Business Strategy for ALDI in the UK Market

This report analyzes ALDI's strategic planning, formulation of business strategies, environmental audits, stakeholder analysis, and implementation strategies for entering and growing in the UK market.

BUSINESS STRATEGY
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Table of Contents
Introduction................................................................................................................................3
LO1. Understanding the process of strategic planning..............................................................4
1.1 Providing an assessment of the extent to which ALDI’s visions, missions, goals,
objectives and core competencies inform its strategic planning................................................4
1.2 In a situation like this, analyzing the factors that ALDI will have to be consider when
formulating its strategic plans....................................................................................................5
1.3 Evaluation of the usefulness or worth of the techniques used when the business developed
its strategic plans........................................................................................................................6
LO2. Being able to formulate a new strategy............................................................................8
2.1 Carrying out an organizational audit for ALDI and providing the analysis of its present
strategic position........................................................................................................................8
2.2 Carrying out an environmental audit for ALDI showing both its macro and micro
environment................................................................................................................................9
2.3 Assessing the significance of stakeholder analysis for ALDI when formulating new
strategy.....................................................................................................................................11
LO3. Understanding approaches to strategy evaluation..........................................................12
3.1 Identification of a market and analysis of the aptness of the suitable strategy for ALDI in
relation to its limited growth, substantive growth, or retrenchment........................................12
3.2 Providing a justification of one of the strategies of ALDI for market entry and market
growth discussed in the earlier portion....................................................................................13
LO4. Understanding how to implement a chosen strategy......................................................14
4.1 Assessing the roles and responsibilities of the personnel who are involved with strategy
implementation.........................................................................................................................14
4.2 Providing an analysis of the requirements of resources for the successful implementation
of ALDI’s strategy...................................................................................................................14
4.3 Evaluating how the use of SMART targets can contribute towards the achievement of the
strategic objectives of ALDI....................................................................................................15
Conclusion................................................................................................................................16
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Reference List..........................................................................................................................17
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Introduction
ALDI can be considered as one of the familiar trademarks in case of private industries that
includes more than 8000 retail stores in more than 15 countries across the globe. ALDI is the
trademark of the most two leading discounted chains for the supermarket that includes an
estimated income amounting more than £50 Billions. Presently, ALDI needs to increase its
all shares in the market of UK for business purpose and increase the business as well. In this
assignment a brief description on the ALDI’s mission, vision as well as organizational goal
and objectives are described properly. In order to achieve the organizational objective,
various factors are provided below. The assignment contains of ALDI’s strategic planning as
well as the formulation of the proper business strategy. ALDI needs to adopt specific
business strategies along with formulation of business planning and that’s why a proper
description of the innovative business planning is provided in this assignment.
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LO1. Understanding the process of strategic planning
1.1 Providing an assessment of the extent to which ALDI’s visions, missions, goals,
objectives and core competencies inform its strategic planning
The proper strategic direction also refers to the methods that provide the necessary help to an
organization in case of leading the process towards achieving the organizational goals along
with its objectives. ALDI can be considered as one of the most leading supermarket chains as
well as the company includes its own mission, vision, aims, objectives that are all very
essential elements for making the strategic planning for the organization (Scholes, 2015).
The operation planning of the organization is reflected through the Mission statement of the
company that the organization used to achieve its predetermined goals. The mission
statement for ALDI is to offer different products of high quality in a cheap price.
On the contrary, the organizational vision statement is to take a vital role of describing all the
necessary and important details about the ALDI organization that desires or sets its aims for
becoming in the upcoming years. The vision statement of ALDI Company is to be most
leading retailer across the globe with a heart.
The objective for the business is a wider terminology than of the organizational mission and
vision in case of describing a proper direction through which the organizational business plan
moves by highlighting their goals that they needs to achieve (Bharadwaj et al., 2013). The
primary goals of the ALDI Company are:
 Improving the most broad and longest network inside the supermarket chains in the
UK
 Making the organization as a renowned trademark that can be considered as the most
favourable by the customers
 Providing the customers of the organization a better quality products in an affordable
price
The main objectives of ALDI Company for the business are wider, precise as well as
concentrated more than its aims that help the organization in explaining all the aims for the
organization in an inclusive way. The objectives are as follows:
 Establishing the most largest chain of supermarket inside the UK
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 Increase all the contribution for the company towards the financial condition of the
country
 Improving the level of satisfaction of the customers those are buying the products of
ALDI
 Provide proper training to all the employees for giving better quality services to their
consumers
One of the most primary competencies for this company is to offer the best as well as
competitive benefits to the organization through providing the biggest value to the customers
of the organization (Verbeke, 2013). The main capability for ALDI Company is to generate
proper understanding along with the satisfaction of the customers by giving them their
required products. The organization also overcomes in the market for business purpose as
well as makes the customer base much stronger and this can be considered as another core
capability for the organization.
