ALDI Business Strategy

Table of Contents
Introduction.................................................................................................................................................2
Part 1: Evaluating the Strategy....................................................................................................................3
a) Provide an assessment of the extent to which Aldi’s missions, visions, objectives, goals, core
competencies inform strategic planning..................................................................................................3
b) Analyse the factors to be considered by Aldi when formulating their strategic plans..........................4
c) Using evidence to support your answer evaluate the worth or usefulness of techniques used when
businesses develop their strategic plans...................................................................................................5
d) Carry out an organizational audit for ALDI and provide an analysis of their current strategic
position....................................................................................................................................................5
e) Carry out an environmental audit for ALDI showing both micro and macro environment. You are
advised to use Porter’s 5 Forces analysis to answer this task...................................................................6
f) Assess the significance of stakeholder analysis for ALDI when formulating new strategy..................7
g) Using the research and information collected about ALDI, present a new strategy.............................8
Part 2: Making a strategic choice.................................................................................................................9
a) Identify a market and analyse the appropriateness of suitable strategy for ALDI in relation to
substantive growth, limited growth or retrenchment................................................................................9
b) Provide a justification of one of the strategies for market entry and growth......................................11
Part 3: Implementing the Strategy.............................................................................................................13
a) Provide an assessment of the roles and responsibilities of personnel who are involved with the
implementation of the strategy..............................................................................................................13
b) Provide an analysis of the resource requirements for the implementation of the strategy.................13
c) Evaluate how the use of SMART targets (give examples) can contribute to achieving the strategic
objectives...............................................................................................................................................14
Conclusion.................................................................................................................................................16
References.................................................................................................................................................17
1

Introduction
Business strategy is very crucial for any organization in order to be successful. It implies the
course of action of business in order to achieve some particular and desired objectives and goals
for the organization. It enhances the productivity and performance of the organization. These
strategies are generally designed by the top management but they get implemented by middle
management under a careful supervision of managers. A business cannot run successfully
without having a effective business plan or strategy. The following assignment covers the
business strategies of ALDI, a chain of supermarket having its origin from Germany. The two
min groups of ALDI are ALDI Nord and ALDI Sud. Earlier it was a small business chain but
now it has transformed itself into one of the most successful business chains all around the
world. In this assignment, we will discuss the vision, mission, thinking as well as the main
objectives of ALDI, PESTLE and SWOT analysis will also be conducted in the following
assignment.
2

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.
Mission: The main objective of developing a mission statement is to meet the end results or
objectives which are set by the organisation. The statement which is developed by the company
helps to identify the size of the market along with its stakeholders which helps to understand the
execution of the strategies which needs to be followed by the organization the Mission of ALDI
to focus on the comfort and safety of its customers.
Vision: Vision usually portraits the future of the organization and assists the people to work as
per the mission of the organization. A vision is usually long term process which contains the
future goals. The vision of ALDI UK states that is to fair, open and honest in each and every
activities which is conducted by the organization for everyone whether it is customers,
government or suppliers.
Objectives: Objectives are basically the roadmaps which are developed in order to achieve the
goals of the organization successfully. The objectives of ALDI are as follows:
 Development of the products which provides higher satisfaction to its customers
 Delivering the products which offers comfort to the customer
 The product should be simple and reliable
Goals: Goals are usually the specific or precise target which the company decides before the
implementation of any strategy. Goals are the end result which is desired by the organization.
Goals are of two different types
Short term goals: These are that goal which help the organization to come closer towards the
achievement of the long term goals and faces usually the day to day challenges and help to keep
the organization stable. For ALDI the short term goal may be is to explore the new market so
that they can cater the requirement of the customers effectively.
Long Term goal: These are those goals which are in line with the mission statement of the
organization. For example the long term goal for ALDI is to become leading store that provides
all the consumer goods under one roof across the globe.
3

Core Competencies: These are the components which help for strategic planning and act as the
drivers in today’s competitive market and also help to enhance the skills and techniques of the
employee which results in increasing customer satisfaction. The core competency which ALDI
has is they keep their product simple and reliable and they own the responsibility for each and
everything in the organization. Core competencies are those which give them certain unique
benefits which makes the organization different from its competitors (Montgomery, 2011).
b) Analyse the factors to be considered by Aldi when formulating their strategic plans.
Strategic planning helps the organization to achieve their goals and objectives which is stated by
the organization. However, there are various factors which needed to be taken into consideration
while developing strategic planning which are as follows:
 Managers: Each and every organization requires various levels of management which
manages the activities. The top management are responsible for developing the long term
plans and policies for the organization. The middle management are responsible for
dividing the responsibilities and targets on the department according to their capabilities
and the front line managers are responsible for assigning individual targets to the
employees so that they can work as per the strategic plan. Since ALDI has various stores
across the country, it is essential to have effective management team at place.
 Delegation: It is the Responsibility of the Mangers in ALDI to delegate the
responsibilities among the middle level management as per the skills and experience of
the employees
 Targets: The targets need to be set by the organization should be realistic and achievable.
ALDI should determine the targets for its employees to increase the profitability of the
organization.
 Resources: Efficient management and distribution of available scare resources are crucial
part of the organization. The resources includes financial, human , knowledge, capital,
equipment etc needs to be allocated properly to achieve the organizational goal
(Woodcock, Green, and Starkey, 2011).
4

