In this assignment, I have chosen ALDIsupermarket to identify their macro environmental factors by applying PESTLE and SWOT to identify key strength and weakness of their businesses.
The macro environment is a major externaland uncontrollable factor that influence an organization’s to take a decision or helps in decisionmaking and affect organizations performance and strategies. The economicfactors are demographics; legal, political, and social conditions;technological changes; and natural forces.Examples of macro environment influencesinclude competitors, changes in interest rates, changes in cultural tastes,disastrous weather, or government regulations.Purposeof ALDI supermarket To provide value and quality goods to thecustomers through fair and efficient in all and give value for money.
Politicalfactors affecting ALDI:Inthis environment, we consider political, but not legislative, issues. Levels ofconflict are high and political vulnerability across the world rewardsthreaten the sustainability of foreignfirms who may be stigmatized based on their country of origin. Aldistores are situated in Europe, as well as in the U.S.
A, Australia, and China,which at present are all relatively free from conflict, and thus threat toAldi’s operations from war is low AfterBritain voted to leave the EU, the uncertainty remains in the future of Europeanfirms in the UK. Aldi made a foreign direct investment into theUK, and thus should not be affected as much as a firm with a joint venture orimport/export business. However, theregulations and political relationships between the UK and Germany and they areone of the most influential countries in the Eurozone is likely to presentdifficulties to Aldi’s UK operations Economic factors affecting ALDI: Thisenvironment, perhaps more than any of the others, is the one that mostinfluences business decisions. Prices have risen in the U.K due to Brexit andtherefore pound has dropped.
This wasfavorable to ALDI as the shoppers turn to discounters and sales was boosted inover two years and it helped to increase their market share. Costof food in the United Kingdom increased 3.90 percent in December of 2017 overthe same month in the previous year. Inflation of food in the United Kingdomaveraged 2.
55 percent from 1989 until 2017, it is higher than of 13 percent inAugust of 2008 and a record low of -3.30 percent in February of 2015. Given that Aldi is a discount supermarket,this is favorable as customers will be seeking cheaper products.Therise in inflation means, less spending, therefore shoppers will more likely tofocus on budgeted life, to balance their household budgets they more likely toeat at home as opposed to in restaurants. That means that supermarket sales indiscounted retailers such as Aldi could rise even further. Aldi announced in 2017 that it will increaseits lowest hourly wage in London to £9.75 an hour, beating the living wage. (Thenational wage is £7.
20 an hour for workers over the age of 25)and meaning thathigher disposable income is available. Socio-Cultural factors ofALDIHigherwages result in a better standard of living for those being paid them and thusallow workers to afford better food, healthcare and exercise means, benefittingsociety. Aldi is currently the highest paying supermarket in the UK aftergiving 3000 staff members a pay rise in a bid to overtake fellow Lidle in termsof wages paid. By2020, Aldi aims to teach 1.2 million children in the UK healthy eating habitsthrough their Get Set to Eat Fresh Initiatives Technological factors ofALDISupermarketsare increasingly turning to technology to aid their service propositions, withan increasing number of consumers expecting the efficient self-servicecheckouts from grocery providers Aldiis yet to adopt such technology, and although notoriously quick and efficientin serving consumers, long ques may deter consumers who wish to only buy a fewproducts and can’t check out efficiently.Environmental factors ofALDI Aldi stock their products from local Britishproducers and farmers, helping to support local producers and ensure thesustainability of the local areas that they operate in. Legal factors of ALDI Inthe past years, many supermarket industries of U.K has been affected by legal disputes.
In2016, Aldi also found itself in legal disputes because of misrepresenting itssales of herbs, with watchdogs finding olive leaves in oregano products ConclusionAnybusiness organization affects external and internal environmental factors.Before making any business decision analysis and evaluation of external andinternal factors will guide the business organization to take a wisedecision. Every department of a businessorganization must consider carefully to identify the strength and weakness ofmacro environment and plan their activities in business operations.
External environmentstrengths/weakness Politicalfactors are uncontrollable by the business organization, but it helps them tounderstand the characteristics of its core competency, its capabilities, andavailability of resources. Some organizationsmay not be competent to face sudden political changes within the country oroutside the country. Therefore, a careful study of macroenvironment is helpful to an organization. External analysis uses to identifycurrent market trends and events that affect the strategic decisions of the organizationInternal environmentstrengths and weakness. The most important strength of anorganization is clarity in its vision which is maximizing profit and satisfiescustomers irrespective of the market conditions. Organizationscan measure its performance by their key indicators which organization has setup. An internal analysis will help toidentify the proper amount of resources for carrying the working activities andprocesses.
