Business environment refers to the combination of internal as well as external factors that may affects the ability of a company to maintain its position in marketplace. This includes suppliers, government law, social and economic trend, competition , customers etc that influence the strategies or plan formulated by company (Zsambok and Klein, 2014). This report describe about ALDI which is a discount supermarket that operates its business in more than 20 countries worldwide. It provides a range of products from food to household category and is headquartered in Germany. It elobrates about the type & purpose of organisations along with their size and scope with in the business encironemnt. It also describes about interrelationship shared by different functional unit within an organisation. Further it includes a detail analysis of pestle framework to determine its positive and negative impact on organisational activirties. In addition to this project also includes SWOT analysis to determine the strength and weaknesses of ALDI and their interrelation with macro factores.
P1. Type and purpose of organisations and its legal structure
Business environment refers to the collection of all the individuals, institutes and other forces that are present within or outside the organisation and have a greater influence over the plans and policies that are formulate by a company. Business environment consists of various types of organisations that are different in term of their size, operations and purpose. The type of business organisations can be better understood using following points
Public organisation: - These types of organisations are owned by government which is generally operated for providing services to its citizens. The fund for public sector organisations are usually raised from taxes, fees and fund transferred from government (Zeng, Li and Duan, 2012). The Crown Prosecution is a public sector company which handles the cases that have been investigated by police to ensure that the culprit person must be punished for the right offence. It works independently from police or government in England and whales.
Purpose:- The aim of Crown Prosecution Service is to provide assistance to police department for solving different criminal case so that the offenders get justice and right person get prosecuted for their attempt to crime.
- State government: It refers to a regulatory body which is subdivided into federal form and work at a level below the central or national government.
- Local government: It is defined as administrative body which have a control over a small geographical area like city, town etc. And is not liable to pass law that will affect a wider area.
- Central government: It is a political authority that has a power to control the whole country by formulating laws and regulations.
Private organisation:- It refers to type of enterprises that are owned and operated by either a single individual or companies rather than a governmental authorities. Private sector organisations are generally operated with the aim of achieving profit (Yu and Ramanathan, 2013). ALDI is a privately owned discount supermarket chain retail company that offer different types of product related to food, beverages, household goods and sanitary articles.
Purpose:- Main aim of ALDI is to provide a wide range of quality products to its customers throughout the world by marinating a long chain of retail supermarket
- Sole proprietorship: It refers to the company which is owned and operated by a single individual with an aim to enhance its standard of living and who is personally held responsible for all its debts.
- Partnership: It refers to a formal agreement in which two or more parties’ joint together for managing and operating a business in which liabilities and profits are distributed among partners.
- Limited company: It refers to a type of private company where the owner’s liability is limited by share and shares are prohibited from being publically traded.
Voluntary organisation: - It defines as a group of people who jointly enter into an agreement with common interest to form up an organisation for the accomplishment of their goal. Voluntary organisation performs its operation to serve for the welfare of people and society at large (Wack, 2017). United Nations International Children’s Emergency Fund (UNICEF) is a perfect example for voluntary organisation. It is headquartered in New York work toward providing emergency food and healthcare related services to children.
Purpose:- It main aim is to provide protection to children against violence, abusive situation and exploitation such as child labour, child marriage and child trafficking.
- Unincorporated association: It refers to the group of people who come up together to form an association for the welfare of society. These associations are generally operated by constitutions and management committees and are not recognised as a legal entity.
- Charitable trust: It refers to a limited that are regulated by charitable commission that must be limited by guarantee and not by shares.
- Incorporated organisation: It refers to the association which is recognised as a legal entity and body separated from its directors. Here the directors are not help personally responsible for debts of company.
P2. Size and scope of different type of organisations
There are generally three types of organisations that operate in business environment which are public, private and voluntary enterprise (Vaiman, Sigurjonsson and Davidsson, 2011). But these are different in term of their size, objective and scope which can be better understood using following points:
Public sector:- The Crown Prosecution Service is a public prosecuting agency that perform its operations in conducting criminal prosecutions in England and Whale.
- Product or services: It offer services related to providing legal advice to police and other investigation agencies during criminal case investigation in Crown and Magistrate courts.
- Size and scope: It has around 6000 people among half of them are lawyers who represent the investigation of Crown in several courts for hearings.
- Vision and mission: The mission of Crown Prosecution Services is to provide community with a professional, independent and efficient criminal prosecution services. Its vision is to provide high quality of prosecution services to community so that they get justice.
- Business objective: Main objective of CPS is to limit the unlawful practices and to improve the way through which criminal cases are handled and heard in court so that fair decision can be taken.
