Influence and Impact of Macro Environment on Lidl Company and Their Strategies

This report discusses the influence and impact of the macro environment on Lidl Company and their strategies. It covers topics such as the internal environment and abilities of the organization, Porter's five forces model, and strategic planning for the company.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1-................................................................................................................................................3
Influence and impact of macro environment on Lidl Company and their strategies...................3
LO 2.................................................................................................................................................6
Internal environment and abilities of organization......................................................................6
LO 3.................................................................................................................................................9
Porter’s five forces model in context of Lidl...............................................................................9
LO 4...............................................................................................................................................11
Theories, models and concepts as well as devise used for strategic planning for company......11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy is companies working plan for achieving their vision, mission,
competing successfully, prioritizing objectives and optimizing financial performance with their
effective business model. It consider as powerful tool used to help firms for gaining their
business aims. It aid to create clear vision and milestone for overall company. It is really very
essential that all workers within an organization have defined aims and are following guidance,
direction and mission of business. It can be said that by creating effective business strategy
organizations can create competitive advantages.
The current study is based on Lidl firm operating their business across UK with skilled
and talented applicants. This report explains influence and impact of macro environment on
company and their strategies. Internal environment and abilities of firm using suitable framework
and justify Porter’s five forces model impact on organization. Furthermore, this study will
examine range of concepts, interpret, models and theories and devise strategic planning for
company.
LO 1-
Influence and impact of macro environment on Lidl Company and their strategies
Lidl is a German international discount supermarket chain in Neckarsulm, Germany
which operates its business over 10,000 outlets across Europe. It has a range of high quality
products and fresh food items offer every day to millions of consumers. The vision of this
company is to enhance living standards of consumers by offering quality goods at market leading
value whilst assuring buyer’s satisfaction is at heat of everything they do. Along with this,
organization mission is to offer everyone (Employees) the best work place where they can feel
safe and works hard. Lidl work hard to achieve their set objectives mention below-
 To assure value by constantly optimizing and innovating efficient procedure and also
assure market leading quality.
 To work with shareholders in sustainable relationships.
 To contribute and support positively to local communities.

To achieve all these objectives company has to create and apply effective strategies, but
before this act they had to conduct external environmental analysis by using appropriate tools or
frameworks.
PESTEL analysis-
Political factor-
Political stability or instability, tax policy and trade restrictions impact on organizations
strategies and business practices (Enroth, 2017). In context of Lidl, Brexit affects overall
business performance negatively, it can influence firm as it sources huge proportion more over
70 percent of their products in United Kingdom. It impact business expansion strategy of firm
into US where they can gain attention of more people towards purchasing quality food products.
Above factor create trade barriers between UK and US companies which is not suitable for them.
Economic factor-
Unemployment rate is one of the economic factors that impact on Lidl employment
strategies and marketing plan for hiring new applicants (Johnes, 2019). UK unemployment rate
fall to 3.9% in three months in 2020. Government put pressure on big companies like Lidl to hire
local people it impact on company employment planning and procedure positively. It gives the
biggest chance to firm for hiring top most applicants from talent pool. Management had to
change their existing plans and recruitment strategies that may be take time but put positive
impact.
Social factor-
Consumer preference change is one of the biggest social factors that directly impact on
production and marketing strategies of Lidl negatively. Organization faces challenge to gain
attention of consumers and satisfy their needs (Kunc and Križan, 2018). In recent time, people
drive more towards using organic products that is good for health, they buy products according
to preference. It put pressure on company to store all items according to consumer’s needs and
requirements that is tough to do because individual preference get change accordant to market
trend.

