Aldi's Business Strategy Analysis

This assignment analyzes the business strategy employed by Aldi, focusing on its growth and market dominance. It utilizes frameworks such as the BCG matrix and the Space Matrix to evaluate Aldi's position within the grocery retail market. The analysis explores Aldi's unique competitive advantages, including its low-cost model and efficient supply chain, and examines how these contribute to its overall success.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1. Mission, vision, objective, goals, core competencies inform strategic planning of ALDI's1
1.2 Factors to be analyse while formulating strategic plans by ALDI........................................2
1.3 Evaluating the worth of techniques during the development of Strategic plans by
businesses....................................................................................................................................3
2.1 Analysis of current strategic position of ALDI by carrying out organisational audit...........6
2.2 Environment audits for ALDI using Porter's 5 force analysis..............................................7
2.3 Significance of stakeholder analysis for ALDI.....................................................................8
2.4 Formulation of New strategies for ALDI..............................................................................9
TASK 2..........................................................................................................................................10
3.1 Strategies appropriate for ALDI..........................................................................................10
3.2 Strategies for market entry and growth...............................................................................10
TASK-3..........................................................................................................................................11
4.1 Role of personnel in implementation of the strategies........................................................11
4.2 Resource requirement for strategy implementation............................................................11
4.3 Use of SMART targets to achieve strategies objectives.....................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategies are the purpose for the development in an organisation by making
strategies and plans which can help the organisation to deal with its future challenges, it creates
continuous improvement in performance. ALDI is a German supermarket chain. It is considered
as formation of both organisation which is Sales oriented and Market oriented. The organisation
has opened its first store in 1913 and not having more than 7000 stores worldwide. This retail
company is mainly famous for their product's low prices. The following report is throwing light
on the an organisation's missions, its values, objectives, etc., along with its undertaken business
strategies that has been further evaluated in this report (Auzair, 2011).
TASK 1
1.1. Mission, vision, objective, goals, core competencies inform strategic planning of ALDI's
Nation's low price grocery leader is ALDI. ALDI is creating efficiencies at every point
either on building of the stores or in display of store, which ensures that the price will remain
low and helps their customer for saving. ALDI is mainly focusing on stakeholders and delivering
their needs, these are the main reasons behind the success of ALDI.
 ALDI's Mission:- The main mission of ALDI is to providing, “Top quality of the
products at incredibly low prices.” The organisation wants to satisfy their customers by
every possible efforts, either its from quality satisfaction or by the price of it. The
organisation always says, “Spend a little live a lot”.
 ALDI's Vision:- The business philosophy of ALDI is very clear. Keeping their mission
in mind, the organisation works on five main idealogical principles.
1. Huge amount of saving.
2. Excellence in the quality.
3. Outstanding value.
4. Special buys.
5. Confident buying.
 ALDI's Objective:- The main objective of the organisation is to insure the quality of the
products and total customer satisfaction. The organisation is providing the best quality of
products and services to their customers and continuously updating their services
(Bharadwaj and et.at., 2013).
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 ALDI's Goals:- The organisation is working to provide the best products and services to
their customers. They also want to introduce healthy food diet and for this they are
providing only healthy food items in their stores and encouraging people to stay fit and
eat healthy.
 ALDI's Core competencies:- The core competencies of the organisation is their strict
focus on price. They attained their leadership status because of the price they are offering
to their customers. Other competitors are unable to offer such low prices (Azar, 2011).
The corporation has undertaken by ALDI and has become fifth biggest market of UK.
According to data about market from Kantar Worldpanel, this German retailer company has
increased its sales by 9.8% in just 12 weeks, whereas other UK's top four supermarkets
collectively grew just by 1.6%.
1.2 Factors to be analyse while formulating strategic plans by ALDI
Formulation of Strategic plan is the planning which is done by the organisation which
carefully creates the vision of their future goals and with the help of those strategies' organisation
would be able to achieve its Goals (Martin and Rice, 2010). For the successful implementation of
Strategies plans organisation should ensure these five critical factors.
