Report on Aldi’s International Business Strategy

Running head: STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Report on Aldi’s international business strategy
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STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Executive Summary
Strategies act as an essential document for the companies and organization in terms of
improving their focus on business. As a matter of specification, strategic approach enables
the companies and organizations to systematize the business activities according to their
priority. Development of strategies is not only the responsibility of the managers. The
employees need to contribute in the strategy development for assessing their capability and
caoacity towards the workplace issues. This type of collaboration leads to the infrastructural
development, which is significant in terms of penetrating into the foreign markets. All these
aspects are applicable for all of the companies and organizations including the retailer Aldi.
Conducting market research on the countries selected would enhances the awareness of Aldi
personnel about the pros and cons of setting business there. Using analytical tools like VRIO
and Porter’s five forces would bring to the forefront the preparedness of Aldi towards
encountering the competitive rivalry from the contemporary brands. Social media would
broaden the scope and arena of the Aldi personnel in terms of choosing the prospective
channels for increasing profit margin. Evaluation would make the personnel acquainted with
the effectiveness of the selected channel for business expansion.

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Table of contents
Introduction................................................................................................................................3
Task 1.....................................................................................................................................3
Pestle analysis of Czech Republic and New Zealand........................................................3
Discussion..................................................................................................................................4
Task 2.....................................................................................................................................4
Rationale for the selected target market.............................................................................4
Task 3.....................................................................................................................................7
Porter’s five forces of Aldi in the chosen market..............................................................7
Task 4...................................................................................................................................10
Application of VRIO framework.....................................................................................10
Task 5...................................................................................................................................12
Recommendation on suitable modes of entry..................................................................12
References and bibliography....................................................................................................14
Appendices...............................................................................................................................17
Appendix 1...........................................................................................................................17
Appendix 2...........................................................................................................................18
Appendix 3...........................................................................................................................19

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Introduction
Task 1
Pestle analysis of Czech Republic and New Zealand
Both New Zealand and Czech Republic are unique in their diversity, customs and
traditions. The following PESTLE analysis enhances the clarity of the readers in terms of the
prospective country, which would upgrade the standards of companies and organizations like
Aldi. The several factors provide a critical touch to the analysis, assessing the effective and
appropriate channel for Aldi in terms of achieving a sustainable growth.
PESTLE analysis of Czech Republic
The political factor is most important for Aldi in terms of setting their business in the
threshold of Czech Republic. This is because stable and efficient governmental infrastructure
is the greatest advantage for countries like Czech Republic in terms of penetrating into the
foreign markets. Moreover, the absence of political unrests is an additional assistance in
terms of carrying out the importing and exporting activities. Low labor costs have increased
the employment rate in Czech Republic. Typical evidence of this lies in the year 2011 when
$214.6 billion GDP was produced (Vlada.cz 2018). Innovative plans in further lowering the
labor costs have escalated the GDP by $279 billion by the end of 2017. This fact places
Czech Republic in alignment with the Western European countries in terms of labor costs.
Along with this, the economic parameter is very important for Aldi. A strong PPP
value places Czech Republic in the 34th position in the stable economies of the world. Social
parameter is important, as the Aldi services revolve around catering to the needs, demands
and requirements of the customers (Refer to Appendix 1). As a matter of specification, most
of the people belonging to the age group of 15 to 64 are the residents of Czech Republic.
Therefore, it would be advantageous for Aldi, if they set up their business in Czech Republic.

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The people of this age group are very passionate towards the new and creative products and
services. These people are highly skilled and qualified. Effective utilization of the latest and
modern technologies, through ages, has produced innovative products for the people.
Therefore, technological parameter is most important. This is because adoption of latest
technologies would help the Aldi personnel to attract more customers towards the brand
image (Refer to Appendix 1).
Along with this, legal and environmental parameters are also the most important
considerations for Aldi business set up in Czech Republic. This is because legal compliance
towards the environmental directives would safeguard the brand from illegal instances and
scandals. Maintaining consistency in the innovations would act as an opportunity for Czech
Republic in terms of gaining the tag of Smart City (Vlada.cz 2018). Czech Republic has
bagged the 24th position in terms of recycling the wastes. Implementation of the landfill
taxes has increased the recycling from 1% to 16%. Free trade movements have enhanced the
stability in the relationship between Czech Republic and the associate countries.
PESTLE analysis of New Zealand
The political factor is most important for Aldi business in New Zealand as the Government
elections after 3 years prove beneficial for New Zealand in terms of introducing new rules
and regulations. Stability in the political system possesses flexibility towards financially
aiding the companies and organizations. Harsh tax obligations hamper the import and export
activities. The economy of the country is very stable. Typical evidence lies in the reasonable
rates of the products and services, which allows enough space to the people for exercising
their purchasing power (Govt.nz 2018). This makes the economic factors most important for
the Aldi personnel to consider while setting their business in New Zealand. In spite of a low
population, the people are skilled and highly educated. An interesting fact is the introduction

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of attractive tourism packages, which has increased the tourist visit in New Zealand. The
government is keen on ensuring the wellbeing of the citizens. Herein lays the appropriateness
of the social factors, being tagged as the most important.
The technological parameter is also the most important, as the adoption of latest
design technologies are an indicator for adding to the stock of customers. For operating these
technologies, the companies and organizations need to have legal compliance towards the
marketing activities and the environment (Govt.nz 2018). Therefore, the weightage of these
parameters are most important and less important. The reason for environmental factor being
less important is because the New Zealand government is responsible for regulating the
environmental activities of the companies and organizations. Environmental directives are a
part of the governmental initiatives, therefore, it does not need separate mention in terms of
Aldi business set up in New Zealand (Refer to Appendix 2).
Discussion
Task 2
Rationale for the selected target market
After comparing the macro environmental analysis of Czech Republic and New
Zealand, it can be concluded that Czech Republic would be an effective option for Aldi in
terms of foreign market penetration. Stable political infrastructure would help Audi personnel
to introduce lucrative offers for the customers. Countering this, alteration in the governmental
structure of New Zealand would seem more beneficial for Aldi in terms of coming up with
lucrative offers, schemes and discounts for the customers. In terms of economy also Czech
Republic is the best option (Vlada.cz 2018). This is because of the low labor costs. Indulging
in partnership with the members of the trade union would enable the Aldi personnel to set up