c) Using evidence to support your answer evaluate the worth or usefulness of techniques
used when businesses develop their strategic plans.
Strategic planning is depends on the current situation of the business which can be understand
properly through various strategic techniques. For ALDI the strategic tool will be the BCG
matrix which gives a clear picture about the organization position (Bharadwaj, Sawy, Pavlou,
and Venkatraman, 2013).
It is a matrix which determines the relative level of industry share and business with the help of
four dimensions. The BCG matrix helps to determine the growth rate of the industry and the
current situation of organization in the industry. The four dimensions include Question mark,
star, cash cows and dogs. The question mark dimension shows that the position of the business
share is lower than the growth rate of the industry. Stars shows that both the industry growth rate
and business share is increasing at faster pace. The cash cow shows that there is stagnant growth
of the industry but the market share of the organization is favorable. And at last the dog shows
both the industry as well as the industry is declining. Currently for ALDI we can say that both
the industry growth rate and the business is increasing at faster pace hence the company is
currently placed into the STAR dimension of the BCG Matrix and to remain in the same
dimension it is essential for the organization to remain competitive in the market by developing
new strategies for the business.
d) Carry out an organizational audit for ALDI and provide an analysis of their current
strategic position.
Swot Analysis is the technique which can help to understand the Strength, weakness,
opportunities and threats for the organization which are as follows:
Strength: The main strength of ALDI is the quality of the product which the organization
delivers along with its efficient and hardworking employees which makes the organization better
than its competitors (Naidoo, 2010).
Weakness: The inability of manage the resources available in the organization, poor techniques
for placing the order and delivery, scarcity of resources are few examples for ALDI which are
consider as its weakness.
5

Opportunity: The Company has various opportunities like they can expand its business into
other countries so that they can cater more customers, development of new vendors,
advancement in technology etc.
Threat: The consumer products and stores has the large market and has huge competition. It is
easy for the people to enter in this business hence the increase in competition is one of the main
threat for the company.
e) Carry out an environmental audit for ALDI showing both micro and macro
environment. You are advised to use Porter’s 5 Forces analysis to answer this task.
Pestle Analysis:
Political factor: The current condition of UK is not political stable. The BREXIT has affected the
business in the economy.
Economic Factor: The economy of UK is quite stable. With increase in the price of Pounds, the
UK economy is developing further and the purchase power of the people has also increased.
Social Factor: ALDI is the company which always works for the social benefit of the society and
the company always tries to follow the corporate social responsibility.
Technological: ALDI believes in development of the strong and advanced technology which can
satisfy the requirement of the customers and also tries to develop new and innovative technology
in order to reduce the cost of operation.
Legal: the Legal factors and laws are also favorable for the grocery stores. The company always
tries to remain within the legal boundaries and follow all the laws and regulation of the country.
Environmental: ALDI as discussed earlier is focused for the social and moral responsibilities.
The organization always tries to develop eco-friendly product that does not impact the
environment.
Porter Five forces:
Threat of New entrants: In this industry there are large number of buyers and sellers and it is
easy for the seller to enter in this industry. Hence, the threat from new entrant is high.
6