 Engagement:- That is the involvement of Staff to generate additional input and building
of commitment to complete or achieve the plans. Providing full information about issues,
Objection, concerns and fully make sure that the employees understand about
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Illustration 1: Market share of supermarkets
(Source:-Trouble for the big four supermarkets as Aldi and Lidl growth
speeds up again, 2015 )

opportunities. By ensuring “Buy in” which will help organisation for the execution of
their strategies.
 Communication:- Strategies planning processes will only success if there is proper
communication between top to bottom order of employees in an organisation. It includes
the involvement of employees in the planning processes. Inputs to strategic planning
processes will be provided by the employees with the help of feedback surveys, meetings,
focus groups or others.
 Innovation:-Organisation should tell their employees to be more innovative. For this
organisation should put teams of individuals, and by providing them investment money
for work on major initiatives to ensure success (Scholes, 2015). By continuous
introduction of new features in terms and policies and innovation in the way of working
will definitely take the organisation towards success.
 Management of the projects:- After creation of strategies plans the organisation have to
work on which project ensures the success, and for execution of Project management
team works on it. They also work on prioritization of these projects and execute those
projects as according to priority and ensures success.
 Culture:- The culture of an organisation commonly depends upon the values, trust and
behaviour and attitude of its employees. A proper system of shared assumptions, taking
care of values and beliefs governs the behaviour of the employees in an organisation. It
controls the work-environment in an organisation and helps the organisation to achieve
its goals and success.
Considering all the above factors of strategies plans, ALDI can increase its profit level
and provides satisfaction to their customers as well as their employees.
1.3 Evaluating the worth of techniques during the development of Strategic plans by businesses
To achieve the goals and mission set by the company, The techniques which were used
by the businesses while developing their business strategies plan are very useful. By the use of
this development techniques, businesses can encourage the growth rate of their organisation.
Some major techniques which are used by businesses are:-
 BCG growth matrix- It is a planning tool of corporate which is basically used for the
Portfolio of portray films brands or Quadrant SBUs along speed of market growth axis
and relative market share axis (Gold, Seuring and Beske, 2010).
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It is a business tool which promotes investing strategies and by using market share & rate of
industry growth factors evaluates the prospective portfolio of the business brands. It is a frame-
work formulated by Boston Consulting Group which evaluates the current position of business
brand and its potentials. It further classifies business strategies into four types which are based on
business competitive position and its attractiveness. ALDI is able to make such profit and the
growth rate of its is continuously increasing Because of proper investment and their Techniques
to follow BCG growth matrix.
◦ Dogs- This holds low market share and it only operates in slow growing market at
low level. They can supply action for brands or SBUs.
◦ Cash Cows- In this type of generally this is larger form of corporation, which is
capable of new product's innovation (Gollakota, Gupta and Bork, 2010). It will
produce more amount of cash if properly undertaken and this cash could be used for
further growth.
◦ Stars- It only operates in big growth industries and help to maintain high market
share. These are primary market unit, the investment of money in this is profitable as
it acts like cash cows and generate money.
◦ Question mark- These are not usually profitable and a very correct consideration is
required to decide the worth of investment.
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 Space Matrix:- It is an acronym of Strategic Position and Action Evaluation. It allows
forming of an idea of business strategies to the organisation. Using of Space matrix
analysis ALDI can predict the overall key themes. It provides return on sale, returns on
sources, help in cash flow, Gearing and working capital intensity (Ibrahim, 2015).
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Illustration 2: BCG matrix
(Source:- What is a BCG Matrix?, 2017)

By using Space matrix techniques ALDI can definitely increase its market share, Quality
of the products, Product's life and replacement cycle, and can achieve customers loyalty.
 PIMS techniques:- It assists organisation in formation of strategies on the basis of
empirically tested hypotheses. It is formed for the purpose of SPI that is Strategic
planning institute. It supplies both counter intuitive and common sense to gain
competitive advantages.
Using these Examples and techniques ALDI can prepare their Strategies plans and
develop their business more rapidly and in progressive direction.
2.1 Analysis of current strategic position of ALDI by carrying out organisational audit
Audit is an activity to assist an organisation for to improve its operations by the
identification of its weaknesses and strengths strategic position. It will provide information about
origin and capabilities of organisation in which it operates.
