Impact of Business Environment on Lidl's Organisation Behaviour

This report provides a comprehensive analysis of Lidl's business environment, examining the interplay of economic and non-economic factors on its organizational behavior. The report begins with an introduction to the organizational environment and its impact on business performance, followed by a literature review exploring the economic environment (inflation, interest rates, exchange rates, and consumer laws) and its influence on Lidl's operations. It also delves into the non-economic environment, covering cultural, social, political, and technological factors. A detailed discussion and analysis section utilizes SWOT and PESTLE frameworks to assess Lidl's strengths, weaknesses, opportunities, threats, political, economic, social, technological, legal, and environmental factors. The report concludes with a summary of the key findings and insights into Lidl's strategic positioning within the competitive retail landscape, considering the challenges and opportunities presented by the business environment.

ORGANISATION AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
Literature review .............................................................................................................................4
Economic environment and its impact on organisational behaviour...........................................4
Non-economic environment and its impact on organisation behaviour......................................5
Discussion and analysis ..................................................................................................................7
SWOT analysis............................................................................................................................7
PESTLE analysis.........................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Organisation environment is composed of all forces or institution that surrounds an entity
which has huge affect on performance, resources and operations (Aderounmu and Adepoju, 2019
). Additionally, business is impacted by different components that collectively form the business
environment. It is inclusive of the all social, legal, technological and political components that
affects the business in huge aspect. In addition to this, organisation behaviour termed out as the
application of knowledge in terms to how people, groups and individuals act within the
enterprise. This assist the enterprise to establish strong and trusting relation with employees
(Alblas, Wijsman and van Noort, 2019).
Furthermore, assignment is based on to explain that how business, cultural, and natural
environment shapes the behaviour of selected enterprise. Also, study will cover key literature
analysis of economic and non-economic environment and its impact on organisation behaviour.
Lastly, discussion and analysis will be conducted with use of SWOT and PESTLE analysis.
Company background
The present report is based on business activities of Lidl, it is German food retail
company. This is an international entity with varied independent national entities which is
situated almost everywhere in Europe (Beckford, 2019). It is entity that deals in product and
services as clothing, food, stationary, household essentials baby care etc. Additionally, chosen
enterprise that has more than 380 stores within United Kingdom. It is the entity that has more
than 6000 stores and its 3000 stores are located within Germany that is making the Lidl's biggest
national market. Thus, market share of the Lidl is 5.9%. In the year, 2018, quoted firm has
generated revenue of 24.77 billion euros in Germany.
The major rivalries of Lidl are as Asda Aldi, Tesco, Sainsbury's etc. Thus, current
situation with its employees is quite stable. As chosen firm increasingly focused on paying more
than nation living wages to employees and offers equitable opportunities to all employees. Lidi
has also taken the steps to invest £10m as this provides 19000 employees a pay rise. In addition
to this, this can be stated that Lidl will face few consequences of Brexit within the United
Kingdom and their major competitors are British rivals (Buchanan, 2019). This is the enterprise
that relay more on the local commodities. Thus, this firm also has other characteristics that must
assist to mitigate risk of Brexit by buying power and international exposure.

