis to examine external factors and a SWOT analysis to assess internal factors. The report highlights the company's strengths in having a good reputation, stable economic environments, and technological advancements. However, it also identifies weaknesses such as changing prices according to government policies, high salaries for employees, and potential risks from inflation and currency fluctuations.

Business and Business
Environment

Table of Contents

From: Management Accounting Officer
To,
General Manager, Aldi
Subject: Explanation of different types of organisations and the growth of the international
business environment.
INTRODUCTION
Business environment is a sum total of all persons, organisation and other outside factors
that control a business and affect overall performance of a firm. It is a accumulation of all
intrinsic and extrinsic factors which influence business activities. It includes employees, supplier,
customers etc. This report is based on ALDI is a private company which is a retail industry. It is
located in UK and it deals in food, beverage and household goods. Business environment is
essentially required in every organisation to analyse the factors that affect its performance. This
report covers, different types of organisation with their purpose, legal structure, vision, mission
and scope etc. Apart from this, SWOT analysis and PESTLE analysis with positive and negative
impact on ALDI is also discussed. At last, there is a discussion about interrelationship of various
functions with link to the organisational structure.
TASK1
P1. Types, Purpose and legal structure of different Organisation
There are different types of organisations, which are as follows:-
Public Organisation
Public organisations are under controlled by government. It is the the part of economy
which raises national income and GDP from public revenues like taxation system and composed
public services. For example- National Health Service. It is a public health service in UK which
provide all encompassing range of health services (Aithal, 2016).
Purpose
Main purpose of public company is to provide services to general public and distribute
income and wealth by rising the structure of society. National Health Service build a strong socio
economic infrastructure by providing health services.
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Legal structure Local Government- It include both municipal and country government structure. Local
government is an administrative body of a small geographic area like town, city etc. State government- It is a unit of government that implement laws for state. It is
responsible to identify problem and local need of a state.
 Central Government- A political authority that governs whole country is known as
central government. It maintain national security and international delicacy.
National Health Service is comes under state government because it is identify causes of disease
and find solution.
Private Organisation
It is a part of country's economy which is run by an individual or a group. There is a few
restriction of government on private enterprises. ALDI is private firm which deals in food,
beverage and household goods (Cai and Yang, 2014).
Purpose
Main purpose of private firm is to earn maximum profit. ALDI select a correct
organisation structure to improve quality and productivity.
Legal Structure Partnership- It is an agreement between two or more persons who engaged in a business
to achieve a common objective. They share profit and loss and burden of ownership. Sole proprietorship- In this structure, a single person or an individual can run a business.
Owners can start their business by register their name and secure licence. Limited company- In this type of structure, there is a limited number of members and it is
a form of incorporation which control the amount of liability. It includes public limited as
well as private limited. Multinational Corporation- MNC owns and control production of goods and service in
two or more countries. Its head office in one country and branches in different countries. Global Company- These companies are market their product in many countries with
same brand name. Corporate office is responsible for global strategy (Business
Environment, 2018).
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 Transactional company- Those organisation which are more complex is known as
transactional organisations. They invest in foreign countries and give decision making
power to every individual.
ALDI is a private limited company with limited number of members and liability.
Voluntary organisation
A group of individuals who enter into an agreement as a volunteer to execute an
objective. National Trust is a voluntary firm established in UK. It concentrate on preserving
culture heritage of a specific area (Chavis, Klapper and Love, 2011).
Purpose
Main purpose of voluntary organisation is social welfare, overcome the problems arises
in society and save natural resources.
Legal structure Trust- It is usually established by a group that doesn't need membership. It is a structure
form of charity.
 Association- A union of people who agreed to accomplished a common objectives other
than profit.
National Trust is an association who work to preserve culture heritage and natural beauty.
Organisations can enlarge their business in global market by examine the environment
and geographical area of international business. Firm has to analyse objective and legal structure
of international market and enhance their business globally (Teece, 2010).