Technology factor-
Technological advancement and improvement put positive impact on marketing
strategies of Lidl about their products or services (Pantano, Priporas and Dennis, 2018). With
digital technology organization spread their brand awareness all around the world and gain
attention of consumers rather than before. With advance Technology Company create their
promotion strategy in effective manner and add some interesting features in it. It impact in
positive manner which in return increase profitability, productivity and sales rather than before
that is beneficial for company.
Environmental factor-
Buyers and government are becoming more aware about environmental sustainability it
put high pressure on retail companies to drive towards reducing carbon footprint (Young and
et,al., 2018). It put positive impact on Lidl firm they already take one set ahead for driving
business towards sustainable business practice. To protect environment from air, water and land
Pollutions Company take essential step. They use recycle paper packaging for food products
instead of plastic packaging because it fills land from harmful elements that cannot be reused.
Legal factor-
Equality Act 2010 is legal factor that put positive effects on Lidl and its business
strategies related to wage. In fast paced environment like retail industry, it is really very
important to be capable to respond to regulations and laws to avoid negative reputational costs
(Flynn, Schröder and Chan, 2017). According to above act Lidl had to pay fair wages and
provide all the rights to its staff which in return retain skilled and talented applicants with
business for longer period of time who are able to contribute in competitive environment.
SWOT analysis -
Strength-
Discount offer in stores of Lidl is one of the biggest strength which makes the able to
gain attention of new consumers and retain the existing one. They provide most daily utilize
goods to local people with best offer and quality (Shaikh, Karjaluoto and Häkkinen, 2018).

Outlet sells most important items at affordable prices that are much lower than organization
competitors. Effective pricing structure allows company to sustain within marketplace for longer
period of time. Through this strategy firm enhance their customer base more than before.
Weakness-
Along with above strength, Lidl company have some weakness that impact on its
production, marketing and other strategies. Inability to penetrate successfully and effectively in
foreign marketplace such as china is weak point of firm that affects negatively on its business
growth plan (Tomasevic and Spasojevic, 2018). Organization restricted itself usually just to
USA, US and Europe and not attempt to focus on Asia where they can earn more than before.
They have been lacking concentrate on this market which has most promising emerging markets
like India and China.
Opportunity-
It refers to those avenues in macro environment that surrounds Lidl on which it can be
capitalize to increase their returns. The growth of online market it one of the best opportunity
company can gain to target new consumers (Hardaker, 2018). It opens up new segments and
markets for organization across the world which in return increase profits and sales rather than
before. By gaining this opportunity and entering into new market place company will strengthen
their brand image effectively more than its competitors.
Threat-
Threat is that factor in environment which can be detrimental to success and growth of
business. Intense competition between existing players to gain profitability and become market
leader threatens Lidl. There are number of competitors challenging firm in United Kingdome
and other European nations. TESCO, Morrison’s, Sainsbury and Aldi are the main competitors
of company. They all are strong and powerful companies and able to give tough competition to
Lidl. This type of threat impact on organization marketing strategies and production that is not
suitable for business success.

LO 2
Internal environment and abilities of organization
Value chain analysis-
Here, this tool is used to analyze Lidl capabilities and internal environment of company.
Primary activities-
 Inbound logistics- Lild name this as main distribution and business practice contain
centre of products as warehouse from provider, distribution to outlets and indoor
handling. Company is able to manage their inbound activities; they eventually place food
items on display at shelves (Mulder and et.al., 2019).
 Operations- Procedures form essential and risk area for smooth and effective functioning
of Lidl. Functions include day to day inventory management, management of stocks and
shelf display to assure competitive benefits. Production department is able to manufacture
products according to consumers needs.
 Outbound logistics- It associated with practices that deal with obtaining finished items
and service to target market. Lidl presents sustainability to customers by offering them
home delivery options. Efforts of management are also developed to improve
pantechnicon place and other tangibles to enhance comfort to people.
 Marketing and sales- Organization is capable to retain consumers with purchase for
long, they reward buyers in any of their new outlets with a Welcome card. This card
allows customers to select one free product every week for up to 6 week.
 Services- Lidl with knowledgeable applicants provides after sales services they give
quick response to consumer’s queries. Workers read complaints about poor after sale
service and communicate with buyers to cater the best one which in return increase
consumer loyalty.
Secondary activities-
 Company infrastructure- Within Lidl many important and beneficial activities are
conducted which increase sales rather than before. Organization have department of