Bargaining power of the Buyer: the bargaining power of the buyer is also relatively high as there
are a lot of grocery stores which are available in UK and people can easily shift from one store to
another.
Bargaining power of the supplier: the Bargaining power of the supplier is less under this industry
as there are many suppliers which are available for the similar type of products.
Threat of substitute: the threat from substitute is lesser in this industry.
Competitive rivalry: there is cut throat competition in this industry and the people will shift from
one place to other even if they find minimum pricing difference. Hence the competition is very
intense in this industry (Mindtools, 2015).
f) Assess the significance of stakeholder analysis for ALDI when formulating new strategy.
The stakeholder plays an important role for the organization. These are those entities which can
impact the organization to a great extent. These are both internal as well external to the
organization includes employees, government, unions, customers etc. To understand the
significance of the stakeholder in the ALDI the stakeholder mapping needs to be applied which
can determine the power and influence of the stakeholder.
The customers of ALDI Can be categories under high power with less level of interest. As the
customers are the one who generates revenue for the organization so it is essential for ALDI to
understand the requirements of the customers. Thus, the main objective of ALDI should be
satisfying the need of the customers.
The second section represents High power with high level of interest generally includes the
financial institution, share holders etc which requires high return on investment which requires
ALDI to keep them updated regarding the new strategy and profitability of the business
The third section shows high level of interest with low power which are the employees of the
organization. The employees’ level of interest is high as their salary and growth is dependent on
the organization whereas they don’t have any power of decisions in the organization.
7

g) Using the research and information collected about ALDI, present a new strategy
Strategy acts as a roadmap for the organization which helps the organization to develop the
target to achieve its goals and objectives. The new strategy for ALDI should be penetration of
the market and development of the new market. Penetration of the market will help ALDI to
modify certain changes in the pricing strategies which can help the organization to catch more
share in the market along with that the company will focus on developing new market so that
they can cater the need of the customers in that particular market. It is one of the growth
strategies which need to be adopted by ALDI to increase its profitability (Augier and Teece,
2009).
8

Part 2: Making a strategic choice
a) Identify a market and analyse the appropriateness of suitable strategy for ALDI in
relation to substantive growth, limited growth or retrenchment.
ALDI, an international chain of discount supermarket mainly focuses on developed markets as
compared to developing. Both the ALDI companies, ALDI Nord and ALDI Sued are owned by
private owners who never reveal their business strategies. Its main slogan is “High quality for
low prices”. The daily prices of ALDI are far lower than other supermarket’s discount prices thus
making it different from other supermarket chains. The various strategies related to substantive
growth, limited growth and retrenchment can be understood as follows:
Market Entry Strategy
 Organic Growth: When the development in an organization is being done over one’s own
development using the same process and activities, it is said to be Organic Growth of the
organization.
 Merger: Merger can be one of the best strategies for ALDI in order to grow faster, which
simply means to combine with another company or take over another company. But merging
is not that easy. It requires careful planning, larger share of market, more research, more
finance, more risk etc. ALDI can merge with any other company operating in the same
industry and having a market share of equal size.
 Acquisition: Acquisition is the process where the ownership of one company is purchased
by another company and the later becomes its sole owner. After acquisition, the purchased
company becomes a part of the company who purchased it.
 Strategic Alliance: When two companies agree to share their resources and assets with
mutual consent in order to achieve their goals in a more effective manner, it is said to be
strategic alliance.
 Licensing: Licensing is said to be a process where one parent company gives the authority to
use its trademark to another company.
 Franchising: When the strategies, maintenance cost and formula of the parent company are
also provided to another company in addition to its trademark, it is called franchising.
Substantive Growth:
9

 Related Diversification: When diversification is being closely related to the line of
production, it is called related diversification.
 Unrelated Diversification: When a company tries to establish itself in an entirely new
market with new products and different from its existing products, it is said to be unrelated
diversification. In order to gain the competitive advantage, ALDI can make use of unrelated
diversification.
 Horizontal Integration: When a company decides to merge with its competitor company
which is also functioning in the same product line in order to increase its market share, it is
said to be Horizontal Integration.
 Vertical Integration: When a company decides to have control over its supply chain since
beginning of product manufacturing so as to reduce its product cost, it is called Vertical
Integration. The cost of the product after vertical integration is even lower than the cost of
outsourcing.
ALDI can create a lot more wealth and can lead in future by making use of the substantive
growth strategy but it can have a disadvantage also as competitors will also emerge (Abraham,
2005).
Limited Growth:
 Market Penetration: When a company adopts various approaches in order to sell its
existing product in existing market, it is called market penetration. In order to increase the
market share of the existing product various approaches like discount, advertisements etc can
be adopted by ALDI.
 Market Development: Market development is the strategy where company tries to sell its
existing product in a different market in order to gain competitive advantage. For any
organization like ALDI, it is very important to offer its product with extra features to a new
category of customers. It should constantly look for opportunities in overseas market.
 Product Development: Product development refers to extending the existing range of
products in the current market so as to increase the business level with current customers. By
following this revenue, ALDI can create more revenue. It implies innovating, designing new
products in accordance with the growing needs of customer (Wood, 2011).
10