P2. Size and scope of a range of different types of organisations
Public organisation:- National Health Service (NHS):
Background details: The National health service is established in 5 July 1948 and its
constitution was published on 21 January 2009. Constitution bring details of what patients,
public and staffs are expect from the National Health Service. Its headquarters situated in
London, England.
Services: Its services include patient care, primary care, dentistry, ophthalmology and
long-term health care.
Size: The National Health Service have employees more than 1.5 million persons. It is
include in top five of world's largest workforces. In this, staff of employees include 150,273
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doctors, 314,966 health visitors and nurses, 40,584 general practitioners, 111,127 dental and
medical staff and 18,862 ambulance staff. It is mainly funded through taxation system.
Scope: This organisation provided the majority of their services in England.
Mission & vision: Its mission is deliver effective and efficient services of health care in
accordance with policies and standards that are: accessible, equitable, sustainable and affordable.
Its vision is excellence in health care through service delivery and quality performance.
Objectives: Its main objective “to assist the government meet the health care necessity of
Samoa through the management and provision of health services and development”.
Organisational structure: It is an independent body, at arm's length to the government.
Private organisation:- ALDI :
Background details: ALDI established in 10 July 1946. Its founders is Karl Albrecht and
Theo Albrecht. Its headquarters situated in Germany.
Product: Households goods, Food, Sanitary Articles and Beverage.
Size: This company have more than 30,000 employees.
Scope: This company has a wider scope and served in Belgium, Hungary, China,
Denmark, Austria, France, Slovenia, United kingdom, Poland, Spain, Ireland, Portugal, United
states, Australia, Switzerland, Italy, Germany, Luxembourg.
Mission & Vision: Its mission is to be leader in the merchandising and distribution of
food, personal and health care items, pharmacy and seasonal merchandise.
Objectives: Its main objective is provide high quality products at a reasonable price to the
customers.
Organisational structure: ALDI company adopt decentralised organisational structure
which is helps to managers for implementation of effective strategies.
Voluntary organisation:-National Trust-
Background details: This company established in 1895. Its headquarters situated in
Swindon, Wiltshire. This company is based on trust.
Services: It provides welfare services to the public.
Size: This company have 5,899 staffs and 62,000 volunteers.
Scope: its served in England, Northern and Wales Ireland.
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Mission & vision: Its mission is to promote, manage and conserve nature with balancing
humans needs. And its vision is providing equal rights, opportunity and dignity to the person in
context of natural beauties.
Objectives: its main objective is “to look after places of natural beauty for the welfare of
the nation across Ireland and England.
Organisational structure: This organisational structure provided specific responsibilities
to the government to appoint the trustees and support and monitor the board of trustees
performance and work.
TASK 2
P3: Interrelation between different organisational departments and their linkage with
organisational objectives
Illustration 1: Organisational Chart of Company
Source: Organisational Chart of Company. 2013
The success and growth of the company are depends on the efforts of different
departments which involve marketing, operational, finance, human resource etc. The top
authority or persons which involves Board of Directors, CEO, and shareholders are liable to
develop policies and plan for every departments so that combined contribution will be get from
them (Organisational Chart of Company, 2013). An organisations such as ALDI need to
understand the duties and value of their departments working for accomplishment of desired
objectives and goals. There are some departments which are as follows:
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HR department: This is the department which is responsible to fulfil the workforce
within an organisation through recruiting skilled and qualified employees using various
promotional tools to invite eligible candidates. Therefore, it needed support of marketing
department in performing their various functions due to which both departments are interrelated
with each other. Mutual support of both organisation assist organisation in achieving desired
goals and objectives within limited time period.
Finance department: It is the department which provides the stability of performance
level of other departments through giving financial support to them in performing their
functioning. Therefore, all such departments are totally depend on the finance department due to
which they are interrelated with each other. For example, to promote brand of company,
marketing team requires budget due to which it get support from the finance department.
