In the following report the various emerging business themes in the context of the economic, political, social, global and legal contexts of the macro environment have been highlighted. In the latter part of the report, the case study on the training and development program of Aldi have been analysed and the ways in which the company is affected by the emerging business themes is highlighted. The various areas where the company management have not been able to address the potential market risks or the opportunities have been identified. Appropriate recommendations have also been provided in the report in order to exhibit how the company can resolve the issues that can and might have aroused due to the emerging themes in the business sector of the organisation.
2.1 Emerging political thematic changes
At present UK seems to be critical and tough market comparing from the perspective of the multifaceted business organisations. Projected industrial growth suggests that the economic growth would slow down to 1.4% YOY within 2018 (Laukhuf & Malone, 2015). The wage growth in the multinational business sector have been nominal and the acute depreciation of the value of the British pound in comparison to the European pound and the USD internationally. As per Volk and Pudelko (2016), the interactivity of business operations of the various UK based organisations operating in the business environment of the EU would face rigorous struggle related to supply chain and resource management. The pro forma sales margin of the companies have been low by 12 to 13% invariably every year (Nepal & Jamasb, 2015). Monetary credit is also going to be costlier and high price of oil, owing to Brexit regulations is going to make the B2C costs higher. The consumer power is going to be weaker and because of that the companies that have been saving out of reduced operational costs would not be reap the benefits. Besides, the UK based companies that have been generating business value by attracting customers with competitive pricing would also lose out in market competition. This is because many of the alternative channels that the companies explore in terms in terms of their supply chain management or resource allocations would not be sufficient to save costs like earlier.
2.2 Emerging technologies
Many of the UK based organisations are experiencing cessations and that is why they need to adapt alternative technologies that can boost their sales and business value in general. The marketers of various companies are mapping the usage trends of various websites and accordingly formulating their online promotions so that they reach out to the maximum number of audience. As informed by Pich, Dean and Punjaisri (2016), the average mobile usage data of the UK people show that the people aged 20 to 50 (having highest purchasing propensity and power) spend about 125 minutes with their smartphones which is about thrice than that two years ago.
However, in this context, the UK based companies have showed lesser proficiency in promoting the digital marketing franchises or the in-house IT marketers so as to allocate them greater roles in market mapping. As opined by Aguzzoni et al. (2016), out of the fear of incurring greater operational costs, the CEO of the big companies of UK are not investing in training and grooming the digital HR resources of their company. As per Bogomolova et al. (2015), the estimates of the UK retails business shows that only 11% of the digital professionals are being hired by the large MNCs of UK.
Another emerging trend that is hitting the UK, market is that due to the insurgence of the e-commerce technology, about 39% of the physical departmental retail stores are going to be closed down by 2020 (Ceseña, Good & Mancarella, 2015). Hence retail organisations who are still planning to provide lucrative offers and thereby drag mass customer base to their stores are going to incur major loss in the long run as the market is gradually shifting online.
2.3 Emerging Demographic changes
It is estimated that within the upcoming three to four years, the major consumer base of the retail industry is going to be over 55 years of age. This is going to b e a major challenge for the retailing agencies as it the consumption trends, designs and preferences of this customer base is going to be different from the target customers (aged 20 to 50) (Bendell, 2017). As per Hutchinson et al. (2015), the target customer base comprising of people over 65 years of age and above accounted for spending value of £1 among every £5 in the retail market. However, after 2019, they are going to be accountable for every £1 spending out of total £ 4 expenditure. The retail segments comprising of Health, DIY as well as products of Home maintenance would get a boost as this demographic base of customers would show preference towards them. Whereas, the sector comprising of clothes retail, beer as well as energy drinks as well as soft drinks are going to face marginalisation (Cao & Li, 2015). According to the Marketing Manager of Barclays, it is required that the traditional high street retail market deigns be resolved and health service stores and libraries are set up amidst chemist stores and convenience stores.
The target market of the UK retailers is also showing a composition of various ethnic groups. According to the opinion of a popular supermarket chain in UK, the marketing as well as promotional patterns are going to be affected as an outcome. Almost all the major super market brands in UK are now incorporating Polish as well as Asian originated speciality foods in the list of deliverables that they offer top their customers. The KPMG director promptly warns that the regional ethnic diversities among the urban population of UK, have made product allocation based on regional preference a priority (Sadun, 2015). This have made the store networks more variegated as well as the maintenance cost of their stores networks much higher. They now need to incorporate products of various domains that are in vogue among the custo0mers of various ethnicities.
2.4 Shifts in the social trends
The retail sector is experiencing a long drawn slowdown because of the declining rate of real wages of the company. The consumer debt rate are hitting the records. The crediting cost is also on the rise. This is compounded by structural shift that the consumer market is witnessing. The trend of online marketing is overwhelming the perception of shopping from the physical stores. According to the data provided by Hosken, Olson and Smith (2018), at present 20% of the retail sale of fashion products of the big brands are conducted online. Besides, the shopping malls that renders a catalogue based in-house delivery scheme are clearly preferred by about 30% of the customers of all age groups. This rapid change is experienced by the boost of the sales rate of the market exponents of the online retailing like Amazon, Asos as well as Boohoo. Again, various retail brands like Toys R U, House of Fraser and New Look are on the verge of extinction.
