Business and Business Environment Analysis: ALDI - HND Level 4 Report

This report provides a comprehensive analysis of the business environment, focusing on the case of ALDI, a grocery retailer in the UK. It begins by explaining different types and purposes of enterprises, their size, scope, and organizational structures, including TESCO's hierarchical structure and ALDI's decentralized approach. The report then delves into the interrelationship of various organizational functions like human resources, production, finance, sales, and administration, highlighting how they are influenced by the enterprise's structure. Furthermore, it examines the positive and negative impacts of the macro environment (political, economic, social, technological, environmental, and legal factors) on business operations, using PESTLE analysis. The report also includes an internal and external analysis of ALDI, applying SWOT analysis to identify its strengths, weaknesses, opportunities, and threats, and discusses how these factors are interrelated with the external environment. The conclusion summarizes the key findings and insights gained from the analysis.

Business and
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different type and purpose of enterprises..............................................................................1
Covered in PPT...........................................................................................................................1
P2 Size and scope of different type of organisations..................................................................1
Covered in PPT...........................................................................................................................1
P3 Relationship between various organisational functions and its link with objectives and......1
structure of enterprise .................................................................................................................1
TASK 2 ...........................................................................................................................................4
P4 Positive and negative impacts of macro environment on business operations......................4
P5 Internal and external analysis of organisation for identifying its strengths and weakness....5
P6 Interrelationship strengths and weakness with factors existing in external environment......7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
.......................................................................................................................................................11

INTRODUCTION
Business environment is a combination of various internal and external factors which
largely affect the activities of an organisation. Any change or variation in these elements affect
the commercial operations of a business in a positive or negative way (Commander and
Svejnar,2011). It is one of the responsibility of manager of every enterprise to identify these
factors and its effect on business operations for achieving smoothness and consistency in
business activities. Analysis of various factors existing in business environment assist manager
in making effective business strategies and policies regarding the enterprise. Analysis of
strategies adopted by competitor also comes under the analysis of business environment as it
comes under the external factors. ALDI grocery retailer in the UK is taken in this report for
study. It contains information about different types of organisations with their different purposes.
Various activities of different department and its link with the objectives and goals of a firm is
also included under this report. Way in which various factors of macro environment affect the
business operations of a firm both in a positive and negative way is detailed here essay. Along
with this, manner in which manager of ALDI can do analysis of firm for identifying its strengths
and weakness and relationship of these strengths and weakness with the various elements of
external environment is also mentioned under this.
TASK 1
P1 Different type and purpose of enterprises
Covered in PPT
P2 Size and scope of different type of organisations
Covered in PPT
P3 Relationship between various organisational functions and its link with objectives and
structure of enterprise
Size and structure largely depends on the sector in which business deals can be public,
private or can be a voluntary. TESCO plc adopts hierarchical structure of organisation which
reflects the large size of business and its activities. In this type of organisational structure,
positions of employees are divided into various sub parts so that authority can be divided among
people and smoothness in business operations can be achieved (Chavis, Klapper and Love,
2011). People at the top position have more authority than the employees working in middle or
lower level. Presently, TESCO has 10 board of directors including chairman and CEO. In the
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stores of TESCO, firm adopts a four layer management system which ensures strong
management of activities but sometimes, it gives rise to bureaucracy and also, disturb the flow of
communication. For removing the barriers, manager of TESCO uses an effective communication
system and can reduce the layers of management.
Structure of an enterprise plays an important role in the overall success of firm as it
affects the quality and process of making final product. For achieving success, it is necessary that
there should be enough flexibility in the structure so that required changes can be done by
managers when needed.
Organisation structure of ALDI
Source: (TESCO organisational structure, 2017)
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ALDI is a large discounted retailer but mainly divided into two parts called ALDI NORD
and ALDI sud. Decentralised organisational structure is presently follow by the firm in which
lower have the responsibility to take business decisions (Eckardt, 2012). This reduce the time of
taking effective decisions and as well as save the cost of firm's operations. This type of
organisation structure increase the skills of a manager.
Relationship among various functions of organisations
Relationship among various functions of organisation
There are many departments run in an enterprise and functions or activities of that
department depend upon its size and structure. This statement can be better understood by the
following: Human resource department: Structure and size of enterprise largely affect the activities
of human resource department. For example: on one hand, decentralised structure makes
the process of decision making fast and effective while, on the other hand, hierarchical
structure increases the time of taking decision related with the routine business activities
which increase the cost of all operations.
 Production: There are large number of tools and techniques available in the market for
making a product and different enterprises choose different processes for producing the
final good for large number of customers. This activity is chosen according to the
structure existing in enterprise.
 Finance: Finance is one of the essential resource required for executing various business
activities. For executing business operations of a large size company huge resources are
required as compared to the medium size firm. For effectively executing large number of
business activities proper finance should be there (Eisenberg and Miller, 2012). Lack of
funds will create disturbance in completing the business activities and along with this will
relate the cost of operations. So in this it comes under the responsibility of finance
department for first analyse the requirement of funds by various department and than
make budget accordingly.
