Business and Business Environment Analysis Report - Apr 2017

This report analyzes Aldi's business environment, focusing on both micro and macro factors. It begins with an introduction to the business environment and the importance of understanding its complexities. The report then delves into the purpose and types of organizations, along with their size and scope, although these sections are stated to be covered in a PPT presentation. A key part of the report examines the interrelationship between various organizational functions, such as production, marketing, human resources, and finance, and their roles within the organization, using an organizational chart to illustrate the structure. The report also explores the positive and negative impacts of the macro environment, utilizing the PESTLE model to assess political, economic, social, technological, legal, and environmental factors affecting Aldi. A SWOT analysis of Aldi is presented, and the interrelation of strengths and weaknesses with the external environment is discussed. The conclusion summarizes the key findings and insights from the analysis.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1. Purpose and types of organisation....................................................................................1
P2. Size and scope of different organisation .........................................................................1
TASK 2............................................................................................................................................1
P3. difference between organisation functions and their interrelation with each other ........1
TASK 3 ...........................................................................................................................................5
P4. Positive and negative impact of macro environment......................................................5
TASK 4 .......................................................................................................................................7
P5. SWOT of Aldi..................................................................................................................7
P6. Interrelation of strength and weakness with external environment.................................8
CONCLUSION .............................................................................................................................8
....................................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment plays a very important role in business operations. Business
operations have to face various uncertainty. Because there are different kind of changes taking
place in environment. There are two type of environment that is micro and macro. These both
influences business to a large extend. Internal factors are those factors which exist inside the
firm. These factors are controllable. Business unit make different strategies by which internal
issues can be overcome. These factors include the structure of business, employee’s behaviour
and others (Baraya, Budden and Escobar, 2011). Other type is, external factors these exist
outside the firm and not under the direct control of an organisation. These factors involve
political, economic, social, technological and legal.
The company which is taken into picture in this report is Aldi. This is famous retail brand
in UK. They deal with grocery and many other products. The firm is having large market share.
They have business in other countries also.
This project includes various kind organisation having their different business purpose.
The internal and external audit has been in this report. The impact of micro and macro factors
has been given in this assignment. The different kinds of organisational functions and their
interrelationships has been discussed in this project.
TASK 1
P1. Purpose and types of organisation
Covered in PPT.
P2. Size and scope of different organisation
Covered in PPT.
TASK 2
P3. Difference between organisation functions and their interrelation with each other
In different organisation levels there are different departments are their. These
departments are having their own functions and roles. The number of departments are depends
on enterprise size. If size is large there is more departments. But if size is small departments can
be less (Jayeoba, 2012). There are various activities with took place. These activities are handle
by different functions because people those who are working in particular functions are
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specialised in that particular field. If is very essential that every function need to be conducted in
proper manner. Following are different department in an organisation showing the organisational
chart;
Source: Enterprise Organization Chart of Service Industry. 2017
Production department: This department is into production of goods and services. It is linked
with the marketing, sales, finance teams, according to their information it works. Marketing and
sales teams provide instructions to work accordingly. The main responsibility of this department
is to produce goods and services in good quality and ensure that all resources should be utilise in
proper manner. They need to maintain cost so that firm can earn higher profit margins. The main
function of this department are as follow.
 Managing stock
 Manufacture goods and services in good quality without wasting resources
 To prepare work task schedule so that task can be completed on given time.
 Department need to maintain machines and equipments on regular period.
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Illustration 1: Organisational chart of Aldi.

Marketing department: This department is responsible for generating awareness among
customers. It is related with the sales, purchase, finance, production and human resource teams to
provide their collected informations to implement in the company. This department promote
goods and services by which customer tends to buy the products (Jehangir, Dominic and Downe,
2011). It is very important department in an organisation. No enterprise can work or sell its
product without this department. Following are functions of marketing department.
 This department do research to understand customers needs and wants.
 They analyse demand and supply of the products in market
 They do interaction with public
 The support the sales of firm
Human resources department: This is department is another important part of an organisation.
Most of the teams which working in the ALDI is directly connected with the HR development
team to provide them training and development program to improve efficiencies of the workers.
They are responsible for managing human resources in an firm. They need to trained employees,
give appraisal to them and recruit employees according to organisation needs. They ensure that
right person should be hire in an organisation. Following are the function of marketing
department (Klapper, Lewin and Delgado, 2011).
 Recruit right person for right position
 Trained and develop employees so that they can enhance their skills.
