Pestle and Swot Analysis of ALDI

Business and
Business
Environment

CONTENTS
Contents...........................................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Type and purpose of organisations and its legal structure....................................................1
P2. Size and scope of different type of organisations..................................................................3
TASK 2............................................................................................................................................4
P3. Relationship between different organisational function and their link with organisational
objective.......................................................................................................................................4
TASK 3............................................................................................................................................6
P4. Positive and negative impact of macro environmental factor over organisational objective6
TASK 4............................................................................................................................................8
P5. Internal and external analysis of strength and weakness of organisation..............................8
P6. Interrelation between the macro environmental factor with strength and weakness.............9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to the combination of internal as well as external factors
that may affects the ability of a company to maintain its position in marketplace. This includes
suppliers, government law, social and economic trend, competition , customers etc that influence
the strategies or plan formulated by company (Zsambok and Klein, 2014). This report describe
about ALDI which is a discount supermarket that operates its business in more than 20 countries
worldwide. It provides a range of products from food to household category and is headquartered
in Germany. It elobrates about the type & purpose of organisations along with their size and
scope with in the business encironemnt. It also describes about interrelationship shared by
different functional unit within an organisation. Further it includes a detail analysis of pestle
framework to determine its positive and negative impact on organisational activirties. In
addition to this project also includes SWOT analysis to determine the strength and weaknesses of
ALDI and their interrelation with macro factores.
TASK 1
P1. Type and purpose of organisations and its legal structure
Business environment refers to the collection of all the individuals, institutes and other
forces that are present within or outside the organisation and have a greater influence over the
plans and policies that are formulate by a company. Business environment consists of various
types of organisations that are different in term of their size, operations and purpose. The type of
business organisations can be better understood using following points
Public organisation: - These types of organisations are owned by government which is
generally operated for providing services to its citizens. The fund for public sector organisations
are usually raised from taxes, fees and fund transferred from government (Zeng, Li and Duan,
2012). The Crown Prosecution is a public sector company which handles the cases that have
been investigated by police to ensure that the culprit person must be punished for the right
offence. It works independently from police or government in England and whales.
Purpose:- The aim of Crown Prosecution Service is to provide assistance to police
department for solving different criminal case so that the offenders get justice and right person
get prosecuted for their attempt to crime.
Legal structure:-
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 State government: It refers to a regulatory body which is subdivided into federal form
and work at a level below the central or national government.
 Local government: It is defined as administrative body which have a control over a
small geographical area like city, town etc. And is not liable to pass law that will affect a
wider area.
 Central government: It is a political authority that has a power to control the whole
country by formulating laws and regulations.
Private organisation:- It refers to type of enterprises that are owned and operated by either a
single individual or companies rather than a governmental authorities. Private sector
organisations are generally operated with the aim of achieving profit (Yu and Ramanathan,
2013). ALDI is a privately owned discount supermarket chain retail company that offer different
types of product related to food, beverages, household goods and sanitary articles.
Purpose:- Main aim of ALDI is to provide a wide range of quality products to its customers
throughout the world by marinating a long chain of retail supermarket
Legal structure:-
 Sole proprietorship: It refers to the company which is owned and operated by a single
individual with an aim to enhance its standard of living and who is personally held
responsible for all its debts.
 Partnership: It refers to a formal agreement in which two or more parties’ joint together
for managing and operating a business in which liabilities and profits are distributed
among partners.
 Limited company: It refers to a type of private company where the owner’s liability is
limited by share and shares are prohibited from being publically traded.
Voluntary organisation: - It defines as a group of people who jointly enter into an
agreement with common interest to form up an organisation for the accomplishment of their
goal. Voluntary organisation performs its operation to serve for the welfare of people and society
at large (Wack, 2017). United Nations International Children’s Emergency Fund (UNICEF) is a
perfect example for voluntary organisation. It is headquartered in New York work toward
providing emergency food and healthcare related services to children.
Purpose:- It main aim is to provide protection to children against violence, abusive situation
and exploitation such as child labour, child marriage and child trafficking.
