Business Environment Analysis and PESTLE Analysis

The given document appears to be a solved assignment related to business environment analysis and PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis. It discusses the importance of understanding the business environment in a selected country, in this case, Mexico. The report provides background information on GDP rate, population, government, international monetary funds, and other relevant factors. Additionally, it uses PESTLE analysis to examine government policies, GDP rate, society influence, environmental regulation, and legal factors that impact the operations of a firm. The business expansion is seen as beneficial for the selected firm in terms of growth and development, increasing profitability, and productivity in the retail industry.

Business Organisations and
Environments in a Global
Context

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Background Information on Lidl Supermarket ...............................................................................1
Background Information on the Business Environment (Mexico) .................................................2
Analysis on Business Scenario (PESTLE and Porter's Five Force) ...............................................5
Opportunities and Threats from the macro-environment ......................................................5
Levels of threats and organizational strategies (Porter's Five Forces) ..................................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Companies are open systems in which they influence by environment beyond their
limitation. Globalization is situation which is utilised to communicate between different nations
attempting to develop international economy. It is procedure of connecting the world's market
and business with each other (Alava and Mu, 2018). This study is based on Lidl- supermarket. It
is the German global discount supermarket chain. Report will explain detailed information on
selected business organization. It will discuss of allocated business environment. Furthermore,
assignment will assess application of an appropriate analytical approach. It will use and
application of appropriate data and examples.
Background Information on Lidl Supermarket
The selected business organisation that is Lidl- supermarket. It is the German
international discount supermarket chain based in Neckarsulm, Germany. Company is operated
over 10000 stores across Europe and US. Lidl is the main competitor of the similar German
discount chain Aldi in several markets involving the US. There are Lidl shops in very members
state of the European Union. The stores of selected supermarket also present in Switzerland,
Serbia and USA. Supermarket is portion of the Schwarz Group which is fifth largest retailer in
the world with sales of $82.4 billion. The first Lidl discount stores was opened in 1973 which is
coying the Aldi concept. The selected supermarket has major distribution centres in Mebane,
North Carolina and Spotsylvania country, Virginia. Lidl planned to open total of one hundred US
stores by the summers of 2018. Now the company wants to open the supermarket in Mexico
which is southern portion of North America (Crane and Matten, 2016). In order to that, selected
business organization provided other services. In 2009, Lidl Movies was introduced in the UK
undercutting Tesco DVD Rental that had previously been the cheapest online rental services for
DVDs in the UK. Company established bakeries in their stores across Europe in January 2012.
In order to that, They consist of small baking filed with numbers of ovens together with
region where bread and pastries like croissants which are displayed for sale. In this context,
Lidl's been around since 1973 when it is the first grocery store opened up in Ludwigshafen about
25 miles south of Frankfurt. It is the expanded outside Germany and presently set up presence
across the Europe. Now it is the 7th largest supermarket in the UK. Selected company being
budget friendly itself. The grocery store keeps expense to minimum and destructs unnecessary
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costs by creating lots of private label items and cutting out plastic and paper bags as well as
fixing displays so fewer restock are needed. Lidl followed by low prices, because younger
shoppers had higher awareness of brand and shopped there often. The reasons for shopping at
selected supermarket such as good quality, effective promotion and fresh goods (Falkner, 2017).
Company has zero waste, no frill, pass the savings to the consumer concept of showing most
goods in their fresh delivery cartons as like fellow German supermarket Aldi. It is allowing
consumers to take goods directly from the carton. The estimated revenue of 57 billion Euros in
2014. The product range of is broad around 1800 items involving private label and branded
goods.
The aim of Lidl is to become one stop destination for their shoppers and offering the
enlarged product range that will involve both branded and private label goods. There are
approximately 315000 employees are working in the selected business organizations. The
mission of Lidl is to deliver outstanding the consumer satisfaction and ensure market leading
quality and value by continuously innovating and goodness their efficient processes. It is driven
by technology and people. The values of selected supermarket such as respect, recognition,
accountability and trust which will determine factor in their future success. These value pillars
define ways for reaching the goals and objectives of firm (Fassin and et.al, 2015). All values
shape culture of selected business organization while also helping to determine their character.
As per the values, company make decisions and ways of behave to the consumers as well as team
within the Lidl. In order to that, this business expansion is beneficial for Lidl in relation to the
growth and development, increasing profitability and productivity in retail industry. This help to
create the high position at the international level.
