A Case Study of ALDI: Strategic Planning and Implementation

A Case Study of ALDI
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Table of Contents
Introduction......................................................................................................................................3
Part 1 – Evaluating the strategy.......................................................................................................4
Part 2 – Making a strategic choice.................................................................................................15
Part 3 – Implementing the strategy................................................................................................18
Conclusion.....................................................................................................................................21
Reference List................................................................................................................................22
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Introduction
The increasing competition in the global markets has forced the organizations in all the spheres
of industrial sector to formulate and prepare strategies to combat the competition and threats
posed by the market. The task of strategy formulation assists the companies to intrude into issues
relating to – organizational and environmental audit, stakeholder needs and strategic positioning
of the company in the market. The strategies developed by the companies are in alignment with
the goals and objectives of the organization as it determines the strategies to enter new markets,
ensures optimum utilization of resources and reviews the existing performance. In this
assignment, the significance of developing and implementing the strategies in an organizational
structure have been discussed using several tools and techniques that an organization would use
to prepare strategies.
Company background – Aldi
Incorporated in the year 1946 by two brothers, Theo and Karl Albrecht, Aldi is one of the
leading supermarket chains in the United Kingdom. The success story of Aldi can be cited based
on the 7000 stores established by them in more than 70 countries. The company employs more
than 20000 people in their 500 UK stores (LLP, 2018). The company is credited to be first store
to offer self-service facility to their consumers enhancing the service quality.
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Part 1 – Evaluating the strategy
a) Provide an assessment of the extent to which Aldi’s missions, visions, objectives, goals,
core competencies inform strategic planning. (AC1.1)
The tool of strategic planning when used assists the management in identifying their internal
flaws and strengths as compared to the current market position after analyzing the opportunities
and threats. As the competition is becoming intense in the retail sector, the management of Aldi
has determined to use this tool after aligning it with their exiting set of goals and objectives and
mission and vision statement. The description of the company aims have been provided below:
Mission: The mission of Aldi is to offer their customers with a variety of good quality products
at affordable prices. The company has incorporated the want to achieve cost leadership in the
retail industry to make a strong financial base (Careers.aldi.us, 2018). Consideration of the
mission statement would provide a direction to the strategic plans of the company.
Vision: The vision of Aldi is to lead their business by three core values – consistency, simplicity
and responsibility (Careers.aldi.us, 2018). The management of Aldi is clear that they want to be
considered as a reliable organization in the market by executing clear, efficient and transparent
processes. Moreover, the vision incorporates the various commitments of honesty, just and
clarity that company makes to their stakeholders.
Objective: The objectives as set by the management of Aldi are as follows (Corporate Mission
Statement, 2018):
 To uphold the spirit of partnership by exhibiting respect in the treatment being met out to
the people
 To be considered and recognized as a company showcasing honesty, openness and
reliability in its business operations
 To adhere to the traditional values of trading as it assists the business and management
operations of the company and guides the actions
Goals: The goals of Aldi are to offer commitments in the area where it would turn to be useful in
developing an understanding with the customers and the market. Moreover, the management
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also wants to honour their stakeholder needs so that they can be known as a reliable organization
based on stakeholder review (Corporate Mission Statement, 2018).
Core competency: The core competency of Aldi is its cost cutting strategy whereby they offer
their products at affordable prices as against the competitors.
Figure 1: Pyramid depicting the strategic planning levels
(Source: Created by the author)
b) Analyse the factors to be considered by Aldi when formulating their strategic plans. (AC
1.2)
Developing strategies has become an indispensable part of the current business plans. Following
the trend, Aldi also formulates several strategic plans based on the market condition and future
trends anticipation. The factors considered by Aldi while formulating strategic plans are:
Future trend in competition: The management of Aldi anticipates the competition levels in the
market based on which contingency plans are prepared. The three most important components of
this factor are – anticipation of trends, driving, capitalizing on future opportunities (Gibson,
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2011). The trends that Aldi identified are – intense competition, threat from e-commerce and
deployment of aggressive marketing tools.
Customer needs: Modern marketing approach considers customers to be the king and hence,
anticipation of customer needs before formulating strategies is of prime importance. The
company needs to anticipate the customer needs and develop strategy around it with the aim of
high customer satisfaction.
Gaining and retaining competitive advantage: Competitive advantage is the ability of the
company to differentiate their performance from the rivals based on one or many parameters
(Sirmon et al., 2010). Aldi has managed to strategize on this factor based on three generic
strategies – cost leadership, differentiation based on price and product and market and customer
focus.
Corporate-level communication and integration of plans: For achieving success in strategy
formulation, the company has to ensure proper connectivity between all organizational functions
(Hrebiniak, 2013). Aldi has understood this and have managed to create a strong communication
channel leading to high levels of co-ordination and co-operation.
c) Using evidence to support your answer evaluate the worth or usefulness of techniques
used when businesses develop their strategic plans. (AC1.3)
Aldi uses several tools and techniques to analyze both the internal and external business
environment. In order to determine the effectiveness of the tolls being used, the management of
Aldi has decided to use the BCG matrix as it determines the growth of the company by
evaluating in on four quadrants.
Stars: It signifies the growth stage of the business where the risks are high and the capital is
procured from equity sources (Marketing modules series, 2018). The aim of the company is to
reduce the liability of financial risks so that the nominal dividend rate is not hampered.
Question Marks: It signifies the launch stage of a business where the business risk is high but
the financial risk is low. Moreover, the funding to operate is procured by method of venture
capitalism. However, the dividend rate provided is zero.
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