ALDI Business Environment Analysis: A Comprehensive Report

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THE BUSINESS ENVIRONMENT
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Table of Contents
INTRODUCTION........................................................................................................................3
ILLUSTRATING THE ORGANIZATIONAL BUSINESS ENVIRONMENT NATURE AND HOW
ORGANIZATIONS OPERATE IN THAT.....................................................................................4
EXPLAINING BUSINESS ENVIRONMENT EFFECT ON THE ORGANIZATION AT MACRO AND
THE MICRO LEVELS...............................................................................................................6
ASSESSING THE IMPORTANCE OF THE EFFECT OF FORCES OF ENVIRONMENT AT INDUSTRY
AND MARKET LEVEL............................................................................................................. 9
DEMONSTRATING UNDERSTANDING OF THE REQUIREMENTS OF STAKEHOLDER’S IN
CONTEXT TO ALDI...............................................................................................................11
MEASURING AND APPRAISING THE EFFECTIVENESS ORGANIZATION’S RESPONSES TO
POLICIES MADE BY THE STAKEHOLDERS............................................................................13
CONCLUSION.......................................................................................................................... 14
REFERENCES........................................................................................................................... 15
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INTRODUCTION
The business environment is the wider term that affects the functioning of the organizations
in many ways. The business environment can be used as the sum of all the different forces
that are around business operations, i.e. the external or internal forces, and affect business
working in various ways. In this report, the business environment of ALDI will be discussed.
The discussion will start with considering in what environmental nature all the businesses
work, the impact of the micro as well the macro factors, and how all the environment
factors distress the organizations at different levels. The assignment report will further
explain the need for various stakeholders for the company. At last, all the measures of the
policies planned by the stakeholders will be measured and their effectiveness will be
appraised. ALDI is the Germany based company that deals in the retail sector and offers a
variety of products to customers such as different beverages, essentials of household, food
etc. The company also has various chains of supermarkets and with that, the business
environment of the company is very dynamic.
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ILLUSTRATING THE ORGANIZATIONAL BUSINESS ENVIRONMENT NATURE
AND HOW ORGANIZATIONS OPERATE IN THAT
The business environment is the term in which all the conditions factors and different forces
that are around the company have some impact on the operations of the business. The
organization’s nature differs with their functioning and operation and thus every business
operates its functions in different nature of the business environment (David and David,
2016). These environmental natures are dependent on the various factors discussed here.
The business environment nature can be of a different variety:
 Interdependence nature
The various factors which constitute the business environment of the company are
interdependent on each other; the change in one will affect the functioning of
others. For example: if the economic condition of the nation changes it will have an
impact on the technology of the company and the same happens with other factors
(Lindgren, 2016).
 Inter-relatedness environmental nature
The environmental nature are also interrelated to each other , it can be explained as
when the policies related to import and export will change because of the change in
the nation's government then, in this case, both political and economic factors of the
company are changing because of the change in one factor (Camilleri, 2018).
 Dynamic environment
The dynamic nature defines that environment of business is changing frequently, for
making progress in the operations the company is trying to bring improvement in
their products matching with latest trends and preferences of consumers. Thus in
this manner, the nature of the organizational environment is dynamic in nature.
 Complex nature of the environment
The complexity of the business environment can be defined as it contains many
different factors such as the various conditions, events activities and with the
combination of these factors business environment is constituted and it affects in
the various manner (Camilleri, 2018).
 Uncertainty
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This factor is very clear that the environment is very uncertain because in the rapidly
growing world activities and trends are frequently changing and thus with that
functioning of ten businesses are fluctuating (Lindgren, 2016).
 Relativity
The environment of the business is relative to factors around them. Such as if the
trend for saree is very common and high in India due to the culture of nations, and
then it would be totally different in western countries.
 Impact
The impact of business also differs according to the factors around them; these
impacts could be long term or short term depending on the current conditions of the
organization in the same industry.
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EXPLAINING BUSINESS ENVIRONMENT EFFECT ON THE ORGANIZATION AT
MACRO AND THE MICRO LEVELS
The environment of the company ALDI is affected to a greater extent at different levels and
these will be discussed here for better understanding of the business environment. In this
section the impact on the micro as well as macro has to be explained, the micro level impact
will be understood with the help of SWOT analysis and for understanding macro impact
PEST model will be used (Charfeddine, 2016).
