Business Strategy Analysis of Aldi: A Comprehensive SWOT, VRIO, and Porter's Five Forces Evaluation

This report delves into the strategic landscape of Aldi, a prominent supermarket chain with a €50 million turnover. It examines the organization's strategic capabilities using the VRIO framework, analyzes its competitive environment through Porter's Five Forces model, and conducts a comprehensive SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report also explores the impact of the macro environment on Aldi's strategic decisions and critically evaluates its internal environment using the McKinsey 7-S Framework. Finally, it recommends appropriate growth platforms and strategies to enhance Aldi's competitive edge and market position.

ASSIGNMENT SUBMISSION FORM
This sheet must be submitted with your assignment. Failure to complete, sign and submit this form will
result in a mark of ‘0’ for the assignment.
Student Name
Student ID
Assessor Name SUJATA OMWENGA
Qualification PEARSONS HND BUSINESS
Unit Number & Unit
Title
UNIT 32 BUSINESS STRATEGY
Assignment Title
Date of Submission
By submitting this form and signing below, I declare that:
 I am the author of this assignment and that any assistance I received in its preparation is fully disclosed
and acknowledged in this assignment
 I also certify that this assignment was prepared by me specifically for this course
 I certify that I have taken all reasonable precautions to make sure that my work has not been copied by
other students
 I confirm that I have understood the College’s regulations on plagiarism
 I confirm that research resources are fully acknowledged
Signature: ……………………………………… Date: ………………………………
1
Plagiarism is presenting somebody else’s work as your own. It includes: copying information
directly from the Web or books without referencing the material; submitting joint coursework
as an individual effort; copying another student’s coursework; stealing coursework from
another student and submitting it as your own work. Suspected plagiarism will be investigated

Table of Contents
PART A................................................................................................................................7
Analyse the impact and influence which SWOT has on your chosen organisation and its business strategies
......................................................................................................................................10
Analyse strategic capabilities of your chosen organisation by using the VRIO framework......................12
Produce an industry analysis for your chosen organisation using Porter’s Five Forces model..................14
M1 Critically analyse the macro environment to determine and inform strategic management decisions.. . .15
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an organisation’s
internal capabilities, structure, and skill set using The McKinsey 7-S Framework................................16
D1 Critique and interpret information and data applying environmental and competitive analysis to produce a
set of valid strategic directions, objectives and tactical actions........................................................17
PART B..............................................................................................................................18
Evaluation of the different types of strategic directions available to the organization............................18
Justify and recommend the most appropriate growth platform and strategies......................................18
M3 Devise appropriate strategies to improve competitive edge and market position based on the outcomes.
......................................................................................................................................19
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and objectives.. 20
Conclusion...........................................................................................................................21
References...........................................................................................................................22
2

Introduction
In this report, it analyse the concept of business strategy in which it explains the different factors. It also
evaluates the different models of Aldi organisations with their capabilities. It also helps to understand the
meaning of strategy and role of organisation with their mission and vision. The strategic capabilities are also
discussed with the VRIO model. The different models and strategies are also discussed to analyse the impact of
organisations and also provides the solutions for the organisations.
NAME OF YOUR ORGANISATION
Aldi has selected for the business strategy, it is the chain of supermarkets that has a turnover of €50 million.
LOGO
Figure: Logo
Source: campaignlive.co.uk, 2017
SLOGAN
Aldi introduce the new slogan that is “Biggest ever ad push”
The definition and meaning of strategy
It is the plan that helps to attain the different goals under the conditions of uncertainty. It is the method that
brings the future such as a solution to the problem. Strategy involves the setting of goals and identifies the
actions to accomplish the goals and also mobilise the resources to implement the actions.
Strategic intent and different strategic direction
It is the high-level statement of means by which Aldi will achieve its vision. It is the declaration of design for
creating desirable expectations. It is the vision of the company that Aldi wants to achieve in the long term.
3