Background Information on the Business Environment (Mexico)
The allocated business environment is the Mexico in which Lidl supermarket want to
open new store. It is the nation of southern North America and third largest nation in Latin
America after Brazil and Argentina. The society of the Mexico is defined by extremes of wealth
and poverty with limited middle class wedged among the selected political unit of landholder and
investor on the one hand and masses of rural and urban poor on the other (Goodwin and et.al,
2015). Selected nation is one of the main economic and political forces in the Latin America.
The Mexico city the capital that is one of the most populous cities and metropolitan fields in the
world. Nation has experienced series of the economic booms leading to periods of effective
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social gains and followed by broke with important declines in standard of living for middle and
lower classes. In this context, there are many general facts of Mexico such as the total population
is 130,759,074, federal presidential constitutional republic, 77.3 years are life expectancy,
Mexico city is capital, Mexican Peso is currency and other general terms.
Economy of Mexico:
The Mexico City area accounts for closely one fourth of the Gross Domestic Product of
the allocated business environment. More than three-fourths of income derives of the District
from the service sector and one-fourth derives from manufacturing. The large majority of
metropolitan region's income and employment also gains from services which are followed by
manufacturing. Mexico state is the economic backbone of surrounding field. Its economy ranks
second only to the Federal District on the national scale. The Mexican economy advanced 02&
on quarter in three months to December of 2018 (Mexico GDP Growth Rate, 2019). It is slowing
from downward revised 0.6% in the previous period and lower than preliminary estimate of 0.3%
as well as in line with market demand.
There are different economic activity in Mexico which has remained resilient despite
political and economic uncertainness in the first half of 2018. It is caused by lead up to election
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Illustration 1: Mexico GDP Growth Rate
Source: (Mexico GDP Growth Rate, 2019)

and US-Mexico-Canada trade negotiation. The allocated nations constantly to face challenges
which involve increasing standard of living through decreasing poverty and inequality,
addressing the crime and corruption. For handling these situations and boost growth in effective
manner which will benefits a broad share of population, reforms will require directing on
increasing the public investment and social spending as well as decreasing the labour market
informality. In relation to that, one cause that is Mexico's poverty rates remain high meagre per
capita growth in the recent periods. The poverty rate at over 43% of population and inequality at
the Gini Index of almost 50 (Inequality and GDP per capita, 2018). In order to that, dispense
role of fiscal policy which is targeted government expenses to aid lower income inequality. It is
the normally weaker in Mexico than in other members of Organization for Economic Co-
operations Development (OECD) and can be expanded.
Government:
Mexico City is the place of federal government, local and national politics interlace there
like else in Mexico. The resident have long had strong voice in politics owing to their big and
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Illustration 2: Inequality and GDP per capita
Source: (Inequality and GDP per capita, 2018)

dense population and their ability to launch massive protests in the city streets (Hamilton and
Webster, 2018).
International Monetary Fund (IMF):
Mexico became member of the International Monetary Fund on December 31 fur days
after official establishment of IMF. It has reached 8.912 billion special drawing rights (SDRs)
which is 1.87% of total amount of SDRs for the IMF. There are two financial arrangement was
approved for 47.292 billion SDR each year in 2012 and 2014. The current provision were
approved with 62.3889 billion SDRs approved in the 2016.
Analysis on Business Scenario (PESTLE and Porter's Five Force)
Lidl is the German international discount supermarket chain based in Neckarsulm
Germany. Selected organization operates over 10000+ stores across the Europe and US. Now
they want to open a new store in Mexico in terms of expanding their business. Therefore,
company needs to analysis the business environment which involves political, economic, social,
environment, technological and legal in the allocated nation (Hurtado Sandoval, 2015).
Opportunities and Threats from the macro-environment
These factors are also called as PESTLE analysis. Mexico is complicated nation full of
hopeful citizens wishing to escape poverty. This business expansion is beneficial for Lidl in
relation to growth and development, increasing profitability and productivity in retail industry.
This help to create the high position at the international level.
POLITICAL ENVIRONMENT
It includes government policy, changes in authority, corruption at localized and
nationalized level etc. which are involved in political factors of selected business environment.
