Internal Environment Analysis: SWOT and Functional Impact on Aldi

This report provides a detailed analysis of Aldi's internal environment, focusing on its strengths, weaknesses, opportunities, and threats (SWOT). It examines Aldi's global presence, diversified product portfolio, low-cost strategy, and double guarantee policy as key strengths, while highlighting brand perception and poor ambiance as weaknesses. The report identifies opportunities in emerging markets like India and potential for product diversification. Threats include competition from retail giants and changing customer preferences. Furthermore, the report analyzes the impact of these factors on functional areas such as marketing and finance, emphasizing the need for aggressive marketing strategies to address brand positioning and the financial implications of low-cost strategies and market expansion. The conclusion summarizes the findings and emphasizes the importance of the SWOT analysis in improving Aldi's current status and future prospects.

INTERNAL
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
SWOT Analysis of Aldi..............................................................................................................3
Impact Analysis on functional areas of Aldi...............................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
This project shall highlight the business environment of Aldi, which is a multinational
supermarket chain operating in more than 20 countries. The study shall reflect both the internal and
external factors that contribute to the changing business environment of the company. It shall include the
SWOT analysis of Aldi, describing its core competencies that it possesses to survive in the market. Lastly
it shall observe various driving factors that are impacting the functional departments in the organization.
MAIN BODY
Business Environment of Aldi refers to the various internal and external factors that are
impacting the operations of the business. They include the customer’s preferences and expectations,
market demand and supply, competitors, changing technology, government rules and regulations etc. It
shall help in identifying the various opportunities and the threats posed and planning for optimum
utilization of resources which shall ultimately lead to the increased operational efficiency and developing
growth prospects (Groşanu and et.al. 2015).
SWOT Analysis of Aldi
Strengths: - Aldi has several strengths which are determining its strong market presence, that are namely-
 The most prominent advantage of Aldi is that it has global presence in over 20 countries of the
world with a strong distribution network that it has built over the years.
 Another important strength could be that it has a highly diversified portfolio of goods offered
under one roof, including certain privately labelled products which stabilizes it revenue.
 It uses the low cost strategy and offers products at cheaper price than the competitors, which
maximizes the customer satisfaction.
 It provides the double guarantee wherein the quality is also assured and if there is some problem
with the goods, they stand replaceable or refundable.
 It has also received several accolades for its all-round performance.
Weaknesses: - Some weaknesses as suffered by Aldi are mentioned below-
 The major weakness that it faces is positioning of its brand in the minds of people who thinks that
the products are low quality and cheap. To change the perception of the customers it is essential
for the company to develop better marketing and PR strategies (Schmid and et.al. 2018).
 Another weakness can be the poor reputation that is built because of certain allegations and
scandal that Aldi was trapped in. This reduced the reliability of the supermarket destroying the
goodwill (Phadermrod, Crowder and Wills, 2019).
 A major shortcoming for the company is the poor ambiance of its supermarkets across the world.
There is lack of staff in the stores which decreases the satisfaction of customers and
simultaneously spoils their shopping experience. Also, it results in the batch of dissatisfied
employees who are overburdened with work.
 Lower prices of its products makes the target customers of lower income families ultimately
reducing their profit margin.
Opportunities: -
 The biggest opportunity that Aldi can tap upon and capitalize is the emerging economy India. It
can grow its market and establish stores in India which is fit for its products. India is a largely
populated country having major proportion of its people in low income families, it can be perfect
for Aldi's strategies.
 As the propensity to spend is increasing, Aldi can improvise the ambiance and customer services
and accordingly charge more from the customers.
 It can also plan expansions by covering the high income families and diversifying its existing
product line.
Threats: -
 The permanent threat for Aldi shall be the cut-throat competition that it faces from various giants
in the retail industry like Walmart, Tesco, Lidl etc. The presence of these competitors decreases

the profitability of Aldi and reduces its market share. To win over these competitors it has to
build core competencies.
 Another threat posed can be the growing global instabilities which is challenging for the company
as it has global presence. Brexit can be one of such challenges.
 The forever changing tastes and preferences of the customer is a major threat to the retail
industry.
Impact Analysis on functional areas of Aldi
There are various functional areas of an organization like Finance, Marketing, HRM, Operations
etc. which get impacted due to the factors in the business environment. There are various driving forces as
determined in the SWOT analysis, in reference to which the impact analysis can be done for Aldi ( Vlados
and Chatzinikolaou, 2019).
Marketing: - Marketing is one of the functional areas that shall be impacted by the drivers mentioned in
SWOT of Aldi company.
 As positioning is a major weakness for Aldi and its products, its marketing is to be done
aggressively. It has to increase the level of advertising, develop strategies for PR, conduct
campaigns to change the perception of the customer regarding its products. The positioning
strategies shall be applied to change the mentality of its product being low quality and cheaper.
 The strength of it providing double guarantee on several goods sold can be used for effectively
marketing its products and services.
 There are opportunities for the company to expand by tapping new markets of emerging
economies like India. While doing so it has to do aggressive marketing of its products to build a
brand image.
 Marketing can be used as a good tool for rebuilding the reputation lost in the scandals.
Finance: - Another functional area which shall be impacted in improving the status of the company is
Finance.
 The low price strategy that is using for its diversified portfolio of goods is certainly going to
reduce the margins of profitability of the company. The finance department of Aldi shall get
impacted negatively as a consequence of maximizing the customer satisfaction.
 To remove its weakness of poor ambiance it has to make investments impacting finance of Aldi.
In order to enhance the customer shopping experience, the services are to be improved.
 Building powerful market image of the company also needs investment of lot of funds in the
aggressive marketing strategies (Hamilton and Webster, 2018).
 To facilitate the programme of expansions a lot of funding shall be required by the company
which again will impact the finance area.
CONCLUSION
Through this project we can conclude that the business environment of Aldi is prone to lot of
changes. The study highlights the SWOT analysis of the company describing the strengths, weaknesses,
opportunities and threats as faced by Aldi. It shows how efficient such analysis is in improvising the
current status of the company. It helps in tapping upon newer opportunities, creating edge over
competitors and removing weaknesses. Also, it is observed how major functional areas are impacted by
the drivers found in the SWOT analysis.

REFERENCES
Books and Journals
Groşanu, A,. and et.al. 2015. The influence of country-level governance on business environment and
entrepreneurship: A global perspective. Amfiteatru Economic Journal. 17(38). pp.60-75.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University Press.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based SWOT
analysis. International Journal of Information Management. 44. pp.194-203.
Schmid, S., and et.al. 2018. Aldi and Lidl: from Germany to the rest of the world. In Internationalization
of Business (pp. 81-98). Springer, Cham.
Vlados, C. and Chatzinikolaou, D., 2019. Towards a restructuration of the conventional SWOT
analysis. Business and Management Studies. 5(2). pp.76-84.
Online
Business Environment Definition. 2020. [Online]. Available through:
<https://www.marketingtutor.net/business-environment/>
Business environment. 2020. [Online]. Available through: <https://penpoin.com/business-environment/>