Strategic Management and Stakeholder Analysis of Lidl: A Case Study

Desklib provides past papers and solved assignments for students. This report analyzes Lidl's strategic management.

STRATEGIC MANAGEMENT
For Lidl Group

Contents
EXECUTIVE SUMMARY...................................................................................................................3
TASK 1............................................................................................................................................ 4
Q. 1 (a) CRITICALLY EVALUATE YOUR CHOSEN COMPANY’S APPROACH TO STRATEGY
DEVELOPMENT, CONSIDERING THE PLANNED, EMERGENT AND INCREMENTAL APPROACHES.
YOUR ANALYSIS SHOULD INDICATE YOUR CONSIDERED OPTIMUM APPROACH FOR THE
CHOSEN COMPANY....................................................................................................................4
OVERVIEW OF LIDL................................................................................................................ 4
CREATING A BUSINESS STRATEGY..........................................................................................5
Q. 1 (b) MAIN AREAS OF CONCERN WITH REGARD TO ORGANIZATION’S EXTERNAL
ENVIRONMENT.......................................................................................................................... 7
PORTERS 5 FORCES................................................................................................................ 9
TASK 2.......................................................................................................................................... 11
Q. 2 CRITICALLY EVALUATE THE COMPANY’S RISK MANAGEMENT IN THE STRATEGIC
PLANNING PROCESS.................................................................................................................11
TYPES OF RISKS IN A BUSINESS............................................................................................11
RISK MANAGEMENT PROCESS.............................................................................................13
TASK 3.......................................................................................................................................... 15
Q. 3 (A) WHAT IS MEANT BY STAKEHOLDER THEORY? IDENTIFY AND PROVIDE JUSTIFICATION
FOR EACH OF THE STAKEHOLDERS TO YOUR CHOSEN COMPANY. PROVIDE A CRITICAL
ANALYSIS OF THE ORGANIZATION’S RELATIONSHIP TO EACH OF THE STAKEHOLDER GROUPS.
................................................................................................................................................. 15
Q. 3 (B) WHAT IS MEANT BY CORPORATE SOCIAL RESPONSIBILITY (CSR)? CRITICALLY ANALYZE
THE CSR IN YOUR CHOSEN ORGANIZATION’S STRATEGIC FRAMEWORK.................................19
CSR POLICIES OF LIDL...........................................................................................................20
CONCLUSION............................................................................................................................... 22

REFERENCES.................................................................................................................................23

EXECUTIVE SUMMARY
Strategic management is an important aspect of the business as the businesses needs to update
and configure its strategy according to prevailing conditions. The companies are focussing on
internal and external development in which they function so that they improve their
performance and leadership in the market. The company Lidl has been taken into consideration
to see the follow up of strategies made by the company and also to assess the external
environment of Lidl which can influence the business structure, composition and functioning of
the brand in the UK. The main focus has been given to strategic management which is used for
risk management as well to minimise the risk associated with the company’s expanse in the UK.
Lastly, the stakeholders of Lidl are discussed in the study which is an integral contribution to the
company. The CSR policies are also mentioned at the end of the study which makes Lidl are
socially and environmentally friendly company to work with and invest into (Geppert et al.,
2015).