Therefore, in this part the analysis depicts the aims, objectives and vision and mission along
with the core competencies are the most necessary elements for the organizational strategic
planning as well as it helps the company to generate better strategic planning.
1.2 In a situation like this, analyzing the factors that ALDI will have to be consider
when formulating its strategic plans
ALDI Company includes its own goals and objectives like other business organizations. The
primary target of ALDI is to make more share in the market of UK. Therefore, presently, all
the activities of ALDI inside the UK are maximizing the rate of sales as well as ALDI makes
its rate of selling by 20 percent in the year of 2017 (Mithas et al., 2013). ALDI performs it’s
all operations and activities in the market of UK by undertaking the following factors to
maintain their position:
Requirements, demands and the preferences of the customers: These all can be considered as
the most important factors by the management of ALDI Company. Inside the UK and
Germany, there are several supermarkets and ALDI still not acquire the perfect position
inside this market. Through considering all the demands and requirements of their consumers,
ALDI make their proper movements and take their future directions for providing help to
formulate a better strategic planning by keeping all the interests to its intact of the customers.
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Direction for the rivalry in the upcoming years: The rivals of the ALDI Company consist of
huge size as well as are of great numbers. The strong competitors like ASDA, Tesco and
many others of the ALDI Company inside the UK market are able to generate a great threat
for this company. Therefore, sustaining their activities and operations in accordance with
their rival’s operations and strategic movements will help the organization to prevent all of
these upcoming threats (Bentley et al., 2013).
Sustaining and making rivalry benefits: The competitive benefits can be considered as one of
the most important factors for the business in the market of UK. ALDI requires acquiring as
well as maintaining all of its competitive benefit inside the UK market. The competitive
benefit of ALDI Company is its great amount of consumers those are lived in UK and they
also prefer the ALDI Company irrespective to any customers. Therefore, the formulation of
the strategic planning for ALDI Company needs to consider all the aspects for competitive
benefit so that they can maintain their position in the supermarket.
Ansoff’s matrix for growth-vector: This factor can be considered as another important factor
for sustaining the position in the supermarket. The matrix depicts four types of growth
opinions for the organization that are called as market penetration planning, strategies for the
marketing development and many others. The selection of the specific growth options is
providing the necessary help to the organization in case of generating appropriate marketing
plan. It also considers all the opinions of growth to help the ALDI Company in case of its
target share in the UK market (Pagani et al., 2013).
1.3 Evaluation of the usefulness or worth of the techniques used when the business
developed its strategic plans
In case of researching all the targeted business as well as generating its proper position in the
market of UK, ALDI Company adopts different types of strategic plans. Every method
includes its primary applications in the time of developing the strategic plan for the business.
The applications of this all techniques can also be used by ALDI Company for making its
strategic plans that may be analysed through the appropriate application of the BCG matrix.
The BCG named as Boston Consulting Group matrix can be categorized into four parts that
are cash cows, stars, after that question mark and finally dog. These all four parts can make
the proper indication for the growth rate of an organization and its all shares in the
marketplace. The cash cow depicts the good positioning of an organization inside the market
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and its reduced growth rate. The function of the star is to provide the details the growth rate
as well as the high shares in market for the organization. All the organizations inside the dog
category can be considered as their share in the market is not good but they can maintain their
existence with that. This portion can be called as the reciprocal of the stars. Finally, the
question mark can be referred to those organizations that only include very least share in the
marketplace but they also consist of high growth rate (Klettner et al., 2014).
The application of these all methods can be used by the ALDI Company for developing their
strategic planning for their business that may be done y the usefulness of the BCG matrix.
According to the BCG matrix, ALDI may be got its place inside the star category. The reason
behind this ALDI Company becomes successful in case of acquiring their place in the market
of UK. They also include a high rate growth and share in case of the marketplace. The
organization also achieved its place successfully in the largest supermarket of UK and the
applications as well as the values of ALDI Company’s methods have been examined
properly.
