Business Environment Analysis: Key Issues Facing Aldi (BUS101, Sem 1)

This report provides a detailed analysis of the key issues impacting Aldi's business environment. It begins with an overview of the organization, highlighting its core values and mission. The report then identifies three key issues: technological advancements, increasing competition, and the company's relatively small size. It analyzes the impact of these issues on Aldi's operations, using SWOT and PESTLE analysis to evaluate internal strengths and weaknesses and external factors. The analysis covers the effects of technological changes on sales, the challenges posed by competitors, and the limitations of Aldi's low-pricing strategy. The report concludes with a reflection on the research process and the key findings, emphasizing the importance of adapting to external factors for sustained business success. The report underscores the need for Aldi to address its internal weaknesses and adapt to external changes, particularly in technology and competition, to maintain its market position and profitability. The report also includes a bibliography and references to support the analysis.

KEY ISSUES IN
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of an organisation.......................................................................................................1
3 Key issues interrupting the business Environment of Retail...................................................1
Impact of 2 issues on business environment of Aldi...................................................................2
Reflection....................................................................................................................................4
CONCLUSION................................................................................................................................5
BIBLIOGRAPHY............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment of organizations plays an important role in comprises internal and
external factors of the enterprise which comprises employees, management, consumers business
regulations and demand and supply. The report will analyze 3 key issue faced by leading retail
Enterprise of UK that is Aldi. It will analyze impact which are caused due to 3 identified key
issues on business environment. Thus, the report will evaluate individuals learning from issues
and their impact on environment.
Overview of an organisation
Aldi is the leading supermarket of United kingdom serving consumer satisfaction since
ages. It has approximately 10000 stores in 18 countries and has annual turnover of 50 billion
pound and more every year. The ultimate motive of the organisation is to serve quality food
services at affordable prices. The core values of the company has made it a price leader in the
industry across the globe. Further, the mission of firm is to become the leader of merchandise
and distribute health, food and personal care items.
3 Key issues interrupting the business Environment of Retail.
Managing business operations according to changing internal environmental factors plays
important role for implementing effectiveness and efficiency in business environment. There are
various key issues faced by retail sector due to fluctuation in micro and macro factors. The
Supermarkets are food-oriented convenience stores, retailers and distributors comprises dietary
supplements and vitamins.
The major issue impacting the business environment Aldi is advancement in technology.
The technological up gradation is beneficial for the organisation until unless it doe not demand
huge amount of investment. The technological changes assist the organizing in reducing manual
working and increasing effectiveness and efficiency in business operations. However, the
advancement in the technology demands expertise training and development of staff (Teece,
2010). Moreover, it leads to unemployment and also demand highly skilled workers and
employees due to which the company has to change internal process which consume time and
reduce the cost efficiency of organizational functions. The major problem faced by Aldi due to
advancement is decreasing sales of stores because there several leading retailers who are offering
Online shopping to buyers and Aldi lacks the service and innovation. Further, the supply chain
management and stock management are the components which assist the organisation in
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managing resources and making optimum of resources (Matsuno, Mentzer and Özsomer, 2012).
Apart from this, the environment of Aldi still based on traditional concept of conveyor belt
approach and no self service whereas the competitors has adopted the pack-up bag system in
which the companies aims at giving more time to buyers. Therefore, adapting the advancement is
not an easy function as due to which the business environment and function of supermarket lack
the profitability and delivering of consumer satisfactory services.
The increasing competition regarding prices, products and services for Aldi is
continuously increasing and interrupting the business environment of Aldi. The increasing
competition has increased the range of products due to which Aldi is facing decline in sales. The
products and branding of retail is limited due to which consumers gets the chance to differentiate
between the products (Mohamed, 2015). Further, in increasing rivalry activities in market to
attract consumers are adopting various attractive offers and advertising campaigns in which the
business environment of Aldi is lacking and facing a decrease in its consumers base and loyalty
(Naranjo Valencia, and Jiménez Jiménez, 2010). The low pricing strategy of Aldi has also failed
from past few years as the interrupting of specific branding products has created awareness
among buyers about the product qualities. The Aldi offers the products of its own brand because
of which it fails to offer choices.
