In this assignment, I have chosen ALDI
supermarket 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 external
and uncontrollable factor that influence an organization’s   to take a decision or helps in decision
making and affect organizations performance and strategies. The economic
factors are demographics; legal, political, and social conditions;
technological changes; and natural forces.

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Examples of macro environment influences
include competitors, changes in interest rates, changes in cultural tastes,
disastrous weather, or government regulations.

Purpose
of ALDI supermarket

To provide value and quality goods to the
customers through fair and efficient in all and give value for money.

Political
factors affecting ALDI:

In
this environment, we consider political, but not legislative, issues. Levels of
conflict are high and political vulnerability across the world rewards
threaten   the sustainability of foreign
firms who may be stigmatized based on their country of origin.   Aldi
stores 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 to
Aldi’s operations from war is low

After
Britain voted to leave the EU, the uncertainty remains in the future of European
firms in the UK.   Aldi made a foreign direct investment into the
UK, and thus should not be affected as much as a firm with a joint venture or
import/export business.  However, the
regulations and political relationships between the UK and Germany and they are
one of the most influential countries in the Eurozone is likely to present
difficulties to Aldi’s UK operations

Economic factors affecting ALDI:

This
environment, perhaps more than any of the others, is the one that most
influences business decisions. Prices have risen in the U.K due to Brexit and
therefore pound has dropped.  This was
favorable to ALDI as the shoppers turn to discounters and sales was boosted in
over two years and it helped to increase their market share. 

 

Cost
of food in the United Kingdom increased 3.90 percent in December of 2017 over
the same month in the previous year. Inflation of food in the United Kingdom
averaged 2.55 percent from 1989 until 2017, it is higher than  in August  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.

The
rise in inflation means, less spending, therefore shoppers will more likely to
focus on budgeted life, to balance their household budgets they more likely to
eat at home as opposed to in restaurants. That means that supermarket sales in
discounted retailers such as Aldi could rise even further.

 Aldi announced in 2017 that it will increase
its lowest hourly wage in London to £9.75 an hour, beating the living wage. (The
national wage is £7.20 an hour for workers over the age of 25)and meaning that
higher disposable income is available.

Socio-Cultural factors of
ALDI

Higher
wages result in a better standard of living for those being paid them and thus
allow workers to afford better food, healthcare and exercise means, benefitting
society. Aldi is currently the highest paying supermarket in the UK after
giving 3000 staff members a pay rise in a bid to overtake fellow Lidle in terms
of wages paid.

By
2020, Aldi aims to teach 1.2 million children in the UK healthy eating habits
through their Get Set to Eat Fresh Initiatives

Technological factors of
ALDI

?    
Supermarkets are
increasingly turning to technology to aid their service

?    
consumers expecting the
efficient self-service checkouts from grocery providers

?    
Aldi is yet to adopt such
technology, and although notoriously quick and efficient in serving consumers,

Long
queues may deter consumers who wish to only buy a few products and can’t check
out efficiently.

Environmental factors of
ALDI

Aldi  stock their products from local British
producers and farmers, helping to support local producers and ensure the
sustainability of the local areas that they operate in.

Legal factors of ALDI

In
the past years, many supermarket industries of U.K has been affected by  legal disputes.

In
2016, Aldi also found itself in legal disputes because of misrepresenting its
sales of herbs, with watchdogs finding olive leaves in oregano products

Conclusion

Any
business organization affects external and internal environmental factors.
Before making any business decision analysis and evaluation of external and
internal factors will guide the business organization to take a wise
decision.  Every department of a business
organization must consider carefully to identify the strength and weakness of
macro environment and plan their activities in business operations.

External environment
strengths/weakness

Political
factors are uncontrollable by the business organization, but it helps them to
understand the characteristics of its core competency, its capabilities, and
availability of resources.  Some organizations
may not be competent to face sudden political changes within the country or
outside the country.   Therefore, a careful study of macro
environment is helpful to an organization. External analysis uses to identify
current market trends and events that affect the strategic decisions of the organization

Internal environment
strengths and weakness.

     The most important strength of an
organization is clarity in its vision which is maximizing profit and satisfies
customers   irrespective of the market conditions. Organizations
can measure its performance by their key indicators which organization has set
up.

      An internal analysis will help to
identify the proper amount of resources for carrying the working activities and
processes.  Resources include financial
resources, physical resources like plant and machinery, human resources, intangible
assets resources and cultural resources

 

 

 

 

Aldi SWOT Analysis

Strengths

Aldi’s
sales 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 70
this year and would invest a further £459m

The
German chain currently has a 6.9% share of the market, according to the latest
industry figures from Kantar World panel.

