Analyzing the External Environment of Lidl: A PESTLE Analysis

This portfolio paper analyzes the external environment of Lidl using a PESTLE analysis. It examines the political, economic, social, technological, legal, and environmental factors that impact the organization. The paper concludes with recommendations for Lidl to increase profitability.

GLOBAL BUSINESS
ENVIRONMENT
PORTFOLIO PAPER

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
EXTERNAL ENVIRONMENT......................................................................................................1
PESTLE Analysis........................................................................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Lidl is owned by Dieter Schwarz and its headquarters are in Neckarsulm, Germany. The
company was started by Josef Schwarz as a fruit wholesaler but converted the company into a
general food wholesaler. There are more than 10,000 stores across Europe and United States.
There are 315,000 employees in the organization and the company is a retailer and hypermarket.
The company is not just focusing on the premium customers but also the other therefore there are
discounts which are being provided on the products.
EXTERNAL ENVIRONMENT
There are two tools which can be used by Lidl to identify the external factors of the
organization which are PESTLE and Porter's five forces (Sedláčková, 2017). These factors can
help the company to make appropriate decisions for the future which the organization can benefit
for it. Decision making in the organization gets easier when there is an analysis of the external
factors which are having an influence in the organization.
PESTLE Analysis
PESTLE analysis is a framework so that they can analyse the market for them so that
they do not have any impact on the performance of the company (Iivari and et.al., 2016).
PESTLE stands for political, social, economic, technological, legal and environmental factors
which have a great influence in the organization which have to be considered and analysed
before making decision in the organization so that the organization can function effectively.
Factors Opportunities Threats
Political
Factors- These
are the
governmental
factors which are
impacting the
market on a large
scale.
 The political factors of the
country is stable which is a
great advantage for Lidl.
 Low minimum wages are
going to be profitable for
organization.
 Taxation levels are increasing
by 40% which can be a great
threat for Lidl for a long run
in market (Härmä, 2017).
 The price war with United
States is going to effect Lidl's
profitability.
Economic  The employment level is low  Exchange rates of currency
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Factors- Helps to
understand the
competitiveness
of the
environment in
the market.
in the country which can be a
great advantage for Lidl.
GDP of UK is GBP
2,824,850 million.
 GDP of the country is
improving which is a great
advantage for Lidl.
can be a trouble for the
company (Kasemsap, 2020).
 Interest rates are increasing
the country if the company
expands itself.
Social Factors-
There are a lot of
social factor
which influence
in organization
like
comunication,
media, religion,
culture, etc.
 There is a selected target for
the company.
 Discounts are provided to
customers so that the
profitability can increase (Big
on Quality, Lidl on Price,
2020).
 Lidl needs to provide the
customers with all the details
of the product.
 The customer's education
level is increasing which can
be a threat for the company.
Technological
Factors-
Evaluating
available
alternatives with
respect to
technology.
 Improvement of technology is
huge in Lidl so that they can
have a better functioning.
 Productivity level of Lidl has
improved and cost cutting has
taken place. Technology will
make Lidl have a better
workforce.
 High cost in investing in
technology by Lidl so that
they can profit from it.
 Limitation on innovation in
the company.
Legal Factors-
Effect on
business to make
the business
operate according
to the employees
 Discrimination law in Lidl is
followed properly and
effectively so maintain the
work environment.
 Data of Lidl is secured but if
the data is lost then the
 Employees are forced to work
in bad environment as well
which is making the company
have high turnover.
Employees can fight for there
rights and not work when the
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and customers. company can face major
issues (Piltz and Melkonian,
2018).
environment is not supportive.
 Lidl will have to make the
customers safe and secure
which is stated in employment
& labour law 2019.
Environmental
Factors- The
biotic and a biotic
factors which are
having an
influence on the
living
organization
 Use of renewable resources is
low and that is good for a
long run for Lidl in market.
 Wastage of the company is
minimum which is giving the
organization competitive
advantage.
 Delivery of products on time
is not possible if the
environment does not favour.
 Global warming is effecting
the company majorly with the
selling of products.
CONCLUSION
From the above report it can be concluded that there is a need for analysing the external
and internal factors of the company so that the company can take appropriate measures regarding
that factor. Lidl is having a safe place for themselves in the competitive market but there are a lot
of changes they need to make so that they can increase their profitability.
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REFERENCES
Books and Journals
Härmä, T., 2017. Entering the Finnish grocery store market.
Iivari, M.M and et.al., 2016. Toward ecosystemic business models in the context of industrial
internet. Journal of Business Models. 4(2).
Kasemsap, K., 2020. The role of strategic outsourcing in global business. In Foreign Direct
Investments: Concepts, Methodologies, Tools, and Applications (pp. 236-268). IGI
Global.
Piltz, B. and Melkonian, M., 2018. Immobilized microalgae for nutrient recovery from source-
separated human urine. Journal of Applied Phycology. 30(1). pp.421-429.
Sedláčková, D., 2017. A Competitiveness Analysis of Cykloservis Zlín.
Zhang, M., Chen, H. and Lyytinen, K., 2019. Toward Achieving Architecture Alignment of
Business and IT: A Portfolio Decision Analysis Approach. In Systems Engineering in
Online
Big on Quality, Lidl on Price. 2020. [Online]. Accessed through < https://www.lidl-ni.co.uk/>.
OContext (pp. 1-12). Springer, Cham.
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