Besides, another major key issue in business environment of Aldi arises due to its internal
weakness which leads to threats. The major weakness of retail is that size of its organisation and
function are small in comparison to competitors (Popescu, 2013). Moreover, it has been
discovered that due to low pricing strategy the company offers low quality product which has
impacted the overall environment of the organisation.
Impact of 2 issues on business environment of Aldi.
The changing internal and external factors impacts the business environment of Aldi. The
major impact to management and customers services is cause due advancement in technology
and because of limited products and size of firm. The factors impacting the environment are
analysed by implementing the use of Swot and Pestle analysis in which (Lorca-Susino 2014) The
Swot analysis is used to evaluate internal threats and weakness of enterprise which can impacts
functioning and environment (Prajogo, 2016). On the other hand, Pestle analysis is used by the
individual to evaluate the external factors which impacts and interrupts the environment of
business. In accordance to Pestle analysis it has been determined that, the advancement of
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technology is assisting the retail, sectors is enhancing the products and services by making
various innovation in products according to changing requirements of consumers (Roper and
Davies 2010). On the other hand Aldi lack the capital due to which it can't afford huge
investment every time with fluctuations. The advancement in technology in country is also
leading to resource depletion. Apart from this if the company make use of technology it will lead
to employment for which the manual work of firm will decrease and the management has to
retrench some loyal employees and will have to recruit skilled employees according to
technological up graduation. The advancement in techniques demands expertise training and
development guidance for which the company need to investment in various facilities which is
also a time consuming and costly process (Thompson and McLarney, 2017). Hence, it is clear
that adapting to technical changes fluctuates the overall business environment of Enterprise as it
demands complete focus on management towards the changes. Moreover, the changes are
regular and therefore it is not like that entity will adapt one technology can continue its operation
whereas it has to keep the management updated about all the external changes which keeps on
fluctuating. Another major impact to Aldi is caused due to its small size in which it has to face
more impacts to changing government regulations, like taxation, interest rates extra because it
holds low power of returning. The retail has limited products at affordable process due to which
it faces the shift in consumers as there are various substitutes available at same prices. The
internal environment of the company is weakness due to limits increasing competition and
strategies used by rivalries like Lidl. The supermarket offers products at lowest possible prices
but still it does not hold a strong control over its consumer base because of weakness which is
leading to decreasing revenue and market share due to its small size of operations. The market of
Aldi are limited to some specific prime location but it does not have easy availability of product
and it is the major reason behind its limited sales and profits. Limited products of only one brand
is the major reason which impacts the profitability of business as the consumers these days are
more focused on branding of products and not on the quality and pricing therefore it is becoming
important for the supermarket to expand its products to various different brands. Innovation
plays major role in impacting the environment of organisation as it helps the business in reducing
the chance of availability of substitute of the specific products of enterprise (Blut, Evanschitzky
and Brock, 2014).
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Reflection
The collection of data regarding business environment of retail sector was difficult as the
information of the business environment is quite confidential. The business strategies used by
the Retail sector are unique as every strategy and innovation in focused ion serving consumer
satisfaction at affordable prices. While conducting research I analysed that Aldi is the only sector
who focus on selling products at lowest prices and not in term of maximizing profits. Moreover,
the research over the factors impact the business environment helped me to learn various
analytical skills like identifying major weakness and their impacts on business functions. I have
evaluated that Supermarkets, food-oriented convenience stores and other food retailers and
distributors comprises dietary supplements and vitamins. I discovered that its important for the
retailer to monitor over external factors of environment in order to stabilize its business
operations. Further, it was amazing to learn about three key issues impacting the business
environment of Aldi. In my opinion among 3 that is technological advancement, increasing
competition and small size of the company the major impact to Aldi is caused to exploding
competition as it fluctuates overall stability of internal management. The increasing rivalry from
the rivalries interrupts the organisation function because in accordance to the changes the firm
has to formulate its plans, procedures, strategies in order to attain competitive advantage (Chavis,
Klapper and Love, 2011). In order to carryout smooth business operation complying with the
external environment assist the entity in establishing effectiveness and efficiency in its
environment. Collecting information about the rivalries and their operation was the difficult
process as evaluating the information of all supermarkets at one point is quite confusing because
almost all the firm offers similar prices for similar products. I was amazed to learn that the
company use differentiated marketing strategy to attract consumers and the consumer attraction
depends non the attractiveness of advertising and promotional strategy. Writing this report has
enhanced my knowledge over the marketing share and factors which impacts the profitability of
Aldi. Apart from this, the small size of the organisation impacts the investment power of retailer
and if the company anyhow manage to comply with the gradation than also it is very difficult of
the firm to maintaining the use of that innovation. The increasing competition is increasing the
power of buyers as the customers are getting various options of similar products with little
differentiation in prices.