managing legal matters, quality management, strategic and other as well. With effective
infrastructure company is able to optimize value of overall value chain.
 Human resource management- HRM and its team members effectively analyze need
for skilled applicants in workplace. They create hiring and recruiting plan and then
implement to hire talented workers who are able to gain competitive advantages for Lidl.
 Technology development- In order to run production and marketing functions in
effective manner, Lidl implement new and advanced technologies. Technological
integration in distribution, human resource, manufacturing and marketing activities
enhance productivity and profitability of company rather than past few years.
 Procurement- It denotes procedures included in purchasing inputs that may range from
raw materials, equipment, supplies and machinery. Organization always considers their
procurement activities to optimize operational, inbound and outbound activities. They use
ERP systems and other tools to manage business practices.
VRIO framework-
It is one of the best analytical methods or frameworks effective for organizations
resources evaluation and thus competitive benefits. It is a business analysis tool that forms part
of companies’ larger strategic plans. Here, this framework is used in regards to Lidl for
analyzing their capabilities and internal environment.
Value-
Lidl is able to satisfy their consumers and fulfill their needs by offering lower pricing
products with better quality. Management is capable to conduct market research and identify the
customer preference that is important before delivering products.
Rarity-
By increasing speed for delivering food items to consumers Lidl is building strong
relations between management and buyers. It makes them able to gain consumers attention and
retain potential clients with business for longer period of time that is quite beneficial for
company.

Figure 1VRIO Analysis
(Source: Explaining The VRIO Framework, 2019)
Imitability-
The organization is not able to offer something that is valuable because their products are
easy to copy and offered by others. For example, TESCO provide quality and fresh food items to
people similar to Lidl or may be better than it.
Organization-
Lidl Company is able to organize their management systems they have organized
production procedures, appropriate organizational culture and well infrastructure to capitalize on
abilities.
LO 3
Porter’s five forces model in context of Lidl
Bargaining power of suppliers-
Suppliers are the most important stakeholders of Lidl they help to increase sales and
productivity more than competitors (Huang and Huang, 2019). The extent of this force is low
because number of suppliers available in retail industry in which firm operates a lot compared to
consumers. It means that suppliers have less control over prices and this makes their power
related to bargaining a weak force. It put positive impact on firm and allows them to deliver their
products without facing any issues. Goods that these providers cater are fairly standardized, have
low switching costs and less differentiated. It also makes easier for buyers like Lidl Company to

change or switch their suppliers who seek to increase supply cost more than before. Accessibility
of suppliers within industry Permit Company to chose the other one who are able to work with
them for longer with common terms and conditions that is beneficial for both of them.
Bargaining power of consumers-
At high extent this force put negative impact on Lidl sales and production activities.
Buyers hold power to change price and quality of goods offer by company they are able to put
pressure on firm to provide things according to market needs and trends. As people have many
opinions instead of purchasing from Lidl supermarket. Consumers play vital role in success and
growth of companies they pay in exchange of products which in return increase sales of business
and profitability. Quality and price of items matter a lot for purchaser they always focus on these
two elements before purchasing anything. This makes bargaining power of customer’s high force
within retain sector. People are high price sensitive they always seek to buy things with
combination of quality and pocket friendly budget. Along with this, it analyzed that product
differentiation within retain industry is low which means that consumers are able to find
alternative companies manufacturing and delivering similar product.
Threat of new entrance-
The degree of this force is high because retail sector provide access to distribution
network for new companies. With only few retail stores selling products type it is easy for any
company to get their items on shelves. This threat put negative impact on Lidl business strategies
and consumer base. It also create intense competitive environment that may be not beneficial for
company but organization can handle this situation by offering products according to clients
requirement with better pricing structure. It helps to retain loyal consumers with firm for longer.
New firms with better marketing strategies are capable to gain attention of people they
effectively determine current needs of clients and then offer things to them which increase threat
for Lidl Company to sustain for long. To deal with this threat chosen company had to focus on
innovation to differentiate their fresh food and other products from that of new entrants. It can
spend on promotion to build positive brand identification.
Threat of substitute products or services-

