Summary
Summary External environment Template LIDL
- Institution
- PEARSON (PEARSON)
EXTERNAL ENVIRONMENT TEMPLATE LIDL
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External EnvironmentExternal factors are the factors outside of a businesses
control, these factors even though the business have no
control over can have a large impact on the business daily
activities. These factors can affect different aspects of the
business such as expenditure (buying materials for their good
as well as paying employees), the demand for their product
(number of customers willing to buy their product at the price
its at). PESTLE is an easy way to show the largest external
factors such as Political, economic, social, technological,
environmental and legal Figure 1 – PESTLE
Political
The political environment is decided by the government’s choices locally, nationally and internationally. These
largely impact the business by interfering with the system the business has in place with new sets of rules and
regulations that have to be followed to make sure the business is being compliant with the law. Lidl operating in 31
different countries means it has to follow different rules based on the respective government’s choices, this can be
in favour or against Lidl depending on the regulations.
VAT is known as value added tax this will tax the customers of Lidl on all
their purchases made at Lidl. If the government decided to raise the VAT
on goods, then the customer must pay more for the products they buy,
this then means they have less disposable income to buy goods because
their expenditure has increased. This decrease in disposable income from
the customer means customers and going to lean more towards saving
instead of spending, leading to less revenue and products sold for Lidl.
Figure 2 - Shopping Comparison Prices (Koncienzcy,
Another effect is that is VAT is also added people would want to look 2023)
for more budgeting options such as Lidl where they can get more
produce for their money for an alternative to more luxury expensive brands like Waitrose or M&S. Figure 3 shows
the different prices for the same item at different stores in the UK.
Eu rules and regulation affect Lidl’s supply chain,
imports and export with the EU. As figure 3 demonstrates Lidl’s
cost have been negatively impacted by external factors
including Brexit this is due to the extra costs and fees involved
Figure 3 - article
in trading withonthe
Lidl's
Eudifficulty
which to keep shelves
causes stockedin profit
a decrease
margins, because of the increased expenditure. If Lidl’s imports cost more money they would need to increase the
price at which their products are being sold this mark-up will lead to customer dissatisfaction, especially with the fact
that Lidl is represented as a budget marking increasing their prices would also damage their brand. This shows that
Eu rules and regulations can have a large impact of the demand of Lidl products as well as the prices they are selling
them at.
Economical
Fiscal policies
are set in place by the
government in order
to help the UK
economy. Polices
Figure 4- article on impact of cost of living crisis on Lidl customers
that can affect Lidl
are taxes such as corporate tax and income tax as Lidl is a budget supermarket when income tax is high Lidl will be
able to thrive as people have less disposable income they are more likely to want to shop where the prices are
lower. This means that Fiscal policies have a large impact on Lidl’s cost and demand as Lidl are in higher demand
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