Literature review
Economic environment and its impact on organisational behaviour
Economic environment can be termed out as those that pertain to the economy of the
country. This is relates with the inflation rate, interest rate, Foreign exchange rate and gross
domestic product. Consumer laws has been framed out in order to protect the right of employees
(Büyüközkan and Ilıcak, 2019). Thus, Lidl has designed consumer laws to prevent working
enterprise from practising fraud and unfair practices that gives inappropriate advantage in
marketplace. With the UK about to leave the EU without a deal, there are number of initiatives
within the consumer commodities and retail sector that can prepare. It is sector that is faced with
the navigating the impact of e-commerce and digital sales on traditional business models.
However, Brexit will continue to enhance the uncertainty and reduce the confidence of
customers by posing ongoing challenges for business (Danuri, Nizam and Razilan, 2019). Lidi
has reminded the supplier of British to pay any EU imports tariff that has imposed on goods
crossing border after Brexit. Thus, Gaganis, Pasiouras and Voulgari, (2019) stated that current
contract of the chosen enterprise with suppliers contains the clause that good mus be delivered
with tariffs paid. Lidl believes that to obligations to pay the taxes legally as accordance with UK
tax law that set by the legal authorities of the United Kingdom. Therefore, tax affairs of the
quoted enterprise is private matter between Lidl and HMRC. Lidl is continually looking over to
expand its international reach. This is the enterprise which has world wide distribution network
and taking steps to have world wide access of product and services. It has been found out that
UK grocery market is continuously dominated by few enterprise that led by Tesco, Sainbury and
ASDA.
Additionally, Ganda, (2019) stated that supermarket sector is oligopolistic and pricing
plan of action of supermarket can be understood as the game theory approach. Therefore, the
Northern Ireland contributes almost £180 million to the local economy each year and sustained
around 3500 jobs. Additionally, it has been found out that UK has a mixed economy that is
developed with help of free market and global economy and this is regulated by legal authorities
to undertake the prevention of market failure. However, the mixed market economy allows the
market to undertake operations of enterprise and government to intervene where the market is
about to fail.

Thus, the one of the main components that is influencing the demand of for the consumer
commodities can be termed out as the level of employment. Additionally, level of the wages get
impacted with consumer spending. Henceforth, the prices and interest rates gets affected by the
rate of inflation (Hiekkataipale and Lämsä, 2019). Thus, rate of inflation also has huge impact on
the spending of consumers. Lidi, retail sector of the UK suffered from the post Brexit rate of
inflation prices with number of traditional stores that closing down as result of troubles in pricing
and due to weak British pound.
Economic growth of the UK will be modest at 1.2% within the year 2019 and this will be
1% in the year 2020. also, this can be stated that consumer spending has continued to drive the
economy growth of the country. Hence, exchange rate of the country in which Lidi undertakes its
operations high affect the profitability of enterprise and this is engage within international trade.
Therefore, stability of the currency plays one of vital role as instability within the rate of
currency discourage the international investor to make investment (Grant and Philipp, 2020).
Higher rates leads to have greater investment and this also assist to have more growth for
quoted enterprise (Luiz, Ganson and Wennmann, 2019). Lidi is taking various initiatives to
compliance with GDPR that is General data protection regulation. Thus, this is systematic
approach that aids to managing data and this can assist the enterprise to make the decision on the
basis of accurate, meaningful data that improved the personalise communication with customers.
Hence, Lidi has invested highly in adopting the services of E-commerce. This is offering the
mobile app and sire for UK and offers services in more than 70 stores across British that allows
customer to order online with their technological devices and collect their groceries from the
store. Therefore, the advancement of the E-commerce has resulted into huge profitability to retail
sectors.
Non-economic environment and its impact on organisation behaviour.
Non-economic factor are seems to influence the working conditions of the enterprise.
These components are inclusive of culture, religion, class and family, natural resources, socio-
political conditions and role of legal authorities. Non economic environment highly impact the
surroundings under which business working of an enterprise is undertaking its functions (Marijs
and Hulleman, 2019). Lidi operations widely affects by the social environment of business as
this inclusive of class structure, nature of social organisation and mobility. In this, the class
structure of the enterprise is mainly relay over individuals occupation and levels of income.

