Business Strategy of Aldi: A Strategic Analysis Report

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BUSINESS STRATEGY

Table of Contents
Introduction......................................................................................................................................3
Task one...........................................................................................................................................4
Task two.........................................................................................................................................11
Task three.......................................................................................................................................12
Conclusion.....................................................................................................................................16
Reference list.................................................................................................................................17
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Introduction
Specific strategies are important for entering new markets and increasing success. Business
owners can get an idea of how the business operation should be managed with the help of such
strategies. The top management of a company can select the strategies by researching the market.
Employees of an organization should be managed in a way that it can be able to reduce high
employee turnover with the help of business strategies. The hiring strategy is beneficial for an
international employee base of a company. Sales and pricing strategies are other important
strategies that enhance the business management of an organisation. An organisation increases
its sales by promoting the products. Low prices of products are also useful for attracting
customers. This study aims to provide an understanding of the development of business
strategies.
Aldi is one of the global retailers. The organisation has more 10000 stores worldwide. The
company was established by Karl and Theo Albrecht in 1946. The total turnover of this company
is near about €50 billion. The company is already established in the other markets of the United
Kingdom. The organisation has a comparatively lower market share in Britain so that the specific
strategies are suggested in the study so that the organisation can be able to grab larger market
share in Britain (aldi.co.uk. 2019).
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Task one
a) Provide an assessment of the extent to which Aldi’s missions, visions, objectives, goals,
core competencies inform strategic planning. (AC1.1)
The mission of ALDI is to create efficiency, clarity and clear orientation within their
organisation for providing better services to the customers. The vision of this organisation is to
enable shoppers to live a better life by providing high-quality products at lower prices.
Objective of ALDI
 To develop service quality
 To serve more customers
 To expand the business
The goal of this organisation is to achieve food security and endorse sustainable agriculture.
The core competency of this company is their cost leadership strategy, as that has helped them to
lead the German market and enter into other markets (Voigt et al., 2017).
b) Many market experts have indicated that market share for Aldi will grow rapidly. Sales
at Aldi rose by 19.8% in the 12 weeks to 21 May 2017 (Guardian, 2017), while the UK’s big
four supermarkets, Tesco, Sainsbury’s, Asda and Morrison’s, collectively grew by just
1.6%, according to market share data from Kantar Worldpanel.
c) In a situation like this, analyse the factors that Aldi will have to be considered when
formulating their strategic plans. (AC 1.2)
In this situation, ALDI will have to use the Blue and Red ocean strategy for surviving in that
competitive market (Mi, 2015). They should develop their infrastructure and install latest
technologies so that they can be able to address the queries of customers quickly. This will help
the company to achieve customer satisfaction. Customer opinion should be monitored regularly,
which will help the organisation to identify ten changes in the demands of customers. Competitor
brand should also be monitored regularly, as this will help to identify any possible threats. The
organisation should use ATL and BTL strategies to promote their products. ALDI will be able to
expand the business online with the help of this process (Arora, 2018). The SMART goal should
be set before developing any new strategies. The factors are analysed below:
PESTEL analysis
Elements Description
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Political The recent political condition of this country
is unstable, as the country has decided to
cancel their membership from the trade bloc,
the European Union (Schmalensee and
Stavins, 2018). The retail markets of this
country are facing challenges due to such
condition. New export and import rules have
been established due to this, which may leave
a negative impact on the company by
increasing its extra expenditure. However, the
organisation will not be able to expand
business in any other countries of the United
Kingdom due to Brexit.
Economical The economic recession has been increased in
this country with 4.6% so it can be stated that
the organisation will lose some of its
employees. This will slow down the business
operation of the company. The GDP of this
country has also been reduced by 2% as of
2019
(Jensen and Snaith, 2016). This shows that the
prices of products will also increase due to
such condition. The buying behaviour of
customers will be influenced negatively in
this situation, as the wages will also be
reduced.
Social Most of the customers of Britain belong to the
medium to the high-income group. The
lifestyle of the people is high standard
(Grayson and Hodges, 2017). Customers
prioritise product quality over cost. This will
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leave a positive impact on the organisation.
The organisation will have to use a different
pricing strategy for a different category of
products. In this way, they will be able to
generate higher profitability.
Technological Technologies such as R&D technology and
others have become popular in this country so
that the organisation has a chance of
developing their products (Anzoategui et al.,
2016). The customers of this country are
familiar with the usage of internet and social
media. The company operates a business
online so that it will be able to generate more
online customers by developing their website
and other platforms.