Strategic direction consists of central forces that propel the business towards the goals and objectives. Strategic
direction consists of mission, strategies, values, tactics that contribute towards the accomplishment.
Strategic Context
It is the high-level plan and policies that help to achieve the goals under the different conditions. It includes the
different elements such as tactics, objectives, mission etc. It is important as the resources are provided to attain
the accomplishment and that can be in limited form. It involves the goals and that identifies the activities and
resources are mobilising to attain the goals. It can emerge as a pattern of actions as the business can adapt
according to the environment. It also includes the different models such as PESTLE that determine the external
factors and SWOT that determines the internal factors of the organisations(Schuhmacher, et. al., 2018).
What are planning techniques?
It is the responsibility of business that can be overlooked by the firms with the limited time and resources.
There are different techniques used by the Aldi such as SPACE, BCG that ensures the employees and
stakeholders achieve towards the goals and objective(Chereau and Meschi, 2018).
Identify some planning techniques
 BCG (Boston Consulting Group) Growth Share Matrix
 SPACE (Strategic Position and Action Evaluation) Matrix
 The Directional Policy Matrix (DPM)
 Profit Impact of Market Strategies (PIMS
BCG (Boston Consulting Group) Growth Share Matrix
It is the tool of planning that can be used graphically for the services and products of Aldi. These techniques
derived into four factors that are dogs, Question marks, Stars, cash cows.
 Dogs: It depicts the low market growth rate and low share of market that neither generates nor
consumes the cash.
 Question marks: This factor is growing rapidly and consumes the more cash as they have the low
market shares and does not generate the cash.
 Stars: It generates the more cash as they have the high rate of market share and they consume a large
amount of cash due to the high rate of growth.
 Cash cows: These are recognised as the leaders in mature market, they exhibit the return on the assets
which is greater than the growth rate of market(Cascio, 2018).
4

SPACE (Strategic Position and Action Evaluation) Matrix
It is the analytical technique that can be used in planning and strategic management. It allows to create an idea
for the strategy of business. It accesses the internal and external environment that allows the appropriate
strategy. The internal environment describes the two criteria that are:
 Competitive advantage: It can be influenced by different factors such as product lifecycle, customer
loyalty, product quality etc.
 Financial strength: It is affected by the debt ratio, return on investment, inventory turnover etc.
External environment is based on the criteria such as:
 Environmental stability: This factor can be affected by the inflation rate, the price of different products,
demand, and supply of the products.
 Industry Attractiveness: It is affected by different factors such as financial stability, utilisation of
resources, labor productivity(Martinsuo and Hoverfält, 2018).
The Directional Policy Matrix (DPM)
It is known as Mckinsey matrix and a way of prioritizing and categorizing opportunities. It includes the
different strategic decisions such as:
 Double or quit: It is the potential major for the future.
 Growth: It is the market that focuses on the resources.
 Custodial: It does not commit and resources as a cash cow.
 Cash generator: It can use as the expansion and growth.
 Phased withdrawal: In this, the cash can be moved to SBU’s with high potential.
 Divest: The assets can be liquidated in a frequent manner.
 Leader: In this, it focuses on the resources.
 Try harder: It can be vulnerable for the long period of time.
Profit Impact of Market Strategies (PIMS)
It is the long-term and comprehensive study of the strategic business units. PIMS is the collection of
statistically documented that is drawn from the business and helps to understand the various types of strategies
in business environments. The PIMS helps to identify the quality of product, lower costs, and capital
investments.
Business organisation
5

It is the supermarket chains that have a turnover of €50 million. It serves the different products such as foods,
Sanitary Articles, Household goods, beverage. It operates in France, Denmark, Spain, Britain etc. Aldi stores
display the different items at various prices that include the different items. It sells the custom branded products
with different name of brands such as Grandessa and fit & Active.
Aldi was founded by the two brothers Theo and Karl in 1964 and took over the store of mother Essen’s that has
been operated from 1913. In 1962, he introduces the Aldi.
Mission
The mission should be precise and clear that represents the purpose of existence. It has the statement of “Spend
a little, live a lot” It supports the beliefs and values. It provides the low-quality products to the poor who are not
capable to purchase.
Vision/strategic intent
Vision and strategic intent are related to the mission and also have the future time. Visions are intended states
of the organisations in future. For example, Moscow is interested in the big picture and not with details; they
are concerned with the future of business.
Goal
The goal of Aldi is to provide better quality products at the fair and best price. It also provides the responsibility
towards the employees, community, and partners etc.
Objectives
 Aldi provides the job opportunities to all over world.
 To increase the market share and also provide the high-quality products and value for clients.
Core competencies
The core competency of Aldi is an emphasis on price. There are different measures that are taken by Aldi such
as cost leadership strategy in which there is a number of services and goods that offers the high quality at
competitive pricing. They also emphasise on their own brands in order to remain independent and also enable
them to avoid the high cost of marketing that is in relation to the national brands and set their own product,
prices and policies.
6