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Hence, the major difficulty I faced was in the second faced in which I have to choose 2
issue impacting business environment of out of three as according to all 3 issue are major and
lads to same kind of impact on the organization operation. The major change is caused in the
internal functioning of business because both that is internal and external changes in business
environment ultimately interrupts the management functions. Evaluating about the impacts
assisted me learning the use of Pestle and Swot analysis which helps the individual in making
comparison of companies function with its rivalries.
CONCLUSION
The report summarized that business environment and its impacts on the organizational
functions. Business environment comprises internal and external factors of the firm which is
evaluated by using business strategies like Swot and Pestle analysis. Further, the report outline
the 3 issues impacting the environment of Aldi the leading retail firm of UK. The company
focuses on serving consumer satisfaction at lowest prices due to which it earns limited profits
and revenue. Moreover, the report analyzed the 2 issue which impacts overall environment of
organization that is advancement in technology and small size of the enterprise in which it offers
limited products to buyers. The report concluded with the reflection on individual learning which
evaluated the personal thinking over factors impacting business environment of Aldi.
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BIBLIOGRAPHY
https://www.google.co.uk/
urlsa=t&rct=j&q=&esrc=s&source=web&cd=14&cad=rja&uact=8&ved=0ahUKEwjanOjT_KT
XAhVDYo8KHVJJD6AQFghlMA0&url=https%3A%2%2Fwww.uos.ac.uk%2Fcourses
%2Fother%2Fcontemporary-issues-business-environment&usg=AOvVaw3nVHc4tWbKstitx-
76xxMF
http://www.firstcarbonsolutions.com/resources/newsletters/july-2015-top-environmental-
problems-and-their-impact-on-global-business/top-environmental-problems-and-their-impact-on-
global-business/
https://www.forbes.com/forbes/welcome/toURL=https://www.forbes.com/sites/
cherylsnappconer/2013/03/04/the-8-great-challenges-every-business-faces-and-how-to-
masterthemall/&refURL=https://www.google.co.uk&referrer=https://www.google.co.uk
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REFERENCES
Books and Journals
Blut, M., Evanschitzky, H. and Brock, C., 2014. The impact of service characteristics on the
switching costs–customer loyalty link. Journal of Retailing. 90(2). pp.275-290.
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Lorca-Susino, M., 2014. The Eurozone and the economic crisis: an innovative SWOT analysis.
Economics, Management and Financial Markets. 9(2). p.27.
Matsuno, K., Mentzer, J.T. and Özsomer, A., 2012. The effects of entrepreneurial proclivity and
market orientation on business performance. Journal of marketing. 66(3). pp.18-32.
Mohamed, A., 2015. The international business environment: a proposed analytical framework.
International Journal of Business Environment. 7(2). pp.168-199.
Naranjo Valencia, J.C., Sanz Valle, R. and Jiménez Jiménez, D., 2010. Organizational culture as
determinant of product innovation. European Journal of Innovation Management.
13(4). pp.466-480.
Popescu, G.H., 2013. Macroeconomics, effective leadership, and the global business
environment. Contemporary Readings in Law and Social Justice, 5(2), p.170.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Roper, S. and Davies, G., 2010. Business to business branding: external and internal satisfiers
and the role of training quality. European Journal of Marketing. 44(5). pp.567-590.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning,
43(2), pp.172-194.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning.
43(2). pp.172-194.
Thompson, J. and McLarney, C., 2017. What Effects will the Strategy Changes Undertaken by
Next Plc Have on themselves and their Competition in the UK Clothing Retail Market?.
Journal of Commerce and Management Thought. 8(2). p.234.
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