TASK 1
Q. 1 (a) CRITICALLY EVALUATE YOUR CHOSEN COMPANY’S APPROACH TO
STRATEGY DEVELOPMENT, CONSIDERING THE PLANNED, EMERGENT AND
INCREMENTAL APPROACHES. YOUR ANALYSIS SHOULD INDICATE YOUR
CONSIDERED OPTIMUM APPROACH FOR THE CHOSEN COMPANY.
OVERVIEW OF LIDL
Lidl Stiftung & Co. KG also knew as Lidl which operates as a chain of discounted stores is
headquartered in Neckarsulm, Germany. The company operates in over 10,000 stores across
Europe and the United States with around 3, 15,000 numbers of employees working for them.
Lidl opened its first company in the UK in 1994 and expanded rapidly and since then it has been
growing consistently (Kapferer, 2012).
The main objective of the organization is to continuously expand and enhance the lives of
customers by providing products and services to the customers at very affordable rates. The
organization has a strong network of customers, manufacturers and number of organizations.
Types of strategies-
Intended strategy- Intended strategy is a strategy that an organization expects to execute. This
type of strategy is constructed at the beginning of the plan. The strategy outlines the end
targets of the organization in order to achieve the objectives of the organization. An intended
strategy is explained in detail as it incorporates every detail of the organization. This strategy is
considered as a rough strategy as the organization intends to implement on the organization.
Emergent strategy- An emergent strategy is a sudden strategy that emerges gradually over
time. It acts as a response to the threats, opportunities and challenges which are unexpected
for the organization. These strategies are constantly changing which may result in both success
and failure depending upon the effectiveness of the change in environment (Muller and Kräussl,
2011).

Realized Strategy- A realized strategy is a strategy which an organization actually follows. This
type of strategy continues to assist an organization from the beginning to the end in order to
fulfil the objectives of the organization.
CREATING A BUSINESS STRATEGY
A strategy is the most important plan which an organization opts for the fulfilment of the
desired goals. A strategy provides a sense of direction to an organization and outlines
measurable intentions. To effectively create a strategy, Lidl has to follow various steps which
include:
1. Set goals- Before setting or creating the strategy, the organization Lidl should develop
specific goals as it is a powerful process for thinking about the future goals and will motivate
to turn your vision of future into reality.
2. Gather facts: Before looking forward to creating a strategy, an organization should review
all the facts regarding the performance of the organization. Gathering facts about the
moves and actions of the competitor and rivals will aid the organization to be fully equipped
with the knowledge of competition and help the organization to take stronger decisions. An
organization can pick up analysis tools such as SWOT analysis to analyse the strength,
weaknesses, opportunities and threats of the organization and PESTLE to determine the
internal and external environment that influences the organization positively and negatively
(Geppert et al., 2015).
3. Construct a vision statement: Before proceeding further, an organization like Lidl must
develop a vision to analyse the future direction of the strategy in the long term. Vision
statements help to determine the purpose of the organization and include organization
values. The organization should follow the vision and vision statements of the organization
in order to achieve the desired goals.
4. Develop a mission statement: developing a mission statement will help the organization to
clarify the chief purpose and primary objectives. A mission statement helps the organization
to focus on the short term objectives as well as the long term objectives. All the mission

strategies an organization follows should align with the mission statement of the
organization.
5. Tactical plans: Tactical plans include plans which are carefully planned to gain a specific
objective of the organization. The tactical plans put the decisions and plans in action to get
the work done. These plans are generally used to achieve short term objectives which
represent the short term efforts to achieve long term goals (Muller and Kräussl, 2011).
6. Performance management: The performance management includes process like
investigating all the procedure followed by the organization to make sure that the
organization is still on the track to fulfil the desired goals. It helps in managing and
monitoring the performance of the organization and enables the organization to capture
relevant knowledge and have an accessible strategic vision.
These various steps of creating strategy will help the organization Lidl to execute the strategies
and the organization Lidl can follow the steps to create strategies for the achievement of
objectives.

Q. 1 (b) MAIN AREAS OF CONCERN WITH REGARD TO ORGANIZATION’S
EXTERNAL ENVIRONMENT
Figure 1- PESTLE Analysis
Source- (Geppert et al., 2015)
Political factors- Political factors are determined on how the government takes part in the
sectors of the economy. The political factors that can affect the profitability and growth of Lidl
are quite diverse. The organization Lidl can be affected by the action of government as the rule
of national minimum wage and taxation. The workers will not work for a low level of pay
because of the existence of government minimum wage law. Along with the minimum wage, a
high level of taxation will discourage organizations like Lidl to maximize their profits.
Economic factors- Economic factors include variations in the inflation rate, the foreign
exchange rate, the interest rate, the gross domestic product, and the current stage of the
economic cycle. These are the factors which determine the success and failure of an
organization like Lidl. If the organization Lidl will engage in international trade, high exchange
rates will affect the profitability of the organization (Muller and Kräussl, 2011).