PART A
Environmental Analysis
Explain in detail the meaning of PESTLE
Pestle is the marketing principles and used by Aldi to track the environment in which they are operating and
planning to launch the new service and products. P stands for political in which government influences the
economy. E for economic in which it determines the performance of company. S stands for social that scrutinize the
social environment and also determines the factor of demographics, cultural trends. Etc. T for technology that
pertains to innovations and influences the operations of industry. L stands for legal that can be affected by the
policies and regulations. E stands for environmental that determined by the surrounding environment.
An Environmental analysis (PESTLE) conducted on ____________________
Political
A large number of Aldi stores are situated in Europe, Australia, USA and that depicts that there is political
vulnerability and conflict that threatens the sustainability of foreign companies that can be based on the origin of
country.
Economic
The growth of market is 3.8% that depicts that the expansion of market and there will be a rise in demand. It can
also be analyses that there is a rise in rate of inflation which means that the shoppers are aware to balance the
budgets of households.
Social
Aldi is the highest paying supermarket in UK and also overtake the Lidl in case of wage payment. It can be
evaluated that high rate of wage provides the better living standard for the people who paid them and that allows the
employees to afford better healthcare and food(Siddique, 2018).
Technology
7

With the help of advanced technology supermarkets aid their propositions of service with the increase in a number
of customers. This factor expects the self-service of checkouts from the providers of grocery.
Environmental
It can be said that Aldi increase their products from the farmers and producers and that also helps them to support
the producers. It also enhances the sustainability of local areas in which they perform their functions.
Legal
The UK is affected by scandals that concern with the food products. Aldi also have an issue in legal disputes as a
result of misrepresenting the sales.
8

Organisational audit: SWOT analysis
Explain in detail the meaning of SWOT
SWOT depicts the strength, weakness, opportunities, and threats. Strength depicts the different offers that can be
provided by the Aldi. Weakness can in form of competition in relation to other brands. Opportunities can be in form
of expanding the market in different countries. Threats can arise due to competition from the other chains of
supermarkets,
9

Analyse the impact and influence which SWOT has on your chosen organisation and its business
strategies
Strengths: The different factors of strength are:
 It helps to promote the services of high-quality products at reasonable prices.
 There is the edge of prices at the various retailers
 It also maintains the low operating
Weaknesses: Weakness can be in form of:
 It is small as compared to the other brands.
 It does not have ability to impact globally due to the fewer chain stores in market.
 There is a limited range of services and products.
Opportunities
 Aldi can invest more funds in advertising to maintain the level of competition.
 They have capability to perform the giants of supermarket that is Woolworth and Australia Coles.
 They can expand their market in the growing economy such as Africa and Asia.
Threats
 Aldi faces more competition from different markets such as Wal-Mart, Amazon etc.
 Private brands of Aldi can be tossed by recognized brands.
 Risks and hazards are recognised by suppliers.
10

Strategic Capabilities
Explain strategic capabilities and the key components of strategic Capabilities
Strategic capabilities define as the ability of business to employ the competitive a strategies that allow to survive
and increase their value over time.
Key elements of strategic capability are:
Resources: Resources can be in form of physical, human and financial. Physical resources include the buildings,
machines, products, patents etc. Human resources include the employees, partners, managers, and customers.
Financial resources include the cash flow statement, balance sheet etc.
Competences: It depicts the things that can be performed by the Aldi. It provides the ways or methods for achieving
the utilisation of productivity, flexibility, marketing etc that can be in form of a physical method. In terms of
financial method, they can be capable to raise the funds and also manage the debtors, cash flows statements. Etc. In
terms of Human resource, the individual can gain and use the knowledge and skills and also build the relationship
and also motivate the others.
11

Analyse strategic capabilities of your chosen organisation by using the VRIO framework.
Explain the VRIO framework
VRIO analysis is the method for the evaluation of the resources of the company and also the competitive advantage.
The basic method is that the organisation begins with the statement of vision and continues with the objectives of
internal and external analysis. It involves the four questions that are a question of value, rarity, imitability,
organisation.
dff
Apply the VRIO FRAMEWORK.to your chosen organisation.
 Value: The financial resources of Aldi can enhance the organisation to pursue their development strategies
in order to maintain the competitive advantage. The organisation can take benefit of technical and human
resources to establish the scientifically advanced hypermarkets in a new market.
 Rarity: Aldi has some scientific resources such as system of management which was installed in 2011 and
that are exclusive to company. It is necessary for the company to an emphasis on their existing technological
resources and that can be used effectively and rest of part depends on the marketing development.
 Imitability: It is possible for Aldi to place the advanced methods and process in outlets that can be hard for
their competitors. There can be assured for the future expansion strategy.
 Organisation: It analyses the different questions in respect of Aldi that it is ready or they can be able to
exploit the capability and resources (Cox, 2018).
12

