Organisational Strategy and Leadership for Aldi Australia

Running head: ORGANIZATIONAL STRATEGY AND LEADERSHIP
Organisational Strategy and Leadership
[Aldi Australia]
Name of the student:
Name of the university:
Author note:

1ORGANIZATIONAL STRATEGY AND LEADERSHIP
Table of Contents
Introduction:....................................................................................................................................2
Background of the chosen organization:.........................................................................................3
External Environment Analysis:......................................................................................................4
PESTLE analysis:........................................................................................................................4
Industry analysis:.............................................................................................................................9
Porter’s five forces analysis:........................................................................................................9
Factors driving the industry towards a change:.............................................................................11
Effect of the change in the industry:..............................................................................................13
Conclusion:....................................................................................................................................14
References:....................................................................................................................................15
Appendix:......................................................................................................................................17
1. External Environment Analysis:............................................................................................17
2. Industry analysis:...................................................................................................................19

2ORGANIZATIONAL STRATEGY AND LEADERSHIP
Introduction:
The retail sector, in particular, the supermarket & grocery stores industry in Australia is
highly competitive. The competition has kept on changing with times and had largely known as
the duopoly of Woolworths and Coles. The wide variety of product line and competitive prices
has kept on establishing stories of success. However, a rapid growth of Aldi in recent times has
not only altered the trend but, also become the reason for declining profit for the industry
(Ibisworld.com.au, 2018). One of the reasons for Aldi’s growth has been the discounted price for
private-label products. Customers had also responded to it which is the reason that forced
Woolworths and Coles to switch over to the same strategy. They also had to consider an
expansion of their private-label product ranges. Smaller supermarket chains like Foodworks have
also struggled to respond to a changing market trend (Ibisworld.com.au, 2018). Industry revenue
is expected to grow up by 3% on an annual basis (Ibisworld.com.au, 2018).
To understand why Aldi is so successful despite the market giants Woolworths and
Coles, it is first necessary to understand the driving factors in the industry. An average person
looks for three factors such as Product Quality, Convenience of Shopping & Value when they
feel like shopping (Singh-Peterson et al., 2016). When looked at the business model that Aldi
uses, it looks bit complicated and also hard to understand what it communicates. However, the
core strategy of the business model is centered on the three highlighted factors. It means Aldi is
fulfilling the needs and wants of its target customers. The three factors have been standardized in
Aldi’ model of business and are continuously executed also (Singh-Peterson et al., 2016).

3ORGANIZATIONAL STRATEGY AND LEADERSHIP
The purpose of this study is to communicate the knowledge related to strategic planning.
The purpose is being served in various ways including the external environment analysis and
also the industry analysis.
Background of the chosen organization:
Aldi is a German based multinational company and had entered Australia in 2001. The
company had its first store in Sydney and since then has kept on growing with its effective
business strategies. However, the excellent performance was noticed in just the last five years.
The company has redefined the market competition with its cost-effective business model. It has
constantly executed the three essential elements of customer needs such as quality, value and
convenience (Knox, 2015). The execution could be possible due to its cost-effective strategies.
Cost-effectiveness was a result of constant strategic planning that also includes maintaining a
lesser number of SKU’s (Stock Keeping Unit). The benefits of the strategy include lower cost of
handling and also higher purchasing power. Exclusive brands of Aldi are accountable for
approximately 90% of their shelf space. Hence, Aldi is able to cut down on the supply prices.
These are few of the reasons how the company has managed to keep the cost of production lower
(Arup, Beaton-Wells & Paul-Taylor, 2017).
Limited range of products was being maintained to focus more on a quality product. The
efficient handling of the production cost was actually reinvested in offering lower prices to
customers. The choice is actually not a very high concern to many customers. There are
customers that prefer getting the reduced range of quality products at competitive price range
over a wide range of expensive and low-quality products. Convenience was maintained with the
help of opening numbers of branches in the different parts of Australia. The expansion rate is

4ORGANIZATIONAL STRATEGY AND LEADERSHIP
appreciable indeed (Corones, 2015). The store layout is another reason why Aldi is able to cut
down on the cost of production. Stores are not open for 24 hours. It helps to save on staffing
costs and utility expenses. The number of employees has also been kept low. Employees are
trained on multi-skills to support their strategy of keeping a low number of employees. Products
are all packaged and hence, it helps to reduce the shelf stocking time of products (Corones,
2015). The checkout process is also very competitive. Customers are encouraged to bring their
carrier bags to avoid unnecessary expenses being made on it. The check-out lines are supported
with long belts. Hence, accommodating a large number of products which is also necessary to
cut down the queues gathered around the place. Packaged products have a barcode in more than
one place supporting an efficient check-out process. Customers are encouraged also to package
their goods. It helps to cut down the time and also the expenses which could have been required
for keeping staffs particularly for packaging (Medlin & Ellegaard, 2015).
External Environment Analysis:
PESTLE analysis:
Political:
The Australian retail grocery sectors have been a point of attraction for the public body
and the critique experts. The competitions have been redefined with the effective strategies of
Aldi which is always good for customers; however, not so for the country's economy. In course
to offer the competitive prices, the supermarket stores have considered being low with their net
profit. Such trend has affected the annual growth of the grocery and the supermarket industry in
Australia. As reported by the IBISWorld, the industry is expected to grow at 3% annually
(Ibisworld.com.au, 2018). Initially, the duopoly of Coles and Woolworths was the reason for

5ORGANIZATIONAL STRATEGY AND LEADERSHIP
criticism and had also produced calls for a reform in the competition laws. It was being felt to
analyze any misuse of the market power (Corones, 2016). Improvements have been felt for
regulation of planning, liquor licensing and trading hours. Aldi’s success just suggests a low
barrier to entry in the industry and also attaining a progressive growth (Corones, 2016).
Economic:
The technological disruption being brought up by new entrants in the Australian retail
sector and also the changing dimension of shopping such as the online shopping are al affecting
the brands and also the country’s economy. Firms are now being shifted to many innovative
moves to solve their incompetency. However, in many ways, such strategies make those
problems poorer (Methner, Hamann & Nilsson, 2015). Aldi has redefined the competition and
has created the urgency for others to bring much innovation in their business strategies, so that,
those firms stay afloat in the industry. Moreover, there is a price war competition in the
Australian retail industry which is always good for customers provided that, three factors such as
value, convenience, and product quality are met. The fact is not so good for the country’s
economy. The competition has affected the annual growth of the grocery and the supermarket
industry. The industry is expected to grow at 3% on an annual basis (Ibisworld.com.au, 2018).
The profit margin is declining for the industry which is an indirect loss the national economy (de
Waal, van Nierop & Sloot, 2017).
Social:
Customers are the drivers of industries, in particular, the grocery retail industry in
Australia. The extent to which they desire for a service it gets reflected in the decision making of
the industry leaders. Woolworths and Coles have long had the duopoly status in the Australian