The
status of Aldi is providing similar quality to the leading brands at notably
lower prices than any of the brand’s competitors.

Aldi
won the best supermarket of the year for the fourth time in 2017 in The Loved by
Parents Awards

Weaknesses

Regardless
of Aldi is a discount retailer, they still had to increase prices of certain Aldi
products, namely basic groceries including milk and bananas, as the fall in the
pound hit, pessimistic since their traditionally cheaper reputation.  Aldi made price adjustments by bringing into 1
pence cheaper than their competitors such as Tesco, Morrisons and Sainsburys
for Milk, and the same price as Asda.

While
Aldi has experienced high growth in 2017, it is still far behind the big three British
supermarkets (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 being
superior alternatives to high-end products. Aldi’s plan to create 4000 jobs in
the UK, as part of its expansion plans. They are aiming to open many stores
from 700 to 1000 stores by 2022.

Aldi
is looking forward to open convenience stores to increase its visibility on
high streets and other local areas like other supermarkets such as Tesco,
Sainsbury and Morrisons.

 

 

 

 

Threats

American
grocer Whole foods   has been taken over by Amazon, therefore the
supermarket industry of the U.K, is anxious that a takeover of market share by
Amazon 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.

Aldi
is not the only German firm growing and accelerating its market share in the
U.K. market.  Lidl currently holds a 5%
share of the grocery market in the UK, and is expected to overtake high-end
grocery store. The current success of Aldi in terms of growth may be
compromised by shoppers preferring cheaper alternatives from Lidl or home
brands.

Reports
from July 2017 indicate that Asda is currently considering a takeover bid on
the British discount chain B, as an attempt to diversify when faced with
increasing competition from cheaper rivals such as Aldi.

Impacts of Macro and
Micro factors in business objectives and decision making.

     Micro environment factors are Suppliers,
resellers, customers, competition and the public.

The suppliers:

      Suppliers
can control the success of the ALDI ‘s business when they hold the power.  However, the supplier can hold the power when
they are the only or the largest supplier of their goods.

The
buyer is not vital to the supplier’s business and buyers can reach to another
supplier too. However, change in suppliers or delay in getting products from the
supplier 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 will
play, a large role in how you approach the marketing of your products and
services to them. Therefore, understanding buyer behavior is necessary

The competition:
 Those organization or business   sell
same or similar products and services as Aldi is the market competition, and the
way they sell needs to be considered. Aldi should do price adjustments, product
improvement and developing market to increase the demand of Aldi’s products.

The public:
ALDI has   a duty to satisfy the public. Any actions of Aldi
must be considered from the angle of the public and how they are affected. The
public has the power to help you reach your goals; just as they can also
prevent you from achieving them.

Impact of Macro-environment
factors.

Aldi
create the vision and objective by considering the factors affect their
business. To create a global visibility ALDI, implement adequate performance indicators
to measure their performance internally and externally.  Political changes can impact the business
positively and negatively

Economic factors
impact on ALDI in the form of increase or decrease in market share due to
inflation rates. Increase in the inflation rate that means business need a
careful consideration in their production and selling target, as customers will
stop spending, but ALDI is a one of the top discounted stores therefore that
will help to stay in the market as customers will depends such as super save
supermarkets rather spending high.

Technology
updating is necessary for ALDI, it will help ALDI to survive in the retail
market as ALDI’s competitors such as LIDL, Tesco, Asda, and Sainsbury are
already 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 encourages
local farmers and suppliers for their products.

 

 

 

 

 

 

 

 

 

 

 

References

 http://www.businessdictionary.com/definition/macro-environment.html
accessed on 19.01.18

https://tradingeconomics.com/united-kingdom/food-inflation
accessed on 19.01.18

https://businessteacher.org.uk/pestel/aldi.php
accessed on 19.01.18

https://www.linkedin.com/pulse/understanding-impact-macro-environment-factors-essential-geoff-burton.
Accessed on 19.01.18

http://www.businessdictionary.com/definition/macro-environment.html
accessed on 19.01.18.

Daily
Record. (2017) ‘Aldi supporting the best of Scottish Produce.’ Online accessed
on 19.01.18

Aldi.
(2017b) ‘Welcome to Aldi.’ Online Accessed on 19.01.18 https://www.aldi.com/?aldiurl=true.