 Sales and marketing department: Marketing department is one of the important
department of every enterprise as this analyse the need of firm's product in large number
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of public and than guide enterprise and its production activity for making products in
order to satisfy the needs of different kind of customers. This helps firm in satisfy its
customers in an effective way which creates loyalty in the mind of consumers.
 Administrative function: This department of enterprise handle the activities like e mails
and handle large number of customers queries (Hamilton and Webster, 2015). This
department of firm prepare necessary documents related with the sale process of
customers and adds effectiveness in the whole process of enterprise.
As type and structure of enterprise largely affects the success of enterprise, roles and
responsibilities of workers are distributed according to the structure. In order to better mange the
operations managers of ALDI should first follow an effective structure so that various needs and
objectives of firm can be fulfilled. With the application of effective organisation structure
objectives such as sales maximisation, optimum utilisation of firm's resources and many more
can be better achieve by ALDI. All functions and quality of that function is also related with the
structure adopted by the firm and size of it so ALDI should effective marketing plan so that
various activities of all departments can be executed effectively.
TASK 2
P4 Positive and negative impacts of macro environment on business operations
Marco environment is known as external environment which includes large number
factor which affect business activities of a firm. Factors of external environment are
uncontrollable by the firm. Legal, political, economical all factors are come under this.
Variations or changes in these factors affect the operations of a business in both positive or
negative way. Managers of ALDI the effect of theses factors by doing the PESTLE analysis.
 Political: Rules, regulations and policies made by the government regarding the working
of various business activities come under this. Every firm became liable to follow these
new rules and regulations and this affect the activities of ALDI. For example if
government increase the tax rate or do modifications in the policy of export import than
this will affect the activities of ALDI (Jayeoba, 2012). Sometime government also decide
the ethical standard of making and deliver product which also affect the operations of a
business.
These factors largely affect the activities of that firms which operate on international
level.
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 Economic: Inflation or deflation rate, overall GDP of a country, currency value all this
affect the activities of a business. Increasing income level of consumers influence them
for buying expensive and luxury products which decrease the sale of products having low
cost. This reduce the sale of ALDI products.
 Social factors: As in today's business environment consumer are becoming more social as
they give attention on how their purchasing pattern affect the society at all. In this way
people are avoiding the retailers which make the product in an unethical way and are
highly irresponsible (Klapper, Lewin and Delgado, 2011). Along with this as needs and
wants of consumers are changing at a fast speed it become difficult for ALDI to make
products in order to satisfy the demands of consumers.
 Technology factors: In today's business environment technology of making products is
changing at a fast speed and change in technology influence the activities of firm to make
the products accordingly. Due to technology revolution presence of online shopping is
also increasing which affect the buying patterns of large number of customers. All this is
creating opportunity for ALDI to offer products online to large number of customers and
to capture a larger market share.
 Environmental factors: Retailers are forced to adopt the strategies which ensures the
safety of environment or don not harm the environment. As increasing use of plastic bags
is hampering the environment and that people blame retailer for this. So for ensuring the
safety of environment retailers are encourages to use the paper bags or quality material
for packaging.
 Legal factors: Legal factors include the various ethical standards set by the government
for making products and the rate decided by the government including tax rate, property
rate and may more. All these affect the activities of ALDI.
As large number of external factors affect the activities of a business so it is very essential for the
manager of ALDI to do evaluation of these factors and its affect on business activities. By doing
this manager can better decide the future activities and can make better plan than its rivals.
P5 Internal and external analysis of organisation for identifying its strengths and weakness
Internal analysis of firm means identifying the various strengths, weakness , opportunities
and threats of a firm. This analysis helps or assists business manager in making business plans so
that strengths of enterprise can be used effectively in a way so that negative effect of its
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weakness can be minimised (Klapper, Lewin and Delgado, 2011). By doing this manager of
ALDI can identify the opportunities exist in the business environment and can do efforts for
capturing a large market share than its rivals. SWOT analysis of ALDI can be understood by the
following:
Strengths: Strengths are the capabilities or that unique features of a firm which make it different
form its rivals (Welford, 2013). By using its strength in an effective way firm can generate large
amount of profits. Following are the main strengths of ALDI:
 Firm deliver quality goods to its customers.
 Lower prices of it quality products is also one of the strength of the firm which attract
large number of customers towards the firm's product.
 Firm has more than 2000 sores in more than 50 countries. Layout of ALDI stores is simple and effective which increase the convenience level of
customers.
Weakness: Weakness are lack of capability of a firm which negatively affect the business
operations and revenues. Following are the weakness of ALDI:
 Captured market share of the firm is lower than its competitors.
 Global presence of ALDI is not that much effective. Sometimes customer perceive the quality of ALDI products low due to its lower prices.