As the main objective of ALDI is to mainly focus on the customer satisfaction, therefore it can
not adopt limited growth strategies as they require the limited expansion.
Retrenchment:
 Turnaround: By following a turnaround strategy, one can convert a company which is
underperforming into a more profit making company. Turnaround strategy is mainly
adopted by weak companies so as to improve its financial feasibility by resolving its
financial crisis. It also helps the organization in identifying those products which are not
bringing profit to the company and hence stop it from investing on those products.
 Liquidation: The liquidation strategy is mostly adopted by companies during the last
phase of any business when it decides to close its business and sell all its valuable assets
to some other company so as to enable itself to make payment to its creditors.
 Divestment: When a company decides to sell its whole business to another company it is
called divestment.
By adopting retrenchment strategies, ALDI can have advantages such as reduction in the costs of
products, better efficiency and more competitiveness but at the same time productivity can
decrease.
b) Provide a justification of one of the strategies for market entry and growth.
The main objective of ALDI is customer loyalty and customer satisfaction. Its vision is to
provide the valuables and products to the customer at the lowest price possible. “No frills
approach” is strictly followed by ALDI (Emsell, 2011). The business of ALDI is operated with
“low price philosophy”. Therefore in order to become a successful low cost producer and still
make profit after offering products to customers at comparatively lower prices, it should adopt
vertical integration strategy following substantive growth strategies. It will enable ALDI to cut
down the prices of production and thus will help in reducing the overall price of products and
will increase its competitive advantage. The main market strategy should be based on cost focus.
For ALDI customer loyalty is very important as it believes that it is much easier to sell the
products to existing customers instead of looking for new customers and market. ALDI makes
the best possible use of its present resources in order to make the maximum profit out of them
and reducing its production cost at the same time. The staff of the ALDI is recruited in a very
careful manner so as to have only efficient one, thus making them run the store in a more
11

effective manner. It also takes care of its technological development so as to have proper
knowledge and information of its business. ALDI makes use of substantive growth strategies in
order to become successful and make profits but the span of the strategy remains limited.
Therefore it needs to expand the span of its strategy so as to make more space for itself in
international markets. By offering products at lower prices and providing customer satisfaction at
the same time has gained so much competitive advantage to ALDI and ALDI needs to focus on
this more and increase its share of market by using this strategy extensively. After product,
growth is also important for any organization. Research has shown that most of the customers of
ALDI are its repeated customers which help in its continuous growth as a brand in the list of
chains of supermarket (Brown, 2018).
12

Part 3: Implementing the Strategy
a) Provide an assessment of the roles and responsibilities of personnel who are involved
with the implementation of the strategy.
It is essential to develop a proper team which helps to implement the strategies of the
organization. Their talent, skills and knowledge will help the organization to plan strategically in
each and every aspect of the business. The assessment of the roles and responsibilities are as
follows:
Top management role: They are the one who will be responsible for developing the strategic plan
and objectives. All the members of the top management will discuss the requirement and
approve the strategic plan develop by them. The Financial condition, human resources
requirement for ALDI will be also taken into consideration by the top management after which
the final plan will be communicated to the middle management.
Middle management role: The middle management of ALDI is comprises of those executives
which are the head of the departments and which posses certain skills and techniques through
which the work can be done on time. They are the one who distribute the targets among its
employees and subordinates and take continues feedback from their team.
Role of the Front line management: they are the supervisors or the team leaders who will
delegate their responsibilities among the team members. It is their responsibility to ensure that
the target given to each team is achieved and they will communicate with the middle level
management.
Role of Employees: they are the one who is responsible to achieve the targets (Stonehouse,
Campbell, Hamill, and Purdie, 2009).
b) Provide an analysis of the resource requirements for the implementation of the strategy.
Resource allocation is a crucial part of the organization which is required to execute the strategy
which is completely depends on the demand and supply of the product in the market. To
implement a particular strategy, allocation of the resources as per the requirement is very crucial
for the organization which involves the following:
13