Thus, Chosen enterprise needs to produce commodities that full-fill the demand of each level of
consumer group. In addition to, Nandonde, (2019) stated that culture is inclusive of values,
norms and behaviour patterns. Each enterprise must take initiatives to develop its own culture.
Lidi guides Managers to create and maintains effective working environment. In the modern era,
norms as social and cultural forces highly influence the working and welfare to the enterprise.
This has been found out that the growing number of the mergers has negatively impacts
the consumer welfare in the retailing sector. Henceforth, economy, culture and social factor
impact the working of the enterprise in the huge context. In the present era, the retail firm as Lidl
has gained the increasing power over the society. Thus, demographic of population widely
impacts the working of Lidi respective of the ages and genders. Chosen enterprise would be
unable to offer the product and service of premium class to general public if maximum number
of population is a lower class. So, it can be stated that income level of the consumer affects the
working of the industry in huge context.
Therefore, Niranjanamurthy, Nithya and Jagannatha, (2019) stated that communication
and language barrier highly impacts the job performance of workers that results in ineffective
growth to Lidi. Barrier to language and culture may lead to poor communication and this results
to business risk. So, it can be stated that the organisational culture ultimately aids to improve the
organisation performance. Political interventions also impact the business enterprise and
operations of the business activities. However, interaction within the legal authorities, politician
and business significantly impact the form of working enterprise. Thus, legal environment
impacts the working of the enterprise substantially. Legal authorities imposes the number of the
policies such as licensing policy, monetary policies, government purchase policy and public
distribution policy etc. These all impacts the working of the enterprise in the huge context.
In addition to this, Lidi needs to be fully aware of health standards as per the current
scenario in market so that they can offer the commodities to customer and be competitive
advancement. Also, beliefs, attitude and behaviour of consumers mostly drive the demand for
goods and services. However, Lidi is taking initiatives to enhance the demand for organic food to
cope with the changes in demand of consumers. Cultural components highly affects the
functional areas of marketing, distribution and sales (Onder and Nyadera, 2020). Thus, retail
industry is constantly making the changes in terms to growing its business operations widely.

Lidi operational working is highly affected by the technological advancement as this leads to
undertake business development quite faster.
The climate condition also affect the working of the enterprise. Therefore, supply chain
and sourcing has changed the weather patterns and this is one of essential element that leads to
drive changes within the organisation (Phadermrod, Crowder and Wills, 2019). These are the
changes that are very dynamic and unpredictable. In addition to this, it can be stated that
naturally disasters also affecting working enterprise adversely. This causes the country in manner
as destruction of property, loss of financial resources and illness.
Discussion and analysis
SWOT analysis
This is matrix that aids to identify the strategies that firm can use to analyse the
situational analysis of the organisation. Therefore, these are outlined as following manner as-:
Strength-:
 Automation- Lidi provides automation of activities that brought consistency of quality to
products and this enables company to scale up and scale down activities as this based on
demand condition within market ( Qin and Sun, 2019).
 Skilled labour workforce- It is enterprise that highly invest in training of its employees
and this resulted in employing effective workforce who carries out business activities
proficiently.
 Customer service- This entity has dedicated department of customer relationship
management that needs to accomplish the high level of customer satisfaction.
 Reliable suppliers- Lidl has strong free cash flows that offers resources to firm by
undertaking expansion into new projects.
 Online presence- Chosen enterprise has high prevalence on social media platforms such
as Facebook, Twitter and Instagram. Also, it provides online services to customers in
comfort of their home.
 Innovation- This entity has huge innovative team that come up with unique commodities
that are not offered by the other competitors.
Weakness-:
 Quality control- Lidl has lower budget for the quality control departments than their
rivalries. It leads to lack of consistency and possibility of damage to quality.

 Poor employee treatment- In this, the work moral of employees is low due to firm
culture and politics that have grown in recent years.
 High employee turnover rates- The chosen enterprise has the high employee turnover
as compare to rivalries (Rapo, 2019). It is happening due to ineffective training to
employees.
 Low current ratio- It reflects that firm's ability to meet its short term financial
obligations and this is lower than the industry average. It can also results in obstacles in
terms to liquidity in future.
Opportunities-:
 Technologies- The new technical advancement offers an opportunty to Lidl to undertake
practices with differentiated pricing strategies in new market. This enables entity to
maintain loyal base of customers with great service.
 E-commerce- It has become the new trend and growth within sales of e-commerce
industry (Sheedy, Garcia and Jepsen, 2019). It has lot of individuals who are making
purchase online. This is enterprise that can earn profitability with help of opening online
stores.
 Skilled workers- Enhance in education and training by numerous institution has helped
to enhance the skills and capabilities of individuals.
 New product and services- The chosen enterprise is continually taking steps towards to
produce innovative commodities. By considering the demands of customer, this firm is
taking steps to produce organic food products so that demand of health conscious
individuals can be full-filled.
Threats-
 Propaganda- The political changes impacts the working of the enterprise. It is effort that
systematically manipulates the individuals beliefs, attitude and actions (Xu, 2019).
 International trade- Regulation in terms to international trade keep changing and this
requires the compliance by entities if they are operate at global level.
 The number of substitute commodities are enhancing and this has become threat to the
number of the companies who are undertaking their business activities at global level.