Social factors- A direct reflection of society's belief, culture, attitude and values are the social
factors which affect the survival of Lidl in numerous ways. A thorough understanding of the
public lifestyle is necessary for the Lidl to identify the change in their behaviour. Lidl should
have knowledge or perception of the health standards of the public and the importance of
environmental protection in the organization (Langlois and Chauvel, 2017).
Technological factors- Advancement in retailing are the factors which can affect the
organization in various ways such as upgrading self-scanning machines, improvement in online
shopping facilities, etc. Technology has the capacity to take apart the formation of price and
competitive base. Therefore, it is necessary for Lidl to constantly innovate to become a leading
supermarket chain.
Legal factors- legal factors are the external factors which determine the way a business
operates. Several laws place by the government to ensure the same opportunities for the
employees regardless of gender and age in the organization can affect the performance of Lidl.
It is essentially important for the organizations to follow and obey the laws of government to
avoid disputes with the government (Hitt et al., 2012).
Environmental factors- Several organizations hold various standards to protect the
environment. Environmental factors include all the factors related to conservation, pollution,
sustainable development that directly or indirectly affects the growth of Lidl. The weather
conditions may significantly affect the transportation of resources and finished products of Lidl
and the profitability of the organization.
These internal and external factors that surround the organization Lidl will determine a great
impact on the success of the organization (Muller and Kräussl, 2011).

PORTERS 5 FORCES
Fig. 2- Porter’s Five Forces Model
Source- (Cohanier, 2014)
The Porter’s Five Forces Model is used to assess the competition the firm faces due to the
rivalry of other competitors, suppliers, buyers and substitutes. There are various factors that
affect the company’s growth and position in the market. The company is affected by a number
of factors which are explained below-
The threat of New Entrants- The threat due to new entry is when the new entry can
easily enter the market requiring the little cost to start up. The entry of a new threat is
felt when existing companies do little to retaliate and oppose the new entry. The
absence of any governmental regulation also gives freedom to new companies to set up
business.
Bargaining power of Suppliers- The suppliers also has power over the business as they
are associated with the business directly. The suppliers of Lidl bring those raw materials

from various parts of the UK to enable a more locally grown and procurement culture.
More the number of suppliers, more the choice with the business to choose from the
best supplier who gives services at according rates (Cohanier, 2014).
Bargaining Power of Buyers- The buyers or the customers of Lidl are the main
stakeholders of the company as they are the ones for whom the company does
business. The switching cost of the customer to another firm should be high so that the
consumers do not switch easily. Many substitutes who are there in the market also
make the consumer’s bargaining power high (David and David, 2013).
The threat of Substitutes- The threat of substitutes is prevalent when the buyers are
able to find the substitutes easily who can replace the existing company for a cheaper
alternative. The substitutes offer services with attractive prices and better quality to
make the switch easily.
Rivalry among Competitors- This force is a major determinant of the profitability of the
industry. The competitors are the ones who compete aggressively for the market share
and earn profits. The intense rivalry is when there are many competitors, high exit
barriers or slow growth of industry (Muller and Kräussl, 2011).
These are the forces which determine the competition of the company in the market.

TASK 2
Q. 2 CRITICALLY EVALUATE THE COMPANY’S RISK MANAGEMENT IN THE
STRATEGIC PLANNING PROCESS
Risk Management is the process of identifying all those processes or factors which can cause a
threat or trouble to the completion of the business project. The risks are identified, analysed
and assessed to see their level of mitigating the business decisions taken by the company. The
risk management usually occurs when the investor or the fund manager assess the
uncertainties associated with the business project and quantifies the losses as an estimate
which can be borne by the company. Risk management is done in almost all the companies as
all companies strive to achieve their business targets having the least negative impact (Kenton,
2018).
TYPES OF RISKS IN A BUSINESS
Fig. 3- Types of Risks
Source- (Ansoff, 2019)