 To ensure that all employees are getting their rights and provide them safe work
environment.
 To fulfil needs and wants of employees.
Finance department: This department is responsible for preparing accounts and records all
business transactions (Krishnan, 2013). The goods which are purchase and sold by firm.
Marketing, sales, purchase, accounts and production team is directly connected with the team to
allows them fund to work. Finance department need to record such transaction. They prepare
budgets, balance sheet, profit and loss account and others. Following are the functions finance
department.
 Keep records for business transactions.
 Preparing of final accounts for the firm
 Evaluate the financial position of firm
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 Prepare budget for every projects take place in an organisation
There are different kind of department all these are interlinked with each other. Every
department need to fulfil their roles and responsibilities in proper manner so that other
department can also continue their work. By this coordination can be maintain. If one department
is not performing their roles properly this may affect on other functions also. When marketing
department do research in market. They understand needs and wants of customers by this they
decide what they need to manufacture. This information they pass to production department and
according to that production start producing goods accordingly. The finance department create
the budget according to which activities can be conducted. Human resources department recruit
new people or trained old employees so that workers can help in producing new goods
effectively.
The another important concept in an enterprise is organisational structure. In different
kind of enterprises these structure differ. In this structure there are various level in an
organisation. According to this the chain of command took place. Following are the type of
structures.
 Functional structure: In this kind of structure there are different levels and every level is
engaged in doing their own given task. In this subordinated inform manager and manger
inform to their higher authorities. The merit of this structure is command of chain can
take place in proper manner (Love, 2011). Disadvantage is every level is engaged in their
own work so they do not get chance to communicate with other levels.
 Divisional structure: This structure is for big organisation. When there is large product
line in an organisation. They divide each product line into separate division. The manger
and workers are different in each division. The main advantage of this structure is firm
objectives can achieved in effective manner. As there is separate operation are taking
place proper concentration can be maintain. On the other hand demerit of this structure is
workers are doing task according to their suitable manner it can lead to inefficiency.
 Matrix structure: This structure is very flexible in nature. This help firm to bring various
kind of changes in their organisation. The main problem in this structure is conflicts can
be arises between employees due to chain of command.
 Organisational chart: When organisational is not bale decide about structure they can
follow organisational chart. In this chart the line of authorities are presented by which
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problem can be solved in effective manner. The different functions of department are
mention in this report (Macdonald, 2012).
All such department is having their interrelation with organisation objective and
structure. As whole department of company as one work for goal and objectives of firm. The
senior executive of ALDI and senior manager divide the whole task into various department so
that such task can be completed on time and this criteria help company to attain their goal and
objective. Organisational structure has to be proper allotted as this help firm to communicate
with each and proper coordination and collaboration make them to have an effective working
too.
TASK 3
P4. Positive and negative impact of macro environment
Marco environment is having great impact on business activities. Macro environment is
study about external environment of business. This environs are very dynamic in nature. For this
PESTLE model need to be studied. PESTLE refers to political, economical, social,
technological, legal and environmental. These factors are not under controllable by firm. So
because of that firm make various strategies by which these factors can be faced by enterprise in
an effective manner. Following is PESTLE of Aldi.
 Political factors: Political factors are those factors which are exercised by government of
particular country. There are certain rules and regulations are there which are implied by
government of country. These factors can be taxes, fiscal policies and others. If there is
any changes in tax rates it may impact on sales of Aldi goods. The customer purchasing
behaviour can be influence by these policies. So firm need to make strategies by which
these policies have less impact on customers.
 Economic factors: These factors are take place due to economic condition of country.
These factors can be exchange rates, inflation, interest rates. In inflation condition in UK.
The prices of goods and services of Aldi product increases. The customer purchasing can
be decreases by this and demand of Aldi products also badly affected. Aldi is having
advantage that they customer having the mindset that Aldi provides goods in high quality
in reasonable prices because of this customers are loyal to this brand.
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 Social factors: Social factors are factors which are affected by group of people those who
are having common values, norms, belief and lifestyle. Every enterprise do research so
that they can understand customer needs and wants. Consumers wants are changing
according to their income, preferences, lifestyles (Madsen, 2016). So firm need to make
changes in their product and services before product gets old in market. The advantage is
consumer have positive mindset about Aldi product and negative impact if consumers
have negative perception they can switch to other brands. Aldi is having established
brand image in market so they have core competency to other competitors.