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Legal structure:-
 Unincorporated association: It refers to the group of people who come up together to
form an association for the welfare of society. These associations are generally operated
by constitutions and management committees and are not recognised as a legal entity.
 Charitable trust: It refers to a limited that are regulated by charitable commission that
must be limited by guarantee and not by shares.
 Incorporated organisation: It refers to the association which is recognised as a legal
entity and body separated from its directors. Here the directors are not help personally
responsible for debts of company.
P2. Size and scope of different type of organisations
There are generally three types of organisations that operate in business environment which
are public, private and voluntary enterprise (Vaiman, Sigurjonsson and Davidsson, 2011). But
these are different in term of their size, objective and scope which can be better understood using
following points:
Public sector:- The Crown Prosecution Service is a public prosecuting agency that perform
its operations in conducting criminal prosecutions in England and Whale.
 Product or services: It offer services related to providing legal advice to police and other
investigation agencies during criminal case investigation in Crown and Magistrate courts.
 Size and scope: It has around 6000 people among half of them are lawyers who represent
the investigation of Crown in several courts for hearings.
 Vision and mission: The mission of Crown Prosecution Services is to provide
community with a professional, independent and efficient criminal prosecution services.
Its vision is to provide high quality of prosecution services to community so that they get
justice.
 Business objective: Main objective of CPS is to limit the unlawful practices and to
improve the way through which criminal cases are handled and heard in court so that fair
decision can be taken.
Private sector:- ALDI is a retail sector company that offer high quality of product or
services through its long network of supermarkets that are speeded over international level
(Türetken and et. al., 2011).
.
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 Product or services: It a grocery stores that offer products in category like food,
beverages and household product.
 Size and scope: ALDI operates around 10000 stores across the world and 1600 stores in
UK with more than 30000 employees working within it.
 Vision and mission: Its mission is to provide high quality product to its customers so that
they can lie a lot by spending a little. The vision of ALDI is to become top retailer around
the world by widening its network and store locations.
 Business objective: Main objective of company is to satisfy the need of customer by
providing quality product at relatively low price that can be affordable to customers.
Voluntary organisation: UNICEF is a non-profit organisation which performs operations
toward safeguarding the children rights.
 Product or services: This organisation work toward safeguarding the children from being
exploited and abused to provide them a better life. Apart from this it also provide food
and healthcare services to children in emergency.
 Size and scope: UNICEF provides its services in more than 190 countries around the
world for safeguarding the children and providing them a better and healthy life.
 Vision and mission: Its vision is to establish children’s right as international standard of
behaviour and ethical principle toward children. UNICHE mission is to advocate for the
children’s right and to help them in fulfilling their basic needs by providing food, shelter
and heath cure.
 Business objective: It main objective is to eliminate the discrimination by promoting and
advocating for the women rights and to support them for participating in social, political
and economical development of communities.
TASK 2
P3. Relationship between different organisational function and their link with organisational
objective
Organisations business operations are divided into several functional unit which perform
different activities but are interrelated with one another (Tayur, Ganeshan and Magazine, 2012).
It includes finance, human resources, marketing, Research and development and man more.
ALDI must ensure proper coordination among its functional department for achieving better
market performance which provides an opportunity to achieve competitive advantage.
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Organisational structure: It refers to the system which is used to define a hierarchy
followed by an organisation (Saleem, 2017). ALDI follows a divisional organisational structure
for operating its operations effectively throughout the world. It refers to a structure that organise
the business activities around geographical area according to the product or services group.
(Source: Organisational structure of ALDI, 2018)
Above given image depict about the divisional structure followed by ALDI which divide
the department as peer their operations.
Interrelationship between functional units
Following points describe about the interrelationship between the functional units that are
shared by the different departments of ALDI:
 Human resource management: this unit is responsible for the hiring, managing and
controlling the personnel working within an organisation. Hr department is conceded as a
main part of organisation. So in order to develop a competent workforce it is very
essential for the other departments of ALDI such as marketing, finance, research and
development to communicate about the requirement of employees with particular skills.
Apart from this they can also communicate with HR manager regarding the training
programs that are required to be conducted for sharpening up the skills of employees. By
maintain effective communication with HR department ALDI will be able to get high
skilled workforce that provide competitive advantage.