Production & Marketing department: This department produce superior services and
products with the support of advanced equipment and technology which can be acquired by the
resources available from financial division. Production action are also based on the demands and
needs of targeted consumers which can be accessible through conducting investigation by
marketing division. Therefore, it support the company in accomplishing desired objectives and
goals within fixed time period.
Marketing department: Marketing division satisfy and identify the consumers needs and
wants at the right place. This department build brand name of the company such as ALDI
through investing more money in acceptance of different promotional tools such as newspapers,
TV advertisement etc. Therefore, it needs to help from finance department for availability of
enough quantity of funds.
Therefore, all departments are interconnected with each other and contribute maximum
efforts to the company for accomplishing desired targets and goal within fixed period of time.
TASK 3
P4: Impact of micro-environmental factors along with positive and negative impact
To identify the impact of external factors such as political, economical, social,
technological etc. it is important for management of Aldi to conduct PESTLE analysis which
enable them to identify their actual market position at current time. Identifying the positive and
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negative impact of each external factors will help management to make an effective decisions
and better plans for the benefits of an organisation.
Political Factors: As the majority of ALDI stores are situated in U.S.A , China and
Australia which are relatively free from instabilities and conflicts, threat to Aldi's operations due
to war and fights are low. Aldi has made a direct foreign investment in U.K. Which is likely to
create difficulties to the company's operations due to BREXIT.
Economic Factors: Due to Brexit , the pound has dropped and this has resulted in the
favour of Aldi , as buyers turn to discounters resulting in fast growth rates . company's lowest
hourly wage is more than national living wage of U.K.
 Positive effect: This helps Aldi to increase its market because the value of pound has
dropped and the customers attracted towards stores. Negative impact: Due to the chances of inflation, the purchasing power of customers
decreases and hence it affects Aldi. (Cuervo‐Cazurra, 2011).
Social factors: In UK people are becoming more updated and want to control their
budget and improve their living lifestyle. As ALDI provide higher wages to their employees
which improves their standard of living due to which the economy of country are positively
impacted. The trend in UK of rising expenses is affecting consumers behaviour and ALDI
provides the products at discounted price so it is socially accepted by the people. Positive effect: Since the product of Aldi is available at discount price hence increases its
production. Negative effect: Since customers have less purchasing power therefore it has impacted
adversely on the market of Aldi.
Technological factor: Due to advancement in the technology, it has affected the
productivity of Aldi in a positive sense.. This new technology helps the company and the
customers to increase the flow of currency and helps the UK government to overcome the
recession stage. The technological growth of Aldi increases as it provides better technology for
its employees and customers. Positive effect: Use of web applications helps Aldi in giving advantage to its customers
of purchasing online and also attracted the customers. Negative effect: Since Aldi is using out of date systems therefore to replace them it has
create the increase in cost of its products.
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Legal Factors: These are the laws and regulations made by the government to provide
the set of rules for a business to operate. It includes employment laws which is essential to
implement by company at workplace. Positive effect: Different acts helps the company to operate according to the set of rules
of government which helps in increase the faith among customers. (Iskanius, Page and
Anbuudayasankar, 2010).
 Negative effect: Implementing these set of rules increases complexity for Aldi to operate
its business.
Environmental factors: Aldi supports its UK based suppliers and manufactures so as to
motivate them to work for their country. Due to its responsibility of developing the area where it
is working(CSR), the faith of customers living in that area increases in favour of the company. Positive effect: To use the wastage of the products, Aldi helps in developing the
environment.
 Negative effect: If Aldi is not following the environmental laws leads to threat for the
company by reducing the faith among people.
TASK 4
P5: Internal analysis of organisation for identification of strength and weaknesses
It is essential for company to conduct internal analysis through SWOT in order to identify
their strength and weaknesses as well as opportunities and threats (What SWOT Analysis is in
simple words, 2016). It enable management to make an effective decisions and suitable plans in
order to achieve desired goals and objectives. Therefore, the same will be applied on
management of Aldi in order to analyse internal factors:
Strengths:
 It offers products for the customers at affordable price
 it has a strong existence in Germany with over 2500 stores
 It have employees more than 1,00,000 people across the world
 It offers a various variety of the different product so they can chose easily.