 Strength:- The main policy of ALDI is providing of top quality products on very low
affordable prices, The prices of ALDI's products is very low as compared to other that
everyone prefer to buy products from ALDI. The organisation is having strong presence
in almost whole Germany and having more than 2500 stores over there, and performing
operations in over 15 countries.
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Illustration 3: Space matrix
(Source:- The Space Analysis Matrix Diagram, 2010)

 Weaknesses:- Even after so much of development in last 3 years still ALDI is at 5th
position after four other supermarket brands. The organisation is not able to impact
globally because of their few other chains. Many people have the thinking about ALDI
stores that low quality items are being sold over their.
 Opportunities:- ALDI should emphasize its investment on advertisement and promotion
of their organisations. Comparing, to others groups the investment of ALDI for their
promotion is very low. ALDI should emphasize its expansion into other growing
economics such as Asia, Africa and others (Köseoglu and et.al., 2013).
 Threats:- Company should be aware of other retailers in the market who are providing
tough competition and having thousands of SKUs, the private brands of ALDI are having
a very big threat from established brands who do not want ALDI brands to create their
name. ALDI is not providing complete shopping of everything unlike their other
competitors.
Keeping all these Strengths, threats, opportunities and the weaknesses of the organisation
ALDI would be able to prepare their strategies plans according to their current market position.
Continuous focusing on the assets which can help and on the threats which can damage the
organisation current market position.
2.2 Environment audits for ALDI using Porter's 5 force analysis
Poster's 5 forces analysis of ALDI will make it able to determine its weaknesses and
strength. By performing Environment Audit and finding both micro and macro environment
company will be able to know about its potential and its weaknesses(Li and Tan, 2013).
The micro environment analyses the specific sector in which organisation works. It looks
on the chain of getting raw material then making of products or goods and then selling it to the
customers, whereas macro deals with the impact of that work to the environment and other
companies or factors.
Poster's five forces provides information about-
 Competition in the Industry:- With the increase in number of competitors and the
threats which can affect the current market position of the company will definitely dictate
the power of the company. It companies are unable to provide suitable deals the buyers
and suppliers will seek out from the company and move to other one.
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 New Entrant's potential into an Industry:- The introduction of new company in the
market will definitely affect the power of the company. The position of company will
significantly weaken with the increase in the market sale of new companies.
 Supplier's power:- This force tells about, how easily suppliers can rise the cost of their
products. It directly affected by the number of suppliers in the market and the demand of
that products in the market. It also depends on the uniqueness of that products and how
convenient it is for the organisation to switch supplier. This the reason behind why ALDI
is continuously by-cutting suppliers and becoming self-dependent in the production.
 Power of customers:- It clearly deals with the power of customers to drive down the
prices. It totally depends on the number of buyer and customers and how m uch
significant they are about particular products of company.
 Threat of Substitutes:- Introduction of substitutes products by the competitors same
alike company's products can weakened the power of company. It will definitely break
the number of customer if the quality of the product providing by the company is not so
specific.
Studying all the above Porter's 5 forces analysis by ALDI and keeping those in their
strategic planning will definitely help the organisation to have more profit and maintain their
current market position.
2.3 Significance of stakeholder analysis for ALDI
Stakeholder is the group that are having interest in an organisation or company. They
could be director, creditor, group or other which are providing assets to run the organisation. The
can affect and can be affected by the actions of the company.
Thus, stakeholder analysis is the best way to understand and respond to stakeholder
interdependencies (Martin and Rice, 2010). The management of stakeholder and operational
strategies can help the organisation to prevent themselves from future loss and able them to make
profits in the future. Stakeholder holder analysis is very significant because of these reasons:-
 Motivates Employees:- Analysing the stakeholder significance can helps in to optimize
satisfaction and business. It helps in understanding the employees and allow organisation
to create positive work environment.
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 It helps to maintain corporate citizenship by proper stakeholder analysis organisation
come to know about different communities, and can make in use of those communities
assets which can help the organisation further development.