The localized government impacts the success of small local business, because of poverty of
Mexico is affected by local and national government. For example: The allocated country is
overwhelming political corruption. Political leaders in power are susceptible to pay for personal
benefits (Knight and Liesch, 2016). This kind of element impact negatively on the Lidl
supermarket which want to expand their business in Mexico. Government is not introduced
enough policies for developmental chances. Mexico trusted on World Bank and International
Monetary to create adjustments. Therefore, nation needs government to focus on policies for new
employment which is highly positively impact on the Lidl supermarket for business expansion in
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allocated business environment. This business expansion is beneficial for Lidl in relation to
growth and development, increasing profitability and productivity in retail industry. This help to
create the high position at the international level.
ECONOMICAL FACTOR
Allocated nation places second for the largest economy in Latin America and Brazil leads
in first place. Plenty of the economy comes from exports shipped to global market. The funds by
exports is beneficial for the nation, but it is not enough to reduce the poverty. Nation battles to
generate enough jobs for their people. Those persons who do have jobs that they do not make
enough the costs of living. High poverty effected on business expansions to Lidl supermarket in
the Mexico. Inflation rate, interest rate, unemployment, limits investment, population, GDP etc.
which are involved in the economic environment of allocated nation (Lasserre, 2017). The nation
experienced big economic condition in which Mexico trusted on US for remittal. These recitals
are typically put towards healthcare, food, housing and education. Country needs for new
technology and security, but nation is not place to pay for this costly good which provides no real
benefits to the nation. For example, if the inflation rate has been increased, so that people do not
buy the high price products and services which can negatively effected on the operation of Lidl
supermarket. This business expansion is beneficial for Lidl in relation to growth and
development, increasing profitability and productivity in retail industry. This help to create the
high position at the international level.
SOCIAL FACTOR
It involves standard of living, culture, education etc. in social factor of Mexico. Allocated
nation is largely Spanish speaking country with more than half of population living in urban
areas. Due to poverty issue, nation is improved their literacy rates and education. Social status is
affected by families ties which is starting from birth to old age. Cultural factor can effect type of
products if manufactured or sold and markets they are sold in. The fundamental part of the
market where goods and services are sold to that is essential resource for business organization
that is Lidl supermarket (Morschett, Schramm-Klein and Zentes, 2015). The focus will be in
demographic and at the problems of cartels in Mexico. Social and cultural influences have
important effect on business operation. For example more female begin to work outside their
home which is changed the culture. It is also opened up new business chance. Fast changed in
society can have negative effected on company and their operation in relation to business
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expansion. If the company want to expand their business in the Mexico so that it can help to
reduce poverty, increase income level and employment in the nation. This can help to effective
expansion of business organization in the allocated country. This business expansion is
beneficial for Lidl in relation to growth and development, increasing profitability and
productivity in retail industry. This help to create the high position at the international level.
TECHNOLOGICAL FACTOR
Technology has aided citizens find new job chance. Computers are more frequently
utilised by companies and personal computers by smaller businesses. With this, there are
increased high level corruption which is involved in technology factor. In relation to that, the
largest reform that allocated nation is the development of telecom system. It is very essential
when telecom system work well which has impact on economic and social development. It is the
wider strengths, growth and productiveness (Schaltegger, Hansen and Lüdeke-Freund, 2016).
Due to reform telecom sector will have better coverage level and better penetration. They will
have lower prices and effective quality of services. This kind of strategy help to Lidl supermarket
for their business expansion in the allocated business environment. Effective telecommunication
reforms is beneficial for companies and its operations in the nation. In order to that, firm need to
adopt all telecom reforms which highly effected on the business and its operations in relation to
business expansion in the allocated country.
ENVIRONMENT FACTOR
It includes geography, climate, air, water pollution, environment laws and so on. These
factors included in environmental factor of allocated nation in which Lidl supermarket want to
open new store and expand business. For example: the new environmental Law is the essential to
show the publication of regulations of law and additional rules relating to Environmental
Protection State Agency law. This regulation is essential to release pollutants to the environment,
water and limits for utilise of natural resources which set up the foundation for the growth of
market of environmental bonds such as carbon bonds (vom Brocke, Zelt and Schmiedel, 2016).
This kind of environment regulation effected on the operations of Lidl supermarket and its
operation in relation to open a new store in the Mexico. In this context, Lidl needs determining
the all environmental regulations and laws which highly effected on the business and its
operations in relation to business expansion in the allocated country. This business expansion is
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beneficial for Lidl in relation to growth and development, increasing profitability and
productivity in retail industry. This help to create the high position at the international level.