 It gives great savings to its customers. It gives high level of customer support with wide range of their daily needs.
Weaknesses:
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 It gives low margins to their suppliers it is a major weakness.
 It contains poor employee satisfaction because no employee retention is available in the
ALDI.
 It is supposed as a store of cheap and low quality products.
 It has not effect globally than other brand stores. It is not fulfilling the demands of high income groups.
Opportunities:
 It requires to expand more funds in offline and online advertising to beat competition.
 It has to expand its business like African and Asian countries. It will be a great opportunity for the ALDI to make a customised brand than a cheap
product company.
Threats:
 It faces a lots of competition like Walmart, and as a retailer amazon move into grocery
which become threat for Aldi company.
 It is not fulfilling the needs and demands of the customers because customers wants
complete shopping experience.
 Government bodies and their policies affect the margin of the company it is a major
weakness of Aldi.
TASK 5
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses
It is important for the management of Aldi to interrelate external factors with company's
strengths and weaknesses in order to identify its actual position in market at present time. This
will be done through conducting PEST analysis and interrelate strengths and weaknesses with
each influencing factors:
Political- Political factors includes stability of the political environment in which
company is working. United kingdom political environment is stable thus helping the Aldi to
improve their productivity. Apart from that the policies made by the government is in favour of
the company. (Klapper, Lewin and Delgado, 2011).
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 Strength: Aldi is one of the biggest supermarket chain in the world with high goodwill.
Goodwill of the company can help them to sell their product thus risk of investing in
other countries is low. (Savrul, Incekara and Sener, 2014).
 Weakness: Aldi operates in more than 20 countries so company has to change the prices
according to the policies made by the government of different companies. Thus it creates
mess while setting the price of the same products in different country.
Economic- Economic factors includes inflation rates, currency exchange rates, etc.
These factors can affect the profit of the company in greater sense. Increase in inflation leads to
less disposable income thus affecting the Aldi balance sheet. So Aldi should open their store
while monitoring the economic factors of the country. Strength: Aldi has attained their profit goals in those countries who has much stable
economic factors.
 Weakness: Those countries who has higher inflation rates or have great difference
between currency rates will affect the company profit in negative way.
Social- Social factors includes the trends running in the country for the longer period of
time. As nowadays consumers need to prefer healthy foods rather than oily or spicy foods and
other than that, consumers are now more concerned about the environment. So Aldi should sell
their product according to the preference of the customer as it will help the Aldi to sell more thus
increase in profits. Strength: If the Aldi is selling, they will try to expand more in the countries thus helping
them by giving growth and employment.
 Weakness: Company has to pay their worker according to the salary set by the
government in the country. So if the salary is high as compare to the work employees are
doing than it will incur more cost to the company as company is paying more than they
are earning.
Technological- Technological factors include latest machines and technology company
are using to conduct their business.. Aldi is using Electronic Point of Sale (EPoS), Electronic
Funds Transfer Systems (EFTPoS) and electronic scanners which helps the company to increase
their performance and productivity. Strength: Aldi has ample of funds and they can use it to improve their productvity and
performance by using latest technology.(Osterwalder and Pigneur, 2010).
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 Weakness: Return on investment on technology is low as technology improvement or
bringing new technology into the environment is costly. Thus it increase the risk of
failure.
CONCLUSION
It has been concluded from the above project report that Business environment should be
analysed more carefully which can either affect company of different types in position or
negative manner. For this, the management of an organisation is held liable to conduct PESTLE
analysis to analyse external factors as well as SWOT analysis to analyse internal factors. This
will assist management to make an effective decision for the betterment of an organisation.
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REFERENCES
Books and Journals
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