 In can helps in the formation of partnership:- Stakeholder has emerged as a important
business factor. It works among manufacturers, Distributes and retailers by providing
every possible asset they can to the organisation workers. They indirectly affect the
promotion of the organisation and providing of the customer's satisfaction.
 Stakeholder analysis allow the organisation to understand how to associate with different
sensitive stakeholders.
 Analysis of stakeholder in regular basis can provide them better understanding of
different demand and allows organisation to avoid conflicts between organisation and
their stakeholders.
 It Assists different planning and future policies of organisation (Munir, Ansari and
Gregg, 2010).
2.4 Formulation of New strategies for ALDI
ALDI is having fifth position in the list of top supermarkets after Tesco, Asda, Saints
berg and Morrison. ALDI is very much different from other superstore such as Tesco or Asda.
Comparing from other supermarkets store ALDI are having very normal stores unlike others
with spacious rooms which are decorated with different hoardings and bright lights. Almost
every ALDI stores are having dimly lit shops with narrow sparse shelves. Unlike other store who
are having chains sells of different bigger brands, ALDI is focusing only on their single own
brand. The main mission of ALDI is to provide great quality of products at very low possible
price and providing full customer's satisfaction (Smith, 2013). Their vision is very clear to
provide huge amount of saving with providing the best quality and customers satisfaction.
ALDI is producing their own brands of different products. They are providing every basic
product their customers mainly needs, and trying to provide full customer satisfaction with the
quality of their products and by the services they are providing to their customers. The biggest
asset which is producing ALDI towards success is the price of the products they are offering to
their customers. ALDI is providing very good quality of products at very low prices as compared
to other Supermarket brands. Most of the Customers prefers to buy products from ALDI as
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compared to others to save their money and this is the main competitive advantage ALDI is
having (Rossi, 2010).
Current market position of ALDI is at 5th position in the list of top supermarkets in UK.
Comparing to other supermarket brands which are having higher ranking in market and their
growth rate in last 5 years the growth rate of ALDI is very much higher than other supermarket
even they are having higher ranking in market. According to Kantar World-panel's data ALDI
has commanded 6.9% of the Grocery Market in UK. In November 2014, a plan was announced
by ALDI to increase their stores tally from 450 to 1000 by 2022. This German company is
vigorously spreading in UK, their goal is to become the top leading supermarket store in UK.
ALDI should progressively proceed towards their objective and goals to achieve that success,
that is providing good quality of products at very low price. They should focus to upgrade and
increase their efficiency. ALDI should invest in some promotional activities and advertisement
by which larger number of people come to know about their products and company.
TASK 2
3.1 Strategies appropriate for ALDI
Business growth strategies are those that brings the maximum growth with ensuring the
least amount of risk to the organisation. The substantive growth strategies are mainly
implemented by two main factors which are, Acquisition and merger. Acquisition is the type of
substantive growth strategy which is taking of one's firm by other organisation, in other works it
is takeover the ownership of that firm by others to increase their profits. On the other hand
Merger is the combination of two of more organisation to work together and share their profit
rate equally or according to their policies. Implementation of these substantive growth strategies
by ALDI can be helpful for their organisation as they can acquire more stores and the range of
their products and services will definitely increase.
Limited growth strategies can helps the organisation to avoid big amount of debt which
comes with rapid growth strategies. Where on the other hand, limited growth strategies can also
provide disadvantages to the organisation by if competitors would be able to take their own
market share by using rapid growth strategies of limited growth. Limited growth strategies may
provide substantial pressure to the organisation for rapid growth (Scholes, 2015).
Retrenchment growth strategies are those policies or strategies which are used by the
organisation through which they can reduce the overall size of operation and its variety. These
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strategies are used to reduce or cut the unnecessary expenses of the organisation and helps them
to become more efficient. ALDI is mainly using these strategies, and this is the reason behind
their efficiency. ALDI is avoiding every possible expense in production and delivering of their
products.
3.2 Strategies for market entry and growth
Retrenchment is always an alternative action. Basically the use of these types of
techniques are done by the company to increase their growth rate or to increase the rate of profit.
