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Analysis of Lidl’s business strategies Essay

Lidl Stiftung & Co is an international discount supermarket that is located in Germany. The company was founded in the early 1940s by one member of the Schwarz family. The company has been operating in most parts of Europe, giving the other competing firms a very tough ground for retail business. Currently, the company has over 10,000 stores, most of which are in the UK. The company is the fifth best retailer in the world with a net income of $82.4 billion (Lidl, 2011). Apart from being active in the retail business, the company also carries out a number of services such as DVD rental, which was launched in 2009 and bakery services launched in 2012.

According to Sillince (2006), resource based view in competitive advantage can help Lidl in achieving competitive advantage by looking at the internal factors that are within its system. For instance, the company has used its employees in ensuring that it achieves most of its goals within the shortest time possible. In addition, the company has achieved greater competitive advantage that has led to increase in the amount of profits and market share by internal tangible and intangible factors such as products and values respectively.In addition, the company uses heterogeneous and immobile resource-based views to ensure the achievement of the most effective competitive advantage in the market.

Discourse and disruption have also affected the company hence making it work towards ensuring that it produces more to enable it sell better than other firms. The PESTEL analysis directly and comprehensively evaluates the industry’s external environment elements in order to identify the overall available opportunities and dangers of specific procedures, on the grounds that progressions in these elements can prompt the huge change of businesses, particularly as time goes on. Specifically, PESTEL mainly highlights Political, Economic, Social, Technological, Environmental as well as Legal variables.

The first aspect of PESTLE analysis is the political aspect. With over 10,000 stores in Europe alone, Lidl needs to manage unique political examples affecting its business operations. One of the major political components influencing the business is natural assurance laws to compel companies to comply with all the government requirements. The second imperative component is UK government vitality advance programs for innovative work of retail products. For this situation, numerous retail companies have been able to greatly undergo structural changes in order to fit in the government policies.

In addition Lild uses economic internal and external factors. Financial elements incorporate monetary development in the option vitality commercial enterprises and increment in the expense of utilizing the automobiles fundamentally because of the ascent in fuel costs in the brief time. In this manner, the interest for more-proficient automobiles is higher than in the recent past. Consequently, recuperation of GDP and the rising rate in the majority of the slowly developing nations from the recessionary period that happened in 2008/2009 has a huge effect on the client buying power. The company also has a stable financial system that enables it to communicate effectively and favorably.

Moreover, Social components are identified with expansion natural concerns, mentality and stress on items, which are eco-friendly. In addition, without a doubt the current society judge’s individuals focused around the sort of the automobile they buy and the thought of having electric vehicles enhances the societal position of a single person. The company has also considered a number of cultural elements that help in achievement of competitive advantage and in promotion of customer interests. For instance, the company stocks various items used by almost all the religions in Europe.

With the rise in technology, Lidl has tried to improve its customer service platform to ensure that the new technological aspects are included in order to avoid any delays. In addition, the company has allowed customers to make purchases using credit cards and checks in order to make purchases easier and faster. Besides, in order to beat competitors and gain competitive advantage against other competitors in the retail industry.

Currently, numerous retail stores have confronted the aggressive weight to produce eco-accommodating products. Natural components, for example, expanding attention to environmental change lead to changes in operations and organizations’ items and administrations, in light of the fact that clients are getting more mindful of ecological impacts of generation. Lidl has also ensured that it initiates various environmentally friendly aspects such as the use of the modernized ways of handling waste disposal such as recycling. Additionally, numerous regulations emanate from governments presenting vitality credit projects and putting weight on creation eco-accommodating products, for example, licensing companies to join the new techniques for green business and working towards reducing the effects of wastes from vehicles on the environment (Sillince, 2006).

Porters Fiver Competitive forces are some of the most essential tools that Lidl has to use in ensuring that it achieves competitive advantage in the retail sector. The company needs to identify some of the most desirable strategies and use them towards achieving the best part of the market share. The first force is Threat of new entrants. Currently, the retail industry has the highest risk from the threat of new entrants. Having entered the industry in 1940s, Lidl also faced the difficulties of being a new entrant in a market that needed high capital and had increased problems that rose from building a brand name to indifferent distributors. However, Lidl managed to pass through this and is still on the verge to become the highest market holder in the industry.

The general bargaining power vested on the buyers is uncertain and Lidl had to rely on their closeness with advertisers in order to please the buyers. These advertisers are some of the buyers of Lidl hence making it achieve competitive advantage in the market. Besides, the threat of substitution is relatively low since very few firms produce can match the market covered by Lidl. This has given Lidl an upper hand in the retail business hence increasing the advantage over other companies. In addition, in its bid to enter the US market, Lidl has to counteract the benefits that Wal-Mart has given to the consumers.

Based on Suppliers’ bargaining power despite building strong relations with the main suppliers, Lidl has a hard time trying to win other suppliers. However, its ability to buy products in bulk has helped increase its bargaining power among the suppliers thereby giving it a higher competitive advantage (Clegg Et., al, 2006).Rivalry in the Industry is evident in the presence of competitors in the market.Despite having competitors such as Morison’s in the UK and Wal-Mart in the US, Lidl has managed to counteract rivalry in the market by using the best strategies that are aimed at improving the company’s image among the various international and local customers.

References

Balogun, J., Jacobs, C., Jarzabkowski, P., Mantere, S., &Vaara, E. (2014).Placing strategy discourse in context: Sociomateriality, sensemaking, and power. Journal of Management Studies, 51(2), 175-201.

Clegg, S. R., Kornberger, M., &Pitsis, T. (2011). Managing and organizations: An introduction to theory and practice. , : Sage.

Clegg, S. R., Hardy, C., Lawrence, T., & Nord, W. R. (Eds.).(2006). The Sage handbook of organization studies.Sage.Colla, E. (2003). International expansion and strategies of discount grocery retailers: the winning models. International Journal of Retail & Distribution Management, 31(1), 55-66.

Hanf, J., &Hanf, C. H. (2007). Does food quality management create a competitive advantage. Quality management in food chains, Wageningen, Wageningen Academic Publishers, 489-502.Hill, C., & Jones, G. (2009). Strategic management theory: An integrated approach. Boston, ME: Cengage Learning.

Morschett, D., Swoboda, B., & Schramm-Klein, H. (2006).Competitive strategies in retailing—an investigation of the applicability of Porter’s framework for food retailers. Journal of Retailing and Consumer Services, 13(4), 275-287.

Porter, M. (2005). Strategy as action : Competitive dynamics and competitive advantage: Competitive dynamics and competitive advantage. , : Oxford University Press.

Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and competitors. , : Free Press.

Sillince, J. A. (2006). Resources and Organizational Identities The Role of Rhetoric in the Creation of Competitive Advantage. Management Communication Quarterly, 20(2), 186-212.

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