PESTLE analysis
This is term that examines the political, economical, social, technological, environmental
and legal factor and this affects the worked of enterprise in huge aspect. These are outlined as-:
Political- These are inclusive of those components that can affect the profitability and chances of
survival of firm that are quite diverse (Zadeh and Jeyaraj, 2019). Herein, the one of the major
political factor that is influencing the working of the enterprise is natural assurance laws that
compel the firms to comply with requirements of Lidl. Additionally, integrity of politicians and
likelihood to part in corruption may results into repercussion that may leads to possible
resignation of high level legal employees. Therefore, high level of taxation can be one of
demotivated components of firm like Lidl from maximising the profitability. Thus, minimum
wage affects the Lidl if the legal authorities have the national wage that lowers the level of
individuals and this negatively affects the working of enterprise.
Economic- The components of the economic as inflation, foreign exchange rate, interest rate and
gross domestic products etc. However, rate of GDP highly affect the working that how Lidl is
expected to grow in future course of action. Exchange rate of the country in which Lidl operates
affects as how well Lidl can raise the capital in the fair price rates ( Lidl PESTEL Analysis &
Environment Analysis, 2018). This is usually depends on demand and supply attributes of the
entity. In addition to this, interest rate of country highly impacts the individuals that are willing
to borrow and invest. This can be stated that higher rate can leads to greater investment and this
assist the chosen enterprise to have more growth.
Social- There are number of the social components such as culture, belief and attitude impacts
the working of the industry in the huge context. In addition to this, demographic of population in
respect to ages and gender widely affect the working of enterprise. Thus, changes in preferences
of customers highly impacts working of enterprise as they need to produce the commodities as
per the needs and wants of consumers. Additionally, use of advertisement tool highly influence
the purchasing power of customers. Also, Lidl must be fully aware with level of health standards,
reactions to harassment claims and significance of protection of environment working that
prevail in industry as a whole.
Technological- With the advent of technology, the retail firm has shifted to competitive
landscape. This is crucial to constantly and consistently innovate the food commodities not only
to earn large amount of the profitability but also to prevent future obstacles to chosen enterprise.

In addition to this, there are multiple instances to bringing up innovative products that is
completely redesigning the norm for entire industry.
Environment- The current weather conditions significantly affect the ability to manage the
resources of the enterprise. In terms, this affect the delivery dates of the final commodities. In
order to be highly competitive, Lidl is taking steps towards to prevent large amount of waste that
required by law to manage the environmental habits. If chosen enterprise knowingly or
unknowingly make contribution towards the further endangerment than it can create the
consequences from the law and also face the backlash from general public (Aderounmu and
Adepoju, 2019).
Legal- The government framework plays the curial role in working of any industry of any
country. In this, varied discrimination laws placed by the enterprise to protect the welfare of
employees. Lidi needs to ensure that employees within the entity are being treated fairly.
However, health and safety laws are framed that assured to provide the product and services that
is made up of the good and quality attributes (Alblas, Wijsman and van Noort, 2019).
Henceforth, chosen enterprise must be ethically and socially responsible.
CONCLUSION
Hereby, it can be summarized that organisation behaviour defines the ways people act
within groups. This is subset of management activities that is primarily concerned with
predicting, understanding and influencing behaviour of individuals in organisation setting.
However, organisation behaviours of an enterprise is comprised with internal and external
components. The present study has covered the activities of Lidl, it is retail enterprise that is
engaged in working of supermarket chain that deals in grocery products.
However, report has defined that how business, cultural, and natural environment shapes
the behaviour of enterprise. Literature analysis has been conducted to determine the impact on
organisation behaviour by analysing economic and non-economic environment of Lidi. Lastly,
SWOT and Pestle framework has been used to discuss internal and external functioning of
enterprise.

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Online
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