Budgetary resources: To conduct each and every activity sufficient monetary budget is required
which needs to allocate after analysis of the cost and return on the investment. The estimated
budget for strategy implementation is required by the management so that they can arrange the
finances.
Personnel requirement: it is the human resources which held to implement the strategy. Hence
forth it is essential for the company to estimate the requirement of the personnel to implement
the new strategy.
Physical Resources: Purchase of new equipments and machineries, new gadgets etc are required
for implementing the new strategy which needs to be estimated in advance (Teece, 2010).
Technology: Now-a-days, latest and advanced technology is mostly preferred by the customers.
It is essential for ALDI to develop certain new technology which can grab the interest of the
customers.
c) Evaluate how the use of SMART targets (give examples) can contribute to achieving the
strategic objectives.
ALDI is one of the leading stories in UK and it is known across the country. The organization
also competes with various huge stores because of which it is essential for them to implement
new strategy to catch more customers. it is essential for the form to develop SMART objectives
which stands for Specific, Measurable, Attainable, Relevant and Time bound objectives. The
company vision is also focus on these objectives
Specific: ALDI is very focused on keeping the objectives of the organization very specific which
allows the organization to be clearer on its vision. When the organization follows these
objectives it is easy for them to communicate with each other. The specific objective for ALDI
could be identification of those areas where Stores are not available in the range of 5 km.
Measurable: the goals should be measurable and should give measurement as per the time
period. For example within a span of three months the company should be able to identify the
new market which will show clear direction to the organization.
Attainable: the goals should be such which can be achieved by the employees. Concentration on
those areas which has limited stores is easily attainable.
14

Relevant: it is essential for the organization to gather the data or information which is related to
the strategy. There should be any gap relating to increase in the investment for the strategy
implementation.
Time-bound: all the strategy which needs to be implemented should be time bound and needs to
give results within the time range given (CMI, 2011).
15

Conclusion
At the end, it can be said that ALDI is one of the most successful supermarket chain in the world.
The effective leadership and management are the main reasons behind its success. The effective
business strategies of ALDI have made what it is today. In the above assignment, we have
clearly understood the mission, vision and objectives of ALDI as well as have conducted its
SWOT and PESTLE analysis also in order to analyze its efficiency. We have also analyzed
various strategies like substantive growth, retrenchment, limited growth etc in the above
assignment and finally have suggested the substantive growth strategy for ALDI in order to grow
and have more market share.
16

References
Abraham, S., (2005), Stretching Strategic Thinking: Strategy & leadership, [Journal], Vol.33,
Issue: 5, pp. 5-12, Available: https://doi.org/10.1108/10878570510616834 [Accessed 30
January 2018]
Augier, M., and Teece, D. J., (2009), Dynamic capabilities and the role of managers in business
strategy and economic performance, Organization Science, [Book], Section 20(2), Page
no: 410-421, [Accessed 30 January 2018]
Bharadwaj, A., Sawy, O. A., Pavlou, P. A., and Venkatraman, N., (2013), Digital business
strategy: toward a next generation of insights, Mis Quarterly, [Book], Section 37(2),page
no. 471-482, [Accessed 30 January 2018]
Brown, V., (2018), Aldi’s Marketing Strategy, [Online], Available:
https://www.academia.edu/31082424/Aldi_s_Marketing_Strategy [Accessed 30 January
2018]
CMI, (2011), Setting SMART objectives Checklist 231, [Article], Available:
https://www.managers.org.uk/~/media/Files/Campus%20CMI/Checklists%20PDP/
Setting%20SMART%20objectives.ashx, [Accessed 30 January 2018]
Emsell, P., (2011), Aldi – “The No Frills Retailer”, [Online], Available:
http://eprints.hud.ac.uk/12404/1/Microsoft_Word_Aldi_case_study_for_Bus_Strategy.pd
f [Accessed 30 January 2018]
Mindtools, (2015), Porters Five Forces, [Online], Available:
https://www.mindtools.com/pages/article/newTMC_08.htm, [Accessed on 30 Jan, 2018]
Montgomery, C. A., (Ed.), (2011), Resource-based and evolutionary theories of the firm:
towards a synthesis, [Journal], Springer Science AND Business Media, page no. -21-44,
[Accessed 30 January 2018]
Naidoo, V., (2010), Firm survival through a crisis: The influence of market orientation,
marketing innovation and business strategy, [Book], Industrial marketing
management, 39(8), page no: 1311-1320, [Accessed 30 January 2018]
Stonehouse, G., Campbell, D., Hamill, J., and Purdie, T., (2009), Global and transnational
business: Strategy and management, [Book], John Wiley AND Sons, page no: 291-344,
[Accessed 30 January 2018]
17

Teece, D. J., (2010), Business models, business strategy and innovation, Long range
planning, [Book], section, 43(2), page no. 172-194, [Accessed 30 January 2018]
Wood, Z., (2011), Aldi effect is back: spending squeeze lifts discounter into profit, [Online],
Available: https://www.theguardian.com/business/2011/oct/04/aldi-effect-back-
discounter-profit [Accessed 30 January 2018]
Woodcock, N., Green, A., and Starkey, M., (2011), Social CRM as a business strategy, [Journal],
Journal of Database Marketing AND Customer Strategy Management, 18(1),page no: 50-
64, [Accessed 29 January 2018]
18