Resources include financialresources, physical resources like plant and machinery, human resources,intangible assets resources and cultural resources Aldi SWOT AnalysisStrengthsAldi’ssales rose 13.5% to £8.7bn in 2016, but operating profit dropped 17%.
Aldi,which currently has 726 stores in the UK, said it planned to open a further 70this year and would invest a further £459mTheGerman chain currently has a 6.9% share of the market, according to the latestindustry figures from Kantar World panel.Thestatus of Aldi is providing similar quality to the leading brands at notablylower prices than any of the brand’s competitors.
Aldiwon the best supermarket of the year for the fourth time in 2017 in The Loved byParents Awards WeaknessesRegardlessof Aldi is a discount retailer, they still had to increase prices of certain Aldiproducts, namely basic groceries including milk and bananas, as the fall in thepound hit, pessimistic since their traditionally cheaper reputation. Aldi made price adjustments by bringing into 1pence cheaper than their competitors such as Tesco, Morrisons and Sainsburysfor Milk, and the same price as Asda.WhileAldi has experienced high growth in 2017, it is still far behind the big three Britishsupermarkets (Tesco, Sainsnbury, Morrisons) in terms of market share.
Opportunities Recently,many Aldi products have been named as being the best in the world, or as beingsuperior alternatives to high-end products. Aldi’s plan to create 4000 jobs inthe UK, as part of its expansion plans. They are aiming to open many storesfrom 700 to 1000 stores by 2022.Aldiis looking forward to open convenience stores to increase its visibility onhigh streets and other local areas like other supermarkets such as Tesco,Sainsbury and Morrisons. ThreatsAmericangrocer Whole foods has been taken over by Amazon, therefore thesupermarket industry of the U.K, is anxious that a takeover of market share byAmazon could occur. The Amazon aiming to a global domination of market meaning that,Aldi could potentially lose some of their market share in the U.
K. Aldiis not the only German firm growing and accelerating its market share in theU.K. market. Lidl currently holds a 5%share of the grocery market in the UK, and is expected to overtake high-endgrocery store. The current success of Aldi in terms of growth may becompromised by shoppers preferring cheaper alternatives from Lidl or home brands.
Reportsfrom July 2017 indicate that Asda is currently considering a takeover bid onthe British discount chain B, as an attempt to diversify when faced withincreasing competition from cheaper rivals such as Aldi. Impacts of Macro andMicro factors in business objectives and decision making. Micro environment factors are Suppliers,resellers, customers, competition and the public.The suppliers: Supplierscan control the success of the ALDI ‘s business when they hold the power.
However, the supplier can hold the power whenthey are the only or the largest supplier of their goods. Thebuyer is not vital to the supplier’s business and buyers can reach to anothersupplier too. However, change in suppliers or delay in getting products from thesupplier can really affect the ALDI’s business.The customers: Customers can be Business to Business,Business to customers, local or international etc. The reasons for buying willplay, a large role in how you approach the marketing of your products andservices to them. Therefore, understanding buyer behavior is necessary The competition: Those organization or business sellsame or similar products and services as Aldi is the market competition, and theway they sell needs to be considered.
Aldi should do price adjustments, productimprovement and developing market to increase the demand of Aldi’s products.The public:ALDI has a duty to satisfy the public. Any actions of Aldimust be considered from the angle of the public and how they are affected.
Thepublic has the power to help you reach your goals; just as they can alsoprevent you from achieving them.Impact of Macro-environmentfactors.Aldicreate the vision and objective by considering the factors affect theirbusiness. To create a global visibility ALDI, implement adequate performance indicatorsto measure their performance internally and externally. Political changes can impact the businesspositively and negativelyEconomic factorsimpact on ALDI in the form of increase or decrease in market share due toinflation rates. Increase in the inflation rate that means business need acareful consideration in their production and selling target, as customers willstop spending, but ALDI is a one of the top discounted stores therefore thatwill help to stay in the market as customers will depends such as super savesupermarkets rather spending high.Technologyupdating is necessary for ALDI, it will help ALDI to survive in the retailmarket as ALDI’s competitors such as LIDL, Tesco, Asda, and Sainsbury arealready in e-commerce, and latest technology of self-checkouts.Environmental factors:Aldi ‘s most products packing is environmentally friendly.
Aldi depends on natural products it encourageslocal farmers and suppliers for their products. References http://www.businessdictionary.com/definition/macro-environment.htmlaccessed on 19.
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01.18.DailyRecord. (2017) ‘Aldi supporting the best of Scottish Produce.
‘ Online accessedon 19.01.18Aldi.(2017b) ‘Welcome to Aldi.’ Online Accessed on 19.
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