Environmental The just in time and other technologies are
beneficial for managing the wastages. This
will reduce the process (Chen and Chen,
2017). Government to reduce the negative
impact on the environment publishes the clean
air act and other acts. The organisation will
have to follow such acts to maintain their
corporate image. The biodegradable
packaging system is being used by other
competitive brands. The organisation has the
chance of lowering the budget by using
biodegradable packaging and.
Legal Employee management of this company is
slightly poor than other companies. There is
employment legislation such as the National
minimum wage act and equality act 2010,
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which prevents discrimination in the
workplace (Davies et al., 2016). These acts
can leave a negative impact on the
organisation if these are not being followed
properly. The consumer safety act empowers
customers to take actions against unfair trade.
The organisation will. Have to keep an eye on
maintaining such laws otherwise, it can affect
the organisation
Table 1: PESTEL analysis
(Source: created by the learner)
d) Evidence to support your answer evaluate the worth or usefulness of techniques used
when businesses develop their strategic plans. You are encouraged to use techniques such
as BCG growth matrix, SPACE or PIMS to enhance your answer. (AC1.3)
The organisation has been the cash cow in the markets of Germany. Other countries of Europe
have shifted to the star segment of the organisation. The Britain market is in the question
segment for the company as the company is still reaching for the idea that will be beneficial for
increasing market share. There are other organisations, which are leading the market and ALDI
will have to develop their business to lead the market.
Hiring technique, promotional techniques will be beneficial for developing the service quality of
the company.
e) Carry out an organisational audit for ALDI and provide an analysis of their current
strategic position. (AC 2.1)
The organisational audit is beneficial for identifying the strengths and weaknesses of the
organisation. ALDI will be able to develop strategies based on this analysis.
SWOT analysis
Strength The organisation has more 10000
supermarkets in 20 countries
(aldi.co.uk. 2019) The organisation follows low pricing
Weakness
 The biggest weakness of the company
is that it thrives on low-profit margin,
which often leads to financial loss
 Poor human resource management has
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policies, which has helped them to
attract more customers The supply chain of this company is
managed very well Aldi provides the customers with a
wide range of offering The organisation uses the latest
technologies for developing the
infrastructure, which has been
beneficial for increasing productivity
and service quality
created employee dissatisfaction
 Lack of strategic direction in the
organisation
Opportunities The company has the opportunity of
attracting a large customer base in the
UK as it provides with discounts and
bonuses ALDI will be able to grab more market
share in the retail markets of Britain by
using strategic plans and developing the
services
Threats
 There are other competitor companies
in the markets of Britain, which has
achieved global recognition. The
organisation will have to face hard
competition while expanding the
business
Table 2: SWOT analysis
(Source: created by the learner)
f) 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. (AC
2.2)
The macro and microenvironment are analysed by using Porter’s five forces model and SWOT
analysis: The external and internal factors can affect the business operation of the company. The
company will have to research their internal and external factors so that they can be able to
identify the risks or opportunities. The macro environmental factors are analysed in this section.
Porter’s five forces analysis
Competitive rivalry: There are other competitive brands in Britain such as Tesco, ASDA and
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others, which are already established in the country market. The company is being unable to grab
more market share. This force poses a high risk for the company. The organisation will have to
differentiate their product line so that they can be able to keep their position in the market (Lan
and Dobson, 2017).
Threats of new entrants: Aldi is already operating a business in the other 20 countries so that
the organisation has achieved global recognition. The organisation also provides customers with
low priced products, which has been beneficial for building a strong customer base. The market
entry fees are very high. The new entrants will not be able to compete with big brands like
ALDI. This can be stated that the organisation has a lower threat from this force.
Threats of substrates: There are several stores in Britain, which provide better services and
products. This can be identified as a substitute for ALDI. This company has a moderate threat
from such factors, as the pricing of the products is comparatively low.
Bargaining power of customers: there are several options in the market of Britain, and the
switching cost is also negligible. It can be stated that the organization has a high threat from the
bargaining power of customers.
Bargaining power of suppliers: ALDI is a global brand, and most of the suppliers want to work
with such a brand. In recent times, the power of suppliers has become low. This organisation will
have a lower threat from the suppliers.
g) Assess the significance of stakeholder analysis for ALDI when formulating a new
strategy. You will explain why stakeholder analysis is important when formulating a new
strategy and support your answer with justifiable reasons. (AC 2.3)
ALDI is a supermarket chain possessing discounts on its every possible product. Hence, it has a
basic cultural strategy such as cost control, such that it is cost effective allowing the customers to
have a maximum amount of savings. Moreover, they also maintain a business strategy of grocery
retailing from their very beginning.