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LO2. Being able to formulate a new strategy
2.1 Carrying out an organizational audit for ALDI and providing the analysis of its
present strategic position
The internal and the organizational audits can be taken into account as one of the most
important factors that need to apply in analysing the recent strategic condition of the ALDI
Company (Haley and Haley, 2013). The present state for this organization may be explained
through its SWOT analysis that can be described through the following table:
SWOT ANALYSIS
Strengths:
 The company provide to its
consumers better quality products and
they make sure about their products
on the supermarket as well
 Every consumer for this organization
get a proper discount in case of
purchasing any product
 The organization also gain a good
position in the market of UK as well
as it includes a great amount of share
in the marketplace
 The actions of ALDI Company are
very low in case of costs and
expenses (Ackermann and Audretsch,
2013)
 Their operations in the supermarket
across more than 14 nations and also
proves own self as a renowned brand
Weaknesses:
 The size of ALDI Company is lesser
than their rivals in the UK market
whereas their rivals are of huge size
 ALDI includes a proper position in
the Germany’s market. Therefore, the
organization do not require to be
recognized globally (Johnson, 2017)
 On e of the major weaknesses for this
organization is not to provide
different types of products in a wide
range as well as their products are
very limited for the market
competition
Opportunities:
 In case of opportunities ALDI
Threats:
If the organization fails to provide the
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includes a great opportunity of
expanding their businesses as well as
achieving a great volume of
consumers by proper advertisement
along with adopting the appropriate
methods
 The expansion of market is also
another opportunity that is available
for the ALDI Company. The
supermarket may spread their
business activities by utilizing all the
proper planning. The niche market
inside the Africa along with Asia also
includes a great opportunity for the
ALDI Company to expand its
businesses.
required products of the customers as well as
giving proper customer satisfaction, that will
be a great threat for the ALDI Company as
they will be lacking of creative skills and
innovative products
From the above SWOT analysis of ALDI Company, it will be easy to get the proper
understanding of the organization’s strategic position in the market. The recent strategic
position displays the different achieved strengths of the ALDI Company. The positioning in
case of trademarks, appropriate position in the supermarket as well as globally coordination
around the globe can also present its strategic position in case of the supermarket (Li and
Tan, 2013). The appropriate analysis of the strategic position of the ALDI Company also
displays the utilization of supermarket that can be identified successfully of its opportunities
and the proper planning to prevent its risks, threats and weaknesses.
2.2 Carrying out an environmental audit for ALDI showing both its macro and micro
environment
The realization of an environmental review is also essential for the evaluation and analysis of
ALDI's micro and macro environment. To carry out an environmental assessment, the Porter
Five Forces analysis for ALDI was performed. ALDI's micro and macro environmental
analysis shows the following information about competitors, suppliers, ALDI buyers,
substitutes and new market entries:
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1. Threat of new entrants in the marketplace: The threat to ALDI from new vendors in the
market is small and almost insignificant. In the current scenario, there is little chance that
another supermarket chain will enter the market (Grover and Kohli, 2013). This is mainly
because the establishment of a new super-wholesale market like ALDI is almost impossible.
The establishment of such a large supermarket requires large investments, which are difficult
for new entrepreneurs. Another reason for the low threat of new entrants is the time needed to
build a new supermarket.
2. Bargaining power of the company’s suppliers: ALDI suppliers have very low
bargaining power, which is another advantage for ALDI. The main reason why ALDI
suppliers do not have much bargaining power is that ALDI is a supermarket and
supermarkets are generally better when negotiating. As supermarkets have greater purchasing
power, they have bigger rights to request discounts when buying goods and raw materials.
Suppliers also prefer large orders and do not trade much.
3. The power of bargaining: One of the main disadvantages for ALDI is the bargaining
power of the buyers (Bharadwaj et al., 2013). As ALDI is not includes in the existing
supermarket, the consumers also have the powers of bargaining. People are also capable to
gain the high discounts as well as low costs provided from the supermarket for the company
in the marketplace.
4. Risks from the substitute products those are available in the marketplace: The risks of
ALDI from its all substitute products in the market for business purpose are moderating
always. The reason behind this, ALDI do not provide its consumers a broader range fo
products as well as customer services. This range of products is also very limited as well as
equal products are available in the marketplace.
5. Competition in between the available organizations in the marketplace: The
competition in between the available supermarkets is also very high. The competition in
between all the organizations available in the supermarket industry also have been risen in
accordance with the target of every rivals in the UK market to provide goods with less price
to gain the attraction of more consumers. Another reason of maximizing the competition on
that the other supermarket industries can set their target markets