Private sector:- ALDI is a retail sector company that offer high quality of product or services through its long network of supermarkets that are speeded over international level (Türetken and et. al., 2011).
- Product or services: It a grocery stores that offer products in category like food, beverages and household product.
- Size and scope: ALDI operates around 10000 stores across the world and 1600 stores in UK with more than 30000 employees working within it.
- Vision and mission: Its mission is to provide high quality product to its customers so that they can lie a lot by spending a little. The vision of ALDI is to become top retailer around the world by widening its network and store locations.
- Business objective: Main objective of company is to satisfy the need of customer by providing quality product at relatively low price that can be affordable to customers.
Voluntary organisation: UNICEF is a non-profit organisation which performs operations toward safeguarding the children rights.
- Product or services: This organisation work toward safeguarding the children from being exploited and abused to provide them a better life. Apart from this it also provide food and healthcare services to children in emergency.
- Size and scope: UNICEF provides its services in more than 190 countries around the world for safeguarding the children and providing them a better and healthy life.
- Vision and mission: Its vision is to establish children’s right as international standard of behaviour and ethical principle toward children. UNICHE mission is to advocate for the children’s right and to help them in fulfilling their basic needs by providing food, shelter and heath cure.
- Business objective: It main objective is to eliminate the discrimination by promoting and advocating for the women rights and to support them for participating in social, political and economical development of communities.
P3. Relationship between different organisational function and their link with organisational objective
Organisations business operations are divided into several functional unit which perform different activities but are interrelated with one another (Tayur, Ganeshan and Magazine, 2012). It includes finance, human resources, marketing, Research and development and man more. ALDI must ensure proper coordination among its functional department for achieving better market performance which provides an opportunity to achieve competitive advantage.
Organisational structure: It refers to the system which is used to define a hierarchy followed by an organisation (Saleem, 2017). ALDI follows a divisional organisational structure for operating its operations effectively throughout the world. It refers to a structure that organise the business activities around geographical area according to the product or services group.
Interrelationship between functional units
Following points describe about the interrelationship between the functional units that are shared by the different departments of ALDI:
- Human resource management: this unit is responsible for the hiring, managing and controlling the personnel working within an organisation. Hr department is conceded as a main part of organisation. So in order to develop a competent workforce it is very essential for the other departments of ALDI such as marketing, finance, research and development to communicate about the requirement of employees with particular skills. Apart from this they can also communicate with HR manager regarding the training programs that are required to be conducted for sharpening up the skills of employees. By maintain effective communication with HR department ALDI will be able to get high skilled workforce that provide competitive advantage.
- Marketing department: This department is responsible for promoting the brand and products or services offered by ALDI. So, it is very essential for marketing department to communicate with HR unit for hiring effective sales personnel that support in increasing volume of sale by influencing customers (Meiners, Ringleb and Edwards, 2014). Apart from this it must also communicate with R&D unit in order to get information about demand of target customers so that effective marketing strategy can be formulated effectively.
- Finance department: this unit is responsible for management of fund that flow within or outside the company. Financial department must maintain coordination with other department like marketing, HR and so on in order to determine their financial need for performing operations. This will support financial department to made fund available whenever required and to minimise the extra expenses of company.
P4. Positive and negative impact of macro environmental factor over organisational objective
The operations performed by a company are greatly influenced by the changes in macro environmental factor. So in order to perform operations effectively it is very essential for ALDI to analyse the macro environmental factors that support in determining the positive as well as negative impact of external factors over business operations and its objectives. This analysis can be performed using analytical tool named as PESTLE which evaluate the external factors and its impact over particular business (PESTEL analysis, 2018). Following are the factor involve in PESTLE analysis and their impact over ALDI’s business objectives:
Political: This factor describes about the degree of governmental intervention in economy which includes government policies, political stability or instability. Political factor have an huge influence over the business operations as it include various regulations as well as standard that are fixed by government over the way a business operates (Sekaran and Bougie, 2016). Hence the ALDI has to consider those regulations while formulating policies so that operations can be performed in a legal and ethical manner.
- Positive: The majority of ALDI’s stores are in countries like Europe, USA, Australia and China which are free from conflicts. Hence treat for political crises are relatively lower which a positive factor for ALDI’s business operations is.
- Negative: ALDI perform its operations in different countries around the world that are different in term of their laws and regulations. So it is very difficult for ALDI to comply with all political guidelines as it always have to formulate different policies when enter into new country.
Economical: It generally includes factors like economical growth, inflation, disposable income of consumer, tax rate and so on. Therefore, business operations of ALDI are greatly influenced by economical factor as it operates in different nations’ worldwide (Li and et. al., 2011). But it has store most in developed and developing nations, hence the impact is positive as such nations have high GDP as well as well maintained inflation cycle.