Degree of this force is high because in retail industry there are varied substitutes
accessible for goods offered by Lidl to its consumers. Instead of purchasing fresh food products
buyers prefer to use organic items that is beneficial for health. It allows consumers to switch to
other items that put negative impact on Lidl sales and profit margin. High substitutes that are
accessible are also produced by high profit earning sector or may be produced through natural
procedures instead of using chemical that destroy natural nutrients. Threat of substitutes in UK
supermarket sector is considerably high for food goods. Substitutes of major supermarkets are
big convenience stores and have good offers for consumers which are capable to meet all needs
of buyers. It makes supermarket sector attractive but not too much for existing firms. It put more
pressure on Lidl to represent all organic food items on their shelves that gain attention of people
towards purchasing.
Competitive rivalry among existing players-
This is the last force of Porter’s fives forces model which may be put positive or negative
impact on Lidl and its business. Competition is extremely high in UK retail industry where top
most supermarkets like TESCO, ASDA and ALDI offering quality products to local people and
also operates across nation. They all have wide market share which means that these will engage
in competition actions to gain top positions and become market leaders. This can make
competition among current companies a stronger force within sector. Lidl can overcome this
situation by focusing on differentiating activity so that action of other companies would have
fewer attempts on their buyers that seek their unique items. Strategies of existing organizations
within sector are diverse which means they are able to give tough competition and unique to each
other in term of strategy. This outcome in them runs head on into each other in context of
strategy which makes rivalry between firms a strong force.
LO 4
Theories, models and concepts as well as devise used for strategic planning for company
Executive summary-

Lidl company to gain competitive advantages create good business strategy that is
suitable for overall business practices. With strategic planning procedure firm wants to achieve
their mission and vision by using appropriate tools or strategic directions.
Vision-
The vision of Lidl is to gain all competitive benefits along with offering quality products
to its consumers.
Mission-
Mission of company is to enter into new market place like Asia where a lot of
opportunities available to them.
PESTLE analysis-
 Trade policy or restriction is political factor that affects Lidl business plan positively as it
allows them to trade their things across UK.
 With good income source people are able to purchase groceries and other products with
reasonable prices. It put positive impact on firm as it help to increase their sales rather
than before in Asian market.
 Consumers preferences are social factor which impact on Lidl business strategy
negatively because people chance their needs and chose according to mood or trends.
 With technology development company obtain chance to gain attention of new
consumers. By using social media and other digital marketing tools they generate brand
awareness all over the world.
 Concern for environment safety among buyers also put positive impact on firm as it allow
them to sustain for long and gain all benefits by reducing carbon footprint.
 At last, it can be said that consumer’s act put positive effect on company when they offer
products according to new buyers needs.
SWOT analysis-

 As above discussion it analyze that Lidl is able to satisfy their target market into new area
in effective manner by focusing on their needs and preferences and then deliver thing
accordingly.
 Less focus on expansion process is the weak point of this company which they overcome
by planning for entering into new market place.
 With the progress of online market company gain attention of their new consumers they
provide list of products via application to people and deliver their chosen items on timely
manner.
 With differentiation of products Lidl can overcome threat of intense competition and
become a market leader.
Porter’s generic strategies-
Cost leadership-
It can be said that by targeting wide market and offer lowest possible price Lidl can gain
competitive benefits and gain attention of clients.
Cost focus-
By focusing on cost of products company can gain all advantages and achieve their
business aims.
Differentiation leadership-
With this strategy Lidl can become market leader and strengthen their brand image
because it allows them to offer unique goods that add value for buyers.
Differentiation focus-
By providing and delivering items that are perceived by people in new market to be
superiors to other products offer by other companies Lidl gain competitive advantages.
Bowman’s strategy clock-
Low price and low added value-