 Technological factors: Technology is another important factor which can take place in an
organisation. It is very for every enterprise to bring new innovation in their products so
that they can serve something new to their customers. Aldi is use high technology in their
organisation so that every process can take place in faster ways. Technology is having
their own merits and demerits. If firm can easily adopt new technology their process can
become more faster. The problems can be solved in easy manner. But there are
disadvantage also as there is new technology comes into market is very difficult for
employees to cope with new changes. Some time workers are very resist in nature they so
not want to change their old process to new one. This can be barriers for enterprise to
apply new technology (McDonald and Wilson, 2011). To over come these challenges
firm provide training and development to their workers so that they can easily adopt the
technology and make best use of it. New methods and procedures help organisation to
reduce cost and lead time incurred in different business activities.
 Legal factors: Legal factors are those which are implied by legal authorities of firm.
There are many Laws and Act are there which firm need to apply in their organisation
this may have bad and positive impact on business. If any laws applied which may bring
restriction for company this can be problem for firm and can reduce their sales of
products. And if any law is implied which is favourable to enterprise this can change the
scenario and more facilities can be given to employees and customers. Business unit
ensure that all these laws are followed properly because if any law is broken by firm they
can face certain consequences in future (Mojaveri and Fazlollahtabar, 2012).
 Environmental factors: These factors refers to environs. Business unit need to conduct all
business activities which do not harm environs. The product which are produce by Aldi
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their production, packaging all are done in a manner by which no harm can occurs on
environment. The advantage of this process is firm goodwill can be increase government
give more support to them as they are serving good to society. The disadvantage can be
cost of company can be increase because they need to adopt special process and use
different equipments.
TASK 4
P5. SWOT of Aldi
Firm can do internal analysis by the help of SWOT model. By this firm can know about
their strengths and weakness. Enterprise use these strengths to prepare business strategies.
Following are SWOT of Aldi.
Strengths:
 Company is having diversified business they are into grocery, books, clothing and many
others.
 The firm is having strong brand name (Myers and Korsmo, 2014).
 They are owning other brands also Aldi start selling other local brands.
 The firm have business in other foreign countries also.
 Firm innovative their products and services in regular manner.
 The packaging of Aldi is very different from other brands.
Weakness:
 Aldi financial performance is weak
 Aldi is facing Bad-debts by which insurance claim of firm is getting affected.
 Firm is only concentrating its own brand that that is why sell of products are decreasing
 As there are other competitors which enter into market by this these retailers are get
badly affected
 The people those disposable income is low they buy less products
 There is lot of competition is there and because of that profits margins are reducing
 Aldi subsidiaries are affected by recent crisis in UK.
Opportunities
 The firm is having opportunities to expand their business in other countries also. They
can go for strategic alliance
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 There are certain areas where firm is not bale to perform in good manner. In those area
Aldi can go for joint ventures and mergers.
 Aldi have the opportunities to expand its range of products by adding some local brands
 The another opportunities which firm is having to go online. Because the user online are
increasing. By this firm can reach to its maximum customers.
Threats:
 As there is economic crises in UK. The sales and profits of firm can badly affected.
 There are many competitors in market so firm need to innovate their products in regular
manner (Rankin, Windsor and Wahyuni, 2011).
 AS profit margins are decreasing the labour are demanding more wages. By this cost of
firm can be increased.
 There are many changes are taking place in market and company is facing regular
pressure from government because of this the strategies of firm need to change which
affect whole operations.
P6. Interrelation of strength and weakness with external environment
SWOT and PESTLE are two different models. But they are interlinked with each other.
From PESTLE firm can identify their strength and evaluate which are the sectors in which they
can handle in proper manner. But some are the area in which firm face difficulty to face. As
political and legal factors are weakness of firm they can bring any changes in firm at any point of
time. On the other hand social and economic factors are strength for Aldi. Because firm is very
good in understanding the customers needs and wants. In SWOT and PEST T is common. So
when firm is studying about external factors. They can identify Strength and Weakness. They
can use strengths to formulate strategies and make plans so that they can over come from their
weakness (Reed And et.al, 2013).
CONCLUSION
Business environment is very important. Every firm need to study about the dimensions
which comes under business environs. There are different kind of enterprises. These difference
can be in size, nature, structure and capital. Aldi have scope to expand its business they have
different ways by which they can enter into market. these ways can be licensing, joint ventures
and franchising. It is depend on firm which sources they want to choose. Firm conduct internal
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and external audit. In that they comes to know about certain factors which can affect business
activities. Firm make various strategies, plans and policies by which they can face these factors
and get long term success.
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