LEGAL FACTOR
The legislation and bureaucracy will not go into the core of the system, but the aim is to
provide thought of two systems combined to each other functions overall in Mexico. It is
essential to open up level of bureaucracy and regulations of nation. It can be preventive to many
transborder business if they seem very complex. Therefore, the legal environment has effected
on the Lidl supermarket on various views. The aim of regulations are to govern status of firm, its
consumer relationship and suppliers as well as internal processes (Wang and et.al., 2016). The
aim of legal environment is to make laws and processes to regulate corporate activities in
relation to protect customers and restricts unfair business behaviour. Legal factors involves
employment law, consumer rights, labour law which are highly influenced on operations of firm.
Therefore, it is necessary to determine all the regulations while Lidl supermarket open their new
store in the Mexico. This business expansion is beneficial for Lidl in relation to growth and
development, increasing profitability and productivity in retail industry. This help to create the
high position at the international level.
Levels of threats and organizational strategies (Porter's Five Forces)
Porter's Five Force Model:
Lidl supermarket want to open the new store in Mexico, so that, it is necessary to analysis
the levels of threats and organizational strategies by utilizing the porter's five force model by
company.
Existing competitors:
The number of challengers in the industry in which Lidl operates are very few. In
Mexico. This means that companies will not create moves without being unnoticed in the retail
industry. Few competitors have large market share. This refers that these will engage in the
competitive activities to gain position and become market leaders in the Mexico.
Bargaining power of buyers:
There are number of buyers in the industry in which Lidl operates. It is lot more than
number of companies producing the goods in the Mexico. The product differentiation within the
industry is very large which refers to that buyers are not able to discover alternative companies
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producing the specific good. Company is focused on invention and differentiation to attract the
more consumers.
Threat of substitutes:
There are few substitutes available for the goods which are produced in the industry in
which selected company is operated. Few substitutes available are high quality but as way more
expansive. Relatively companies producing and selling at lower prices rather than substitutes
with high quality if retail industry in the Mexico.
Bargaining power of suppliers:
The suppliers have less control over prices which makes the bargaining power of
suppliers weak force. The good which suppliers give fairly standardised, less differentiate and
have low switching costs. This makes easier for buyers like Lidl to switch suppliers in the
allocated business environment.
Threats of new entrants:
The economic of scale is fairly complex to accomplish in the industry in which selected
company is operated. It makes easier for those producing high capacitate to have cost advantage.
There is threat for Lidl in relation to expand their business in the Mexico.
CONCLUSION
This report has summarised that selected business organization want to expand their
business in allocated business environment. It can be concluded that background information of
company like operations, financial performance, approach to retail relating to selected company.
It can be discussed that background information of business environment such as GDP rate,
population, government, international monetary funds etc. relating to allocated nation.
Furthermore, report has completed that utilise the PESTLE analysis which involve government
policies, GDP rate, society influence, environmental regulation, legal factors which includes in
selected business environment. These factors have influenced in both positive and negative on
operations of firm. This business expansion is beneficial for selected firm in relation to growth
and development, increasing profitability and productivity in retail industry. This help to create
the high position at the international level.
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REFERENCES
Books and Journals
Alava, R. P. and Mu, J. M., 2018. PEST Analysis Based on A Case Study for. Neutrosophic Sets
and Systems, p.84.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.
Fassin, Y and et.al, 2015. CSR and related terms in SME owner–managers’ mental models in six
European countries: National context matters. Journal of Business Ethics. 128(2). pp.433-
456.
Goodwin, N and et.al, 2015. Macroeconomics in context. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hurtado Sandoval, A., 2015. Wind Energy Development in Mexico-A case study of the potential
for local socio-economic benefits in Mareña. IIIEE Master thesis.
Knight, G.A. and Liesch, P.W., 2016. Internationalization: From incremental to born
global. Journal of World Business.51(1).pp.93-102.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp.
978-3658078836). Springer.
Schaltegger, S., Hansen, E. G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Wang, Y. S. and et.al., 2016. Factors affecting hotels' adoption of mobile reservation systems: A
technology-organization-environment framework. Tourism Management.53. pp.163-172.
Welford, R., 2016. Corporate environmental management 3: Towards sustainable development.
Routledge.
Online
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Inequality and GDP per capita, 2018. [ONLINE ]. Available through. :
<https://www.imf.org/en/News/Articles/2018/11/07/NA110818-Mexico-Economic-
Outlook-in-5-Charts>.
Mexico GDP Growth Rate, 2019. [ONLINE ]. Available through. :
<https://tradingeconomics.com/mexico/gdp-growth>.
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