13

Competitive Environment
Explain in detail the Meaning of Porter’s Five Forces
It is the tool that helps to determine the competition of business and their intensity. The forces can be related to
micro and macro environment. The forces are close to the organisation and also affect the capability to serve their
customers and also earn the profit. Porter five forces can be developed through the SWOT analysis and based on the
structure-conduct-performance in industrial organisations. It also includes the value chain and the strategies of
competition (Hickman and Silva, 2018).
Produce an industry analysis for your chosen organisation using Porter’s Five Forces model
The porter’s five model can be developed by porter that helps to analyse the environment through which company
and product can works. The five forces are:
Competitive Rivalry: It can be analyse that Aldi is facing the high competition with different players in industry.
For example, woolsworth and Coles are rivalry of Aldi. The cost of marketing and advertising are increases but the
amount of products is low. Aldi operates on principle of reducing the fixed costs as with the competitors.
Threat of new entrants: It can be said that capital investment and large establishment raises the barriers of entry in
organisation. To establish the specific brand and opening a new store, reaching the economy of scales requires
finance and time. The barriers can be in another form also that includes the access to inputs, economics of scale,
brand identity and switching of costs.
Bargaining power of suppliers: The industry includes the number of suppliers who are ready to sell the same
services and products at the fewer market prices to retailers such as Aldi. In this factor, the retailers push the
suppliers to provide the offers and discounts. The suppliers do not have a position to influence the number of
products or retailers to sell their products at a high rate of prices.
Bargaining power of Buyers: The factors create the impact on the clients on the producing industry. It can be
observed that buyers are powerful when they have few market shares. They also possess the backward integration
threat that threatens the rival. Buys can be said as weak when the producers threaten the concept of integration.
The threat of substitutes: It can be recognised that the products of Aldi are not unique and supermarkets and
retailers sell the similar products. Other players emphasis on the marketing and advertising and that is very easy
(Tomczak, et. al., 2018).
14

M1 Critically analyse the macro environment to determine and inform strategic management decisions.
Macro environment exists in the economy as whole rather than a specific region. It is the first step in strategic
analysis that turns off in traditional. There are different factors that help in the decisions of management such as
political which determines the changes in the political issues. Economic trends determine the changes in the
rate of inflation, exchange rates, rate of unemployment. Cultural trends determine the behaviours, beliefs,
norms towards the structure of organisation. Legal trends are connected with the political environment and also
focus on the different laws. These all factors of macro environment determine the management decisions by
complying with the ever strategic factors (Spyropoulou, et. al., 2018).
15

M2 Critically evaluate the internal environment to assess strengths and weaknesses of an organisation’s
internal capabilities, structure, and skill set using The McKinsey 7-S Framework
Mckinsey 7 s model is a tool that evaluates the design of organisational firm by different elements to attain the
objectives. The strength of Mc Kinsey model is rational and emotional in the elements. This model can be used
to assess the impact of strategic change on the business. The strength can be in form of cultural issue where
paradox and ambiguity help to bind the needs of individuals with their wants and desires. In relation to
weakness it includes the bias for action, autonomy, productivity through individual. It also helps to guide the
change in organisation. It also creates the dynamic environment and the company also adopts the system of new
equilibrium (Williams, et. al., 2018).
16

D1 Critique and interpret information and data applying environmental and competitive analysis to
produce a set of valid strategic directions, objectives and tactical actions.
It can be said that the mission, vision, objectives are interchangeably used. It is difficult to find the strategies
and tactics as it includes the different meanings. Objective is the statement that helps to attain the goals and
targets and that can be measurable term. The goals help to improve the profitability and stability in organisation
Tactics are the action plan and the process of implementation that helps to deliver the long-term strategy. These
actions plan helps to enhance the day to day activities to achieve the strategy. Strategic directions leads to the
achievement and success and also drafts the mission, vision an goals of the company(Dodgson, 2018).
17