- Positive: Brexit largely affect the economical condition of country by increasing the inflation rate but it act as a positive factor for ALDI as it started as a discount store which provide products at lower price.
- Negative: UK economy recovered from recession this could have negative impact over business as customer may switch from discount store to mainstream supermarket which affect the market share of ALDI.
Social: This factor includes need, taste, preference norm and cultural value of customers in a particular area in which company operates which as a huge impact over the demand and supply of company’s product. Social factors affect the demand of product as people belong to different country are different in term of their choice and taste so, ALDI have to analyse the social need and demand before offering products in particular area.
- Positive: Nowadays, people prefer to purchase all their needed stuff from one place for saving their time. This is a positive factor for ALDI as it provides a variety of product under one roof.
- Negative: UK has aging population which is negative factor for ALDI as the cost of having old workforce may be higher in term of sickness and delay in operations.
Technological: It includes several technological aspects like advancement of technology, new innovation in market, new way of producing product etc that may affect the business operations (Gilboy, 2016). It is one of the most crucial factors that ALDI must consider as changes in technological environment may affect the sale of products and the way it offers.
- Positive: ALDI has implement electronic machines for billing which help them in reducing the time of company and customers.
- Negative: ALDI not offer their services through e-commerce platform which has limited its market share as other competitors offer their product online.
Legal: This element includes the assessment of laws, legislation and regulations that are required to be followed for operating business in a particular location. It includes employment law, health and safety, consumer rights etc. ALDI perform its operations across several geographical areas which follows different laws and regulations (Gharajedaghi, 2011). Therefore, ALDI must consider those regulator need before formulating a business plan for a particular region.
- Positive: European commission has fixed the displaying of nutrition facts over food mandatory for promoting a balanced diet among society. So it is a positive factor for ALDI, as y providing a description about the healthy ingredients used in product may attract customer to purchase the same.
- Negative: The employment law of UK is continuously changing or modifying by government which affect the operations of ALDI as it required to chance policies related to employment contract.
Environmental: It refers to several practices as well as legislative regulations that are related with the environmental protection. Under this factor ALDI must analyse the environmental safety standards of particular region before offering product or services, as avoidance of such standards may affect the goodwill of company.
- Positive: ALDI stock their food items from local farmers for offering fresh product to customer that doesn’t include any harmful ingredients.
- Negative: The concern toward the environmental protection leads to increase in governmental strictness toward environmental standards which require ALDI to change their practices in term of packaging material used must be disposable or recyclable.
P5. Internal and external analysis of strength and weakness of organisation
Internal and external analysis helps a company to determine its strength and weakness which support them in achieving competitive position in marketplace (Crane and Matten, 2016). For this ALDI can use SWOT analysis that evaluate the internal environment of company to determining its strength and weakness as well as external environment to identify opportunities and threats that are present in market. Following table describe about the SWOT analysis of ALDI:
P6. Interrelation between the macro environmental factor with strength and weakness
|Political||ALDI operates majority of its store in UK which has political stability that aid it to operate its business effectively.||As having stores in different countries across the world, any change to political relation among countries may affect the ALDI’s operations.|
|Economical||ALDI maintain its store in developed as well as developing nation which have higher per capita income that provide an opportunity to increase its sales performance.||Inflation period may increase the operational cost of company due to increase in price of suppliers (Zeng, Li and Duan, 2012).|
|Social||Demand of high quality product at low price aid ALDI in attracting large number of customers.||Changing demand of customers to purchase product from mainstream supermarket rather than discount store directly affect the profitability of ALDI.|
|Technological||Implementation of billing machines in store help company to simplify the way of keeping record of financial data.||Demand for online purchasing affecting the demand for store based retailing activities of ALDI.|
|Legal||Nutrition description over ALDI’s product packets attract customer to purchase products.||Fluctuation in employment related regulation increasing the employment turnover in ALDI.|
|Environmental||Purchasing product from local farmers saves the cost of ALDI and also provides organic food which is highly demanded by customer (Zsambok and Klein, 2014).||Increasing strictness toward environmental standards affecting the demand of ALDI’s product which can’t be recycled|
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From the above given information it can be concluded that business environment is consists of various factors that may affect the operations performed by a company or its position in market. So in order to remain safe from such threat it is very essential for a company to analyse the internal as well as external factors present to determine the future changes in environment that may affect business. The internal analysis can be performed using SWOT analysis which represent the strength and weakness that a company have major growth opportunity in market and threat that may affect business. Apart from this external analysis can be performed using PESTLE which assess the macro environmental factors to determine its positive as well as negative impact over business