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 Marketing department: This department is responsible for promoting the brand and
products or services offered by ALDI. So, it is very essential for marketing department to
communicate with HR unit for hiring effective sales personnel that support in increasing
volume of sale by influencing customers (Meiners, Ringleb and Edwards, 2014). Apart
from this it must also communicate with R&D unit in order to get information about
demand of target customers so that effective marketing strategy can be formulated
effectively.
 Finance department: this unit is responsible for management of fund that flow within or
outside the company. Financial department must maintain coordination with other
department like marketing, HR and so on in order to determine their financial need for
performing operations. This will support financial department to made fund available
whenever required and to minimise the extra expenses of company.
TASK 3
P4. Positive and negative impact of macro environmental factor over organisational objective
The operations performed by a company are greatly influenced by the changes in macro
environmental factor. So in order to perform operations effectively it is very essential for ALDI
to analyse the macro environmental factors that support in determining the positive as well as
negative impact of external factors over business operations and its objectives. This analysis can
be performed using analytical tool named as PESTLE which evaluate the external factors and its
impact over particular business (PESTEL analysis, 2018). Following are the factor involve in
PESTLE analysis and their impact over ALDI’s business objectives:
Political: This factor describes about the degree of governmental intervention in economy
which includes government policies, political stability or instability. Political factor have an huge
influence over the business operations as it include various regulations as well as standard that
are fixed by government over the way a business operates (Sekaran and Bougie, 2016). Hence
the ALDI has to consider those regulations while formulating policies so that operations can be
performed in a legal and ethical manner.
 Positive: The majority of ALDI’s stores are in countries like Europe, USA, Australia
and China which are free from conflicts. Hence treat for political crises are relatively
lower which a positive factor for ALDI’s business operations is.
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 Negative: ALDI perform its operations in different countries around the world that are
different in term of their laws and regulations. So it is very difficult for ALDI to comply
with all political guidelines as it always have to formulate different policies when enter
into new country.
Economical: It generally includes factors like economical growth, inflation, disposable
income of consumer, tax rate and so on. Therefore, business operations of ALDI are greatly
influenced by economical factor as it operates in different nations’ worldwide (Li and et. al.,
2011). But it has store most in developed and developing nations, hence the impact is positive as
such nations have high GDP as well as well maintained inflation cycle.
 Positive: Brexit largely affect the economical condition of country by increasing the
inflation rate but it act as a positive factor for ALDI as it started as a discount store which
provide products at lower price.
 Negative: UK economy recovered from recession this could have negative impact over
business as customer may switch from discount store to mainstream supermarket which
affect the market share of ALDI.
Social: This factor includes need, taste, preference norm and cultural value of customers in a
particular area in which company operates which as a huge impact over the demand and supply
of company’s product. Social factors affect the demand of product as people belong to different
country are different in term of their choice and taste so, ALDI have to analyse the social need
and demand before offering products in particular area.
 Positive: Nowadays, people prefer to purchase all their needed stuff from one place for
saving their time. This is a positive factor for ALDI as it provides a variety of product
under one roof.
 Negative: UK has aging population which is negative factor for ALDI as the cost of
having old workforce may be higher in term of sickness and delay in operations.
Technological: It includes several technological aspects like advancement of technology,
new innovation in market, new way of producing product etc that may affect the business
operations (Gilboy, 2016). It is one of the most crucial factors that ALDI must consider as
changes in technological environment may affect the sale of products and the way it offers.
 Positive: ALDI has implement electronic machines for billing which help them in
reducing the time of company and customers.
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 Negative: ALDI not offer their services through e-commerce platform which has limited
its market share as other competitors offer their product online.
Legal: This element includes the assessment of laws, legislation and regulations that are
required to be followed for operating business in a particular location. It includes employment
law, health and safety, consumer rights etc. ALDI perform its operations across several
geographical areas which follows different laws and regulations (Gharajedaghi, 2011).
Therefore, ALDI must consider those regulator need before formulating a business plan for a
particular region.