2.5 Globalisation of retail industry
The advent and popularity of the e-commerce websites in the global context have given market exposure to various small brands that might not any physical existence and major outlets in the UK. The SMEs and boutique organisations are now able to approach the equally big customer bases like the biggest retailing organisations. As an outcome, Hristov and Reynolds (2015), opines, the big brands are facing fragmentation of the market and losing customers also. However the same prospect is equally applicable from the favourable perspective of the UK based brands also. The retail organisations of UK are also getting exposure to the Asian as well as the American markets.
However the market forces that drive the force of globalisation remain still powerful. English as a global language is getting ire prominence. Hence, as per Nonet, Kassel and Meijs (2016), the linguistic barriers to get placed in the global organisations are getting resolved as an outcome. In the Uruguay trade negotiation conference, the stringent duties and exchange controls that were in implementation, have been slackened. As an outcome, many emerging markets have been open to the multinational retailing companies.
2.6 Emerging legal themes
The data protection as well as privacy concerns are going to be big issue for the big retail organisations of UK. The regulation of protection of General data is going have been implemented from 25th of May, 2018. The e-marketing progress detail and the acceptance policy of cookies have to be communicated with the government. However this is a legislative policy of the EU (Wang, Toppinen & Juslin, 2014). Hence it is still ambiguous that the policy would be implemented on the UK based companies in the near future or they would be relieved of the regulations. A recent declaration of the Employment Appeal Tribunal have made it mandatory for the UK companies to the voluntary overtime of regular basis would be incorporated in the calculations of holiday payments (Short et al. 2014). In this context, it deserves mention that the arrival of the holiday sessions would make the decisions very significant since the company have to legally cite the rollovers of the holiday term period and the paperwork required to cite the records would require extra labour on the behalf of the employees and incur extra investment on the behalf of the company (Kolk, 2016). Since, UK is not a part of the EU any more, the policy standards of the companies against the same context in other countries of the EU where they are operational, are also required to be communicated with the UK government.
2.7 Emerging global economic themes
The two most devastating issue in global pretext of the economy have been the unexpected fall in the purchasing power of the consumers. This scenarios have been mostly prevalent in the U&S and the UK contexts. Another important factor that have a combined impact on the economy is the shift of the customer loyalty from the physical retail to the ecommerce sector. 42 medium and emerging retailing organisations of UK origin have ceased their global business since December of 2016. After the emergence of Donald Trump as the President of the United States, the emergence of the UK based retailers like Deloitte, Wal-Mart and so on have been on a much lower scale (Kolk, 2016). The policy of promoting internal brands have led to the loss of the target market of the UK based companies in US, which could have turned out to be a major market in the days of financial crisis in the native country. Hence the European retail agencies have been have been investing in the Middle East, Chinese and to some extent to the Asian countries. They have been franchising out to the emerging retail companies of those countries, as an impact the companies are running on a policy of mutual sharing of the target customer market.
2.8 Impact on Organisational Context
Impact of the political themes
The organisation have been operating 8000 physical stores all over their sales domain. Most of the companies’ stores have been operational in Europe, North America as well as in Australia. The UK and North American outlets would face large number of operational issues (Businesscasestudies.co.uk, 2018). The cost of supply chain management would be difficult to manage owing to the large import duty imposed on the raw materials and other resources. This is why competitive pricing cannot be a substantial policy for the UK operations of the company. Nevertheless, Schroeder, Borgerson and Wu (2017), opines that the Brexit regulations would also make the availability of cheap labour very difficult. The skilled labourers are anxious to work in the other markets of the EU, where they would receive more competent and living wages. Besides the company makes huge investment behind training and development of the employees. In the present context the employee retention rate is also poor. Hence the company would also face segregation of the labour force that would prevent them from yielding the desired productivity and within an apprehended budget.
Impact of emerging technologies
The company mainly provides operational training to the employees. There have an application of software based monitoring of the employees’ performances. This helps the company to acquire business data regarding the wholesome efficacy of the company in terms of serviceability in the retail sector (Burchell, Kennedy & Murray, 2015). However most of the company’s employees are related to physical retail. The multi-channel operations of the company have been very weak. This is why the staff of Aldi do not receive much training in the context of digital marketing or do not learn innovative digital branding and sales strategizing (Businesscasestudies.co.uk, 2018).
Impact of demographic changes
The demographic changes are going to have a huge level of impact upon the organisational performance in a positive manner. Most importantly the company have a profound organisational training policy. The employees of the company receive on job as well as off the job training according to the personal training needs of the employees. One preferential policy implemented by the company is that in Aldi a demographic survey is conducted among the average customer visit per month (Businesscasestudies.co.uk, 2018). As an outcome, the differentiation in the customer demographics are within their knowledge and they even have the policy of updating their inventories based on customers’ demands son regular basis (McGowan et al. 2015). As an impact the company’s employees would have a lot of demographic data regarding the UK market.