These techniques are very helpful at the time of financial recession or in competencies with other
organisation. Using these methods an organisation would be able to minimise their unwanted
expanses and can provide more opportunities to make profit. ALDI is a Supermarket retailer
organisation whose vision are to provide their customers with the best quality and possible low
prices. The organisation is making every possible effort to cut the rate of products they are
selling in their stores (Slack, 2015).
Using Retrenchment growth strategies, ALDI is offering great competition to other
organisation because of their efficient production of good. Other organisation are unable to
provide such products and services at such efficient prices. By the use of these techniques ALDI
has achieved such great rate of increase in their sales and growing very instantly in all over UK.
TASK-3
4.1 Role of personnel in implementation of the strategies
To implement these strategies in an organisation, everyone in an organisation either a
worker or a management team have to understand their roles and responsibility to implement
them. Salder has given mainly three roles for strategy implementation, which are formation of
future strategies, Getting the organisation ready to deliver those strategies and making changes.
The first role states, on communication with internal employees of the organisation and
external stakeholder the strategies are planned by their mutual thinking for the development of
the organisation (Auzair, 2011). The second role states the positioning organisation to deliver
those strategies. This contains motivation of people to follow the new strategies by the
organisation. And the final role states to changing the organisation to implement those roles that
is making the changes in an organisation by which they are able to follow new strategies easily
and efficiently.
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The strategy implementation responsibilities should be taken by middle managers and
external sources that is outsider. The implementation of management's strategies plans are
undertaken by middle managers and it is their responsibilities to motivate the employees to work
according to new strategies and work more efficiently and productive. Further the strategy
implementation responsibility is of outsiders which contains consultants and stakeholder.
Consultants have to work for change processes and strategy implementation agents are
stakeholder.
4.2 Resource requirement for strategy implementation
Resource apportionment is very useful at the implementation of strategies. The nature of
resources determines its requirement to the organisation.
ALDI should use retrenchment strategies for their growth and to compete with others.
Thus, to implement those strategies ALDI need three main resources which are physical
resource, people resource and initial cost for start-up.
Physical resources interactive strategies focuses on the improvement of products quality
by ALDI, production resources, finance resources and resources for marketing. ALDI should
develop their human resources by learning and development methods which will develop its
people resource and implementation of all these strategies process is considered as initial start up
cost and ALDI should provide these financial investment for the implementation of these
processes.
4.3 Use of SMART targets to achieve strategies objectives
Smart targets refers to- Specific, Measurable, Achievable, Realistic and Timely. These
are the starting point to achieve strategies objectives. These objectives should know about why
the implementation of strategies plans is taking in an organisation. The purpose of SMART
targets is it unable ALDI to take control over its marketing plans, these target motivates
individuals and creates proper work-environment in an organisation, it also provides consistent
focus on all the function (Smith, 2013).
All the objective by ALDI should be SMART-
 SPECIFIC- ALDI is an organisation which is very much focused on their objectives and
missions. From the initial the values of the company is same as “to provide the best
qualities are low prices”. The company is very specific about their values and missions.
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 MEASURABLE- The focus of ALDI is to determine their objectives, that is they are
continuously working for the demand of customers and creating their objectives to fulfil
that.
 ACHIEVABLE- This point covers that how much the organisation is working and
putting efforts to achieve their set goals. ALDI should attempt every possible effort for
their development.
 REALISTIC- This point covers the ability of organisation and the availability of
resources to them tom achieve their objective.
 TIMED- This point states that how much efficient the organisation is or how much time
does it take by them to achieve their goals.
ALDI should use these SMART targets to contribute to achieve their strategies objectives
and continuing to work to achieve the main objectives to provide customer satisfaction and have
more growth in supermarket retailers market.
CONCLUSION
The above report has summarized the adopted strategies of ALDI which is a renowned
retail enterprise of UK which is already facing an intense level of competition due to several
other contenders in this field. This report has thereby analysed the accepted business strategies of
ALDI in terms of their effectiveness and contending nature to further scrutinize their benefits to
the business. Beside this, it has also applied several models of analysis namely SWOT, PESTLE
and Porter's five forces to assess both of its internal and external market environment. Lastly, it
has also conducted a stakeholders analysis by together identifying the need base importance of
SMART goals and applying the same on the chosen establishment.
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