According to this strategy company can offer low added value with low price to
consumers that may be beneficial for those who are less price focus.
Low price-
To become successful retailer in new marketplace Lidl can lower down their product
price as it help to drive consumers towards them.
Hybrid-
By mixing to elements with each other like offer low price items and differentiate some
other one company can sustain for long with strong consumer base.
Differentiation-
Accordant to this strategy company only need to focus on differentiation instead of price.
They can offer extreme level of perceived added value.
Focus differentiation-
Company can positions their food and other products at high price degree where buyers
can purchase it because of high perceived value.
Risky high margins-
Along with this strategy company face high risk that may be impact on its business
strategy and plans.
Monopoly pricing-
With this strategy company can set criteria for consumers whatever price they wish to
get.
Loss of market share-
By setting middles standard price for each item with low perceived value is unlikely to
gain benefits over many people who can have much better options.
Action-

To gain competitive benefits and enter into new market place Lidl company can used
hybrid and differentiation focus strategy that is quite beneficial for them in term of increasing
profitability, productivity, sales and consumers base.
Evaluation and control-
In order to measure progress of business strategy and benefits of chosen strategic
direction or options Lild and its management consider growth in current profit margin that helps
to identify success. Furthermore, company can use Benchmarking to analyze and control requires
business activities.
CONCLUSION
From above analysis it has been concluded that Lidl company can sustain within
marketplace for long period of time and also gain competitive benefits by adopting and
implementing effective set strategies. With strong workforce organization strengthen their brand
image across UK and deliver quality products to its target market. By using Hybrid and
differentiation strategy firm achieve their aims and measure progress by using benchmarking.

REFERENCES
Book and Journals
Enroth, H., 2017. Fear as a political factor. International Political Sociology. 11(1). pp.55-72.
Flynn, M., Schröder, H.S. and Chan, A.C., 2017. The impact of national context on age diversity
and age management: The case of the UK and Hong Kong. In The Palgrave handbook of
age diversity and work (pp. 499-519). Palgrave Macmillan, London.
Hardaker, S., 2018. Retail format competition: The case of grocery discount stores and why they
haven’t conquered the Chinese market (yet). Moravian Geographical Reports. 26(3).
pp.220-227.
Huang, Y. and Huang, T., 2019. Money-back Guarantees in Distribution Channels: The Role of
Multilateral Bargaining. Available at SSRN 3362654.
Johnes, G., 2019. Retail therapy: worker displacement and re-employment in the
UK. International Journal of Sales, Retailing and Marketing. 8(1). pp.7-13.
Kunc, J. and Križan, F., 2018. Changing European retail landscapes: New trends and
challenges. Moravian Geographical Reports. 26(3). pp.150-159.
Mulder, H and et.al., 2019. Value Chain Analysis for Processed Fruits from Burkina Faso, Mali
and Ivory Coast.
Pantano, E., Priporas, C.V. and Dennis, C., 2018. A new approach to retailing for successful
competition in the new smart scenario. International Journal of Retail & Distribution
Management.
Schmid, S and et.al., 2018. Aldi and Lidl: from Germany to the rest of the world.
In Internationalization of Business (pp. 81-98). Springer, Cham.
Shaikh, A.A., Karjaluoto, H. and Häkkinen, J., 2018. Understanding moderating effects in
increasing share-of-wallet and word-of-mouth: A case study of Lidl grocery
retailer. Journal of Retailing and Consumer Services. 44. pp.45-53.
Tomasevic, N. and Spasojevic, M., 2018. LIDL'S MODERN BUSINESS OPERATIONS IN
THE DOMESTIC AND INTERNATIONAL MARKETS. Economic and Social
Development: Book of Proceedings, pp.346-353.
Young, C.W and et,al., 2018. Sustainable retailing–influencing consumer behaviour on food
waste. Business Strategy and the Environment. 27(1). pp.1-15.
Online
Explaining The VRIO Framework. 2019. [Online]. Available through: <
https://www.clearpointstrategy.com/vrio-framework/>