Impact of the social changes
The social trends that have been identified in this report have attracted a large number of disadvantages in the context of the performance of the company in the long run. The skill and competencies that the company offers in terms of retail management to the employees have been in alignment to the physical retail management. However, the training provided to the IT marketing team of the company are not significant. As an impact, the company would lack significant endeavours related to the spread of their business across the e-commerce platform. Hence, as per Thite et al. (2016), there is a high chance that the company be left behind in terms of market competition. In this context, the company’s recruitment process is ineffective against current standards. The new staffing needs of the company against the inventory management in regard to online sales are unaddressed. The company do not recruit people after analysing and testing their key skills. Moreover, the sales monitoring technique that have been implemented by the company is insufficient to measure the target achieved by the online sales conducted by the company. Industry leading salaries are offered by the companies (Edwards et al. 2016). However the internal HR management and the up gradation of the organisational standards is poor compared to the other frontline retail companies of the industry.
Impact of global conditions
The market occupancy rate of the company in North America which is the major international market of the company would cease to yield market results to the company. The present US government under Donald Trump is favouring the indigenous companies and allowing them to spread across the US market more exponentially than the other potential multinational companies of foreign origin. As an outcome, the sales outcome of the company in US would run in deficit value within 2 to 3 years. On the contrary, Wieland, Handfield and Durach (2016), opines that the rate of market acquisition of the company in the Asia-Oceania market is comparatively much slow. The Australian segment of the company runs on franchise basis. Besides, the company hardly have any physical presence in the Middle East and in the potential small retail markets like China and India.
Impact of the Legal Frame work
The typical legal setting of the UK have would prove detrimental for the growth of the organisation. They are already lacking an up gradation to the online sectors that is going to be the most feasible sales medium in the whole retail context. Nevertheless, the company have sufficiently employee strength to competently and promptly fulfil the governmental regulations regarding communication of the policy and standards of virtual market operations.
The cost competitiveness policies of the company have to be made differential in the contexts of the adaptations in the retail market around the world. Cost simplification by adapting alternative supply channels is not an option for the UK based Retail Company. The major focus should be on decreasing the packaging costs and adapting to acquisitions and/or mergers. Developed relation with the distributors can help the company to get access to direct channels of inventory management. Besides, keeping an eye on the change in the average age of the demographic customer base, it is essential to substitute the inventories of the company with newer products so that the company have something new to offer to the customers. The company have to employ an external organisation for the purpose of conducting market intelligence survey so that the company can understand the requirement credentials on which the company chooses one product or brand over the other. Moreover this would also provide the sakes personnel a broad conception of the customer insight. As an outcome, they would be able to influence a customer in order to buy a certain product or avail a particular brand.
The company can develop a software that would act as a personal shopper for the customers. In case if the customer feed their shopping criteria, the personalised software can help the customer to identify the major and the most helpful products in the context of their requirement. The same software can be put to application in the physical stores. This would help the customers above the age of 55 to simplify their shopping experience. In this context, the company have to employ Customer relationship managers who would assist the customers to avail the new technology and operate it from the company’s end also. A special taskforce is also required to be formed to conduct an internal survey of the wet markets of the Asian countries. After that the company can open branches in important countries like China, Indonesia and so on.
In the context of the American business sector, the company should focus more on the spread of the online business. However the stringency regarding the operations of the foreign retail brands in the business sector of USA. Hence it would be beneficial if the company invest in the franchise business. They can invest as tertiary market forces with investment shares in small organisations.
Conclusion
The report assesses the performance and the performing ability of the organisation in the context of the identified business themes. The business themes have also been aligned to the retail sector, where the company operates. Analysing the major themes in the business pretext of the UK sector it can be concluded that the political ambiguity have major impact on the business organisations and particularly the retail sector. The Brexit regulations and the negative impact of the depreciation of the value of the Pound against the Euro and the US Dollar have made business transactions very difficult for the organisation.
The complications in the exchange norms between UK and the EU countries and the deliberate stringency imposed on the UK based organisations in the American retail sector by the disposition of the president have made the business scenario complicated for the company. However, in order to overcome the complications in the regulatory framework and the demographic changes that have been affecting the company, a multi-channel sales approach have to be adapted by the company. Other than that, alternative markets also have to be searched for. Major Asian markets like China and India have to be explored also. Lastly, analysing the sales strategy of the company in Australia, it can be concluded that the supply network of the Australian sector have to be strengthened and more franchises have to be incorporated to boost the sales growth of the company.
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An Aldi case study. Available at: https://businesscasestudies.co.uk/aldi/business-expansion-through-training-and-development/identifying-training-needs.html [Accessed: 07 August 2018]
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