PART B
Evaluation of the different types of strategic directions available to the organization
Aldi store pursues the strategy of expansion and development that increases the presence of stores throughout
the countries. The discounter can be communicated effectively by providing the better quality products with the
help of campaigns for advertising. It can also be observed that the retailer will continue with the development
and expansion of different plans and policies. The retailer also develops the online operations and develops the
online stores and that helps to expand the channel over the future period.
Justify and recommend the most appropriate growth platform and strategies.
It can be recommended that Aldi should adopt the strategy of substantive growth which includes the horizontal
integration, related diversification, vertical integration, unrelated diversification. Horizontal integration is the
acquisition of the actions of business that have the same value chain of the industry. It can achieve by the
expansion through the reinvestment of profits or merger. Diversification is the method of risk management that
combines with the investments within the business. Vertical integration can be in form of different activities of
a firm that have the value in the business organisations. Unrelated diversification is the form of expansion in
which the Aldi can add the new products and also penetrates the new markets(Kivikangas, 2018).
18

M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
There are different strategies that help to determine the profitability of firm. The different types of competitive
advantage are low cost or differentiation.
 Cost leadership: In this strategy, the firms set out to become the producer of low cost and they can be
varied and depend on the structure of industry. A producer of low cost finds and exploits the sources of
cost advantage. It can be implied that if business sustains and achieve the leadership of cost then there
will be an average performer of industry.
 Differentiation: In this, a business seeks to be different along with the different factors which are used
by the buyers. In this strategy, they select the one or more factors in which the buyer can perceive and
also meet their need.
 Focus: It includes the two variants in which cost focus on the business and that pursues the cost
advantage in the segment of market. They also seek on the concept of differentiation in the target
market(Roghanian, et. al., 2018).
19

M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.
The plan can be achieved by the SMART objectives that provide the specific which states what can be done
exactly and it can be in a measurable form that helps to know the quantity. Attainable that depicts what is to be
attained by the firm and it should be time bound that provides the limit of time. A tactic tool can be used to
pursue the objective that can be provided with the strategy(Argenti, 2018).
20

Conclusion
From the above report, it can be determined that business strategy plays a crucial role and also leads to the
impact on the organization. To understand the concept of macro and micro environment Aldi uses the different
models that help to determine the issues and problems in the organizations. To gain the competitive advantage
in the market, they use Porter's five models through that they can easily analyse the issue. Through the
PESTLE they determine the issue of environment. With the help of SWOT, they can easily determine the
strength and weakness of Aldi. They also analyses the different strategies that help to know the competitive
edge and the position of market.
21

References
 Argenti, J., 2018. Practical corporate planning. Routledge.
 Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
 Chereau, P. and Meschi, P.X., 2018. Defining Strategic Positioning. In Strategic Consulting (pp. 39-79).
Palgrave Macmillan, Cham.
 Cox, S.A., 2018. A Framework for Exploring IT-Led Change in Morphing Organizations.
In Encyclopedia of Information Science and Technology, Fourth Edition (pp. 694-706). IGI Global.
 Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and internationalization
in innovation. Routledge.
 Hickman, C.R. and Silva, M.A., 2018. Creating excellence: Managing corporate culture, strategy, and
change in the new age. Routledge.
 Kivikangas, M., 2018. Marketing plan for export operations in the German pet care supply market: Case
Karhia Pro.
 Martinsuo, M. and Hoverfält, P., 2018. Change program management: Toward a capability for
managing value-oriented, integrated multi-project change in its context. International Journal of Project
Management, 36(1), pp.134-146.
 Roghanian, E., Ghorbani, B. and Alipour, M., 2018. Application of intuitionistic fuzzy numbers in
SWOT analysis. International Journal of Industrial and Systems Engineering, 28(2), pp.152-165.
 Schuhmacher, M.C., Kuester, S. and Hultink, E.J., 2018. Appetizer or Main Course: Early Market vs.
Majority Market Go‐to‐Market Strategies for Radical Innovations. Journal of product innovation
management, 35(1), pp.106-124.
 Siddique, S.S., 2018. The Road to Enterprise Artificial Intelligence: A Case Studies Driven
Exploration (Doctoral dissertation, Massachusetts Institute of Technology).
 Spyropoulou, S., Katsikeas, C.S., Skarmeas, D. and Morgan, N.A., 2018. Strategic goal accomplishment
in export ventures: the role of capabilities, knowledge, and environment. Journal of the Academy of
Marketing Science, 46(1), pp.109-129.
 Tomczak, T., Reinecke, S. and Kuss, A., 2018. Introduction. In Strategic Marketing (pp. 1-18). Springer
Gabler, Wiesbaden.
 Williams, R.I., Pieper, T.M., Kellermanns, F.W. and Astrachan, J.H., 2018. Family Firm Goals and their
Effects on Strategy, Family and Organization Behavior: A Review and Research Agenda. International
Journal of Management Reviews, 20(S1).
22

23