ALDI has both external as well as internal stakeholders. The company’s key stakeholders are its
employees. The company expects every employee to achieve a rewarding career with all possible
opportunities to develop and grow as a professional and wishes its staffs to be hard-working and
dedicated. Therefore, while formulating a new strategy, the stakeholder analysis is very
important so that the company can measure its capability of conducting the strategy properly. For
this measurement, the potential of its employees is required to be measured using their quality
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(Voinov et al., 2016). More the number of committed and dedicated employees mean more
fluency in implementing new business strategies. Strong stakeholders can also give innovative
ideas in formulating a new strategy. The decision-making abilities of managers and leaders also
contribute to introducing a new corporate strategy.
h) Using the research and information collected about ALDI, present a new strategy ALDI
can follow. (AC 2.4)
The new website designing of ALDI is the recent business strategy introduced by them. The
official website of the company is an integral portion of its below-the-line promotion. The easy
interface and user-friendly features of the official website allow the customers to go through the
detailed information about a particular product.
I. Where are we now? Review the current strategic position and clarify the mission, vision,
and values.
The easy ordering, delivering, payment and billing systems of ALDI allow the company to
operate at fewer rates. Our collaboration with banking sectors allows the customers to have a
flexible choice while paying online via the modes of internet banking. We are now printing our
company’s detailed commercial leaflets one million copies every week for promotion. This
approach will surely help us to attract more new customers in a competitive environment.
II. Where are we going? Establish ALDI’s competitive advantage and the direction the
organization is heading.
The sales infrastructure of ALDI is very much unique compared to other leading grocery
retailers in the UK. ALDI is going to take a step towards selling goods which are equivalent to
brands as the branded services have less operating cost. It can be considered as a competitive
advantage of our company. We are also going to launch our official mobile application on
windows, ios and android platforms by which the customers can have access from everywhere.
This is an essential marketing policy for attracting international customers.
III. How will we get there? Layout the road map to connect where they are now to where
they are going. Set the strategic objectives, goals and action items.
ALDI has introduced this new business strategy by incorporating emerging technologies. Our
website designers have used the latest internet technologies in order to grab the international
market as the internet is the most useful media for spreading international business. The
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company’s strategic objectives are aligned to emphasize the extension of business in other
different countries.
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Task two
Task 2
A) Identify a market and analyse the suitable strategy in relation to market entry,
substantive growth, limited growth or retrenchment.
Aldi Is the supermarket based in Germany. The supermarket chains have 10,000 stores in 20
countries. Karl and Theo Abrecht founded the Germany based super market in 1946.
There are several market structures that a firm can operate their area of activities. The type of
market structure influences the characteristics and operational activities of an individual firm
(Auer and Schoenle, 2016). Market structure defines the competitiveness that exists between
various operational firms in the market. Market structures are classified by the presence and
absence of the rate of competition. There are different kind of market structure is available in the
UK economies and business context.
Aldi is one of the fastest growing supermarket chains that work predominantly in the UK
supermarket sectors. Depending on the nature of the business and competition amongst other
supermarkets in Britain Aldi need to choose the market in such a way where they can expand
their operation activities and can earn a better position in the UK market. The business
philosophy of Aldi is to concentrate on crucial investments that give the consumers maximum
amount of savings (Aldi.co.uk., 2019).
The Marketing strategy or marketing analysis of Aldi
The rapid growth of Aldi has seen the organizations combined market share rise to 12% because
of 1.1 million extra customer visits the store.
In 2017, Aldi sales rose by 19.8% in compares to the supermarkets of Morrison, Tesco and U.K.
Oligopoly market is imperfectly competitive in nature and majorly dominated by a few suppliers
(Gugler and Szücs, 2016). This oligopoly market structure has few advantages. These advantages
are lower price rate, the lower rate of competition and high quality services (Yang et al., 2017).
For such reasons, UK consumers are highly influenced or deeply motivated by the oligopolistic
market structure. For a supermarket like Aldi, oligopolistic market structure will be highly
beneficial. Mainly the performers or supermarkets in oligopolistic market are very less. In order
to have lower level competitors the supermarkets can concentrate more on their profitability in
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