Opportunities: Opportunities are the favourable business condition which give provide a chance
to firm to introduce a new product in the market. Various opportunities can be identified by the
firm conducting research (Krishnan, 2013). For example if ALDI find a need of new product for
satisfying the unmet demand of the customers. That by producing that product firm can capture a
larger market share. Opportunities of ALDI can be understood by the following points:
 ALDI can expand its business activities in countries like Asia and Africa. Firm can invest more funds in advertising for influencing large number of customers.
Threats: Threats are the conditions which negatively affect or decrease the sale of firm's product.
For example introduction of a new product having more features can decrease the sale of ALDI
product (Myers and Korsmo, 2014). Other than this threats of ALDI can be understood by the
following:
 ALDI fails to provide full shopping experience to large number of its customers.
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 Workers of firm are not enough capable for give recommendation to its customers during
the process of shopping.
By conducting an analysis manager of ALDI can identify all its strengths and weakness
and can decide the future activities accordingly or can make business plan for achieving the end
results of business. Internal analysis of firm assist top managers of the company in taking
decisions about the future actions of the firm (Rankin, Windsor and Wahyuni, 2011). Sometimes
analysis of activities done by the rivals also help firm in making better products and capture a
larger market share. Internal analysis give chance to the manager to find out the opportunity exist
in the business environment and properly utilise it for achieving the set targets and to better
satisfy the needs and wants of large number of customers. Along with this with the help of this
analysis various threats can be identified and can be better controlled by the firm by taking
effective actions when required.
P6 Interrelationship strengths and weakness with factors existing in external environment
Main strengths and weakness of a firm largely affect its success and various other
activities. In one hand while strengths or various capabilities positive encourage the success of
enterprise on the other hand weakness negatively blocks the success of firm and hamper the
quality of products. Various factors exist in the external environment affect both strengths and
weakness of firm. One can say that strengths and weakness of firm are directly linked or related
with the variations take place in the factors of external environment.
Strengths: For capturing a larger market share it is very essential and responsible for the
manager of ALDI to find the strengths and use it in an effective way so larger market share can
be achieved by the firm. Any changes in the external environment affect the strengths of a firm.
For example one of the biggest strength of ALDI is that firm operate in various countries and
earn huge amount of profits (Mojaveri and Fazlollahtabar, 2012). So if government of any
country change the rules regarding the export and import than this will definitely affect the
operations of ALDI as firm has to follow the new rules and regulations.
Technology exists in the market is another factor which largely affect the activities of a business
for example if technology changes in one country than the firm who is operating in that country
has to change the technology for deliver products in that country.
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Legal factors also affect the production process of a country. Legal standards and process vary
from country to country and to supply products in that country it is very necessary for the firm to
comply with the legal standards of that country (McDonald and Wilson, 2011).
Social factors include the life style and spending patterns of individual. Tastes and habits of
individuals different from one country to another and in order to betters satisfy the needs and
wants of people it is very necessary forb ALDI to first study about the wants of large number
of customers.
Weakness: Modifications take place in the factors of external environment also affect the
weakness of firms. For example changes done by the government sometimes increase the
complexity of selling process of a firm's product.
Changes in economy of one country make it difficult for the firm to operate in that country and
earn large number of revenues. Sales of ALDI is depend on the economic conditions of another
country (Madsen, 2016).
Not all the changes negatively affect the activities of business some changes in the
external factors positively affect the activities of business for example if government of a country
liberal the rules and regulation related with the export and import than this will encourage large
number of firms to operate business activities on in international and to earn more revenues. So it
is very necessary for the manger to consider all this factors and their effect on business activities
so that maximum benefit can be taken by the firm for capturing a larger market share. Sometimes
changes done by the government decrease the effect of firm's weakness on its business activities.
Not only changes in political factors of external environment affect the business activities
(Macdonald, 2012). As this is not necessary that same technology exist in two different countries
so it is very necessary for the ALDI to use different technology exist in different countries so that
needs and wants of customers of different countries can be better satisfy with the product offered
by the firm.
Various factors of external environment largely affect the strengths and weakness of
firm. So it is very necessary for the manager of ALDI to understand how this affect the can be
maintained by the firm in a way so that maximum sales of firm's product can be achieved and
larger market share can be capture by the market.
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CONCLUSION
From the above information it can be concluded that factors exist in the environment
largely affect the activities of a firm like ALDI. So in this competitive and fast changing business
environment it is very necessary for the manager of ALDI to identify the factors and its affect on
business activities. Analysis of activities done by the rivals also helps or guide manager in
deciding future action of firm. Size and structure of enterprise play and effective role in the
success of enterprise so it is very necessary for the firms to create and support a flexible structure
so that required changes can be done in the business activities for achieving better results. For
planning future activities identification of strengths and weakness can be done by the manager of
ALDI by applying various tools and techniques of analysis. As change in external factor affect
the strengths and weakness of firm so analysis of this should also be done bye the manager of
ALDI to make effective decision in the future.
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REFERENCES
Books and journals
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.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Eckardt, M., 2012. The European Private Company: Do we need another 28th private company
law form in the EU? On regulatory competition of corporate law.
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