SWOT ANALYSIS
STRENGTHS WEAKNESSES
 The company ADLI is performing very
well in all the new markets
 The brand portfolio of the company
ALDI is very strong (Bull et al., 2016)
 The company is growing at a faster
rate with the help of a sturdy
network of distribution
 The company is also able to meet all
the bottlenecks of supplies because
they have various reliable suppliers
who help in getting raw materials
easily
 The company has a lower rate of
profitability as compared to industry
 For bringing new technology in the
company, there is a need for further
capital investment
 Other than the core activities of the
company, they are not successful in
any other segment (Bull et al., 2016)
OPPORTUNITIES THREATS
 The company could plan various
new strategies with the introduction
of the new policies of the
environment
 The company can bring stability in
the market with the support of
minimized rate of inflation (Bull et al.,
2016)
 Development in the technology
 The tough and intense rate of
competition
 The changes in the regulations of the
environment (Bull et al., 2016)
 The company’s profitability could be
affected because of fewer sales of
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 The developing market also provides
an opportunity for ALDI to increase
their competitiveness in the market
by their performance improvement
(Bull et al., 2016)
products which give a higher profit in
the other market season
PEST ANALYSIS
POLITICAL ECONOMICAL
 The changes in the nation’s
government will impact on business
functioning because policies and
rules will be changed (Aithal, 2016)
 Various changes in the legislation of
employment may be a riskier
situation for the company
(Shabanova et al., 2015)
 When the financial crisis occurs in
the national company's profitability
increases because consumers shift to
cheaper products (Shabanova et al.,
2015)
 Due to the favourable economic
condition, the company is able to
maintain a better supply chain and
distribution strategies for consumers
SOCIAL TECHNOLOGICAL
 The company Aldi do not have a
positive impact on social factors
because they need to increase their
employment cost because of the old
population of the nation (Shabanova
et al., 2015)
 The behaviour of the customers
buying could be analysed with the
changes in n the competitor's
strategy and this could help in further
 The Aldi needs to focus on the online
services provided to customers
because of the changes in technology
 For improving the supply chain of
Aldi they need to maintain and
develop technological substructure
(Aithal, 2016)
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progress planning
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ASSESSING THE IMPORTANCE OF THE EFFECT OF FORCES OF
ENVIRONMENT AT INDUSTRY AND MARKET LEVEL
It is very important to analyse the environment of business at different levels because that
helps in analysing strategies and also support the growth as well as the progress of the
company. The importance of the environmental forces affect can be analysed by applying
Porter's five force analysis method.
PORTER’S FIVE FORCE ANALYSIS:
FIGURE 1: PORTER’S FIVE FORCE ANALYSIS
The competitive rivalry of Aldi is very high
Aldi is the company that deals in the retail sector and thus there are many competitors in
the retail industry for the company those are creating a problem and the situation of risk.
This is because the products and their prices in this sector are almost the same and thus the
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competitors try to increase their margin with the help of various marketing promotional
activities as well as the campaign. Due to all of these reasons the company Aldi is facing the
problem of the higher rivalry of competitors (ÖNEREN et al., 2017).
New entrant’s threat is medium for Aldi
The new entrants in the market come when there is the need for the establishment of the
brand, infrastructure or opening of the new market for the customers. But this usually fails
because for that new organizations need huge investment (ÖNEREN et al., 2017). But some
of the local market sellers could take up this place by offering the daily grocery item at a
lower cost and this could be a bad situation for the company and this is the reason of Aldi's
medium threat for entrants.
Aldi has a low power of bargaining for suppliers
There are a lot of suppliers in the market those provide raw mat55erials to the retailers at
minimum prices can thus the retailers never face problem in getting a supply of raw
materials. Thus this case Do no leave much impact on the company's functioning (ÖNEREN
et al., 2017).
The power of bargaining for buyers is higher for Aldi
All the competitors of the company have their stores near around the company’s stores and
their entire motive is to provide products to their consumers at lower prices. Thus it
becomes easier for the consumer to shift from one store to other (Gklaveris, 2016). This is
why the power of bargaining of customers is very high for the company.
Substitute’s threat is higher
The company Aldi is not offering any unique kind of products, thus other companies and
competitors can easily offer substitutes at lower prices that satisfy customers. That is the
reason for higher substitute’s threat for the company (Van Vliet, 2018).
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DEMONSTRATING UNDERSTANDING OF THE REQUIREMENTS OF
STAKEHOLDER’S IN CONTEXT TO ALDI
For analysing various stakeholders and their re1quirement in the company the mo0del of
stakeholder analysis is applied in this section.
In this model, there are usually three steps and these are:
1. Identification of the company's stakeholder's
The various stakeholders’ of the company are employees, customers, suppliers,
shareholders etc. with any change in the company’s functioning will greatly affect
these persons (Cooper, S., 2017).
2. Prioritizing stakeholder’s of company
FIGURE 2: STAKEHOLDERS ANALYSIS
The employees are the main stakeholders of the company Aldi who are closely affected by
the company’s activities and they are the main priority because the company puts many
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efforts to satisfy their employees. Other than employees, shareholders are the 2nd priority of
the company because they have invested their capital (Cooper, 2017). After that customers
are company’s priority because they are the reason for the existence of the company, and at
last suppliers as there are many suppliers and thus company do not have to put more efforts
for suppliers (Cooper, 2017).
3. Understanding major stakeholders
After prioritizing the various stakeholders it is very important to know which
stakeholder is affecting in what manner (Bourne, 2016). And analyse all the related
questions in a various manner so that their importance and their benefit to the
organization could be analysed and used easily (Bourne, 2016).
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