 Positive: European commission has fixed the displaying of nutrition facts over food
mandatory for promoting a balanced diet among society. So it is a positive factor for
ALDI, as y providing a description about the healthy ingredients used in product may
attract customer to purchase the same. Negative: The employment law of UK is continuously changing or modifying by
government which affect the operations of ALDI as it required to chance policies related
to employment contract.
Environmental: It refers to several practices as well as legislative regulations that are related
with the environmental protection. Under this factor ALDI must analyse the environmental
safety standards of particular region before offering product or services, as avoidance of such
standards may affect the goodwill of company.
 Positive: ALDI stock their food items from local farmers for offering fresh product to
customer that doesn’t include any harmful ingredients.
 Negative: The concern toward the environmental protection leads to increase in
governmental strictness toward environmental standards which require ALDI to change
their practices in term of packaging material used must be disposable or recyclable.
TASK 4
P5. Internal and external analysis of strength and weakness of organisation
Internal and external analysis helps a company to determine its strength and weakness
which support them in achieving competitive position in marketplace (Crane and Matten, 2016).
For this ALDI can use SWOT analysis that evaluate the internal environment of company to
determining its strength and weakness as well as external environment to identify opportunities
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and threats that are present in market. Following table describe about the SWOT analysis of
ALDI:
Strength Weakness
 ALDI offer high quality product at
relatively low price which is the main
factor of its product attraction toward
customers.
 ALDI has around 10,000 supermarkets
in more than 20 countries and this
wider network support company to
achieve maximum profit from its
operations.
 Since it is a discount store which
thrives at low margin, hence the profit
is heavily depend over the ales volume.
 As compare to other retailers like
TESCO, Morrison etc. ALDI has
ineffective marketing strategy which is
the reason behind its failure in
attracting or retaining customers
(Chetwood and et. al, 2014).
Opportunity Threat
 The consumers demand is increasing
and they are ready to pay premium
price over quality of services. So ALDI
has an opportunity to earn premium
price over their product b providing
better quality products.
 ALDI has an opportunity to expand its
business in emerging economies like
Asia and Africa where population is
higher. Hence, it also prove a high
demand for discount store products.
 One of the biggest threats faced by
ALDI is increasing competition from
online sellers. As increasing demand of
online shopping may limit the market
share of company.
 Change in customer preference due to
recovery from economical crises may
shift their choice from discount to
mainstream supermarket.
P6. Interrelation between the macro environmental factor with strength and weakness
Factors Strength Weakness
Political ALDI operates majority of its store in
UK which has political stability that
aid it to operate its business
effectively.
As having stores in different
countries across the world, any
change to political relation among
countries may affect the ALDI’s
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operations.
Economical ALDI maintain its store in developed
as well as developing nation which
have higher per capita income that
provide an opportunity to increase its
sales performance.
Inflation period may increase the
operational cost of company due to
increase in price of suppliers (Zeng,
Li and Duan, 2012).
Social Demand of high quality product at
low price aid ALDI in attracting large
number of customers.
Changing demand of customers to
purchase product from mainstream
supermarket rather than discount
store directly affect the profitability
of ALDI.
Technological Implementation of billing machines
in store help company to simplify the
way of keeping record of financial
data.
Demand for online purchasing
affecting the demand for store
based retailing activities of ALDI.
Legal Nutrition description over ALDI’s
product packets attract customer to
purchase products.
Fluctuation in employment related
regulation increasing the
employment turnover in ALDI.
Environmental Purchasing product from local
farmers saves the cost of ALDI and
also provides organic food which is
highly demanded by customer
(Zsambok and Klein, 2014).
Increasing strictness toward
environmental standards affecting
the demand of ALDI’s product
which can’t be recycled
CONCLUSION
From the above given information it can be concluded that business environment is
consists of various factors that may affect the operations performed by a company or its position
in market. So in order to remain safe from such threat it is very essential for a company to
analyse the internal as well as external factors present to determine the future changes in
environment that may affect business. The internal analysis can be performed using SWOT
analysis which represent the strength and weakness that a company have major growth
opportunity in market and threat that may affect business. Apart from this external analysis can
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be performed using PESTLE which assess the macro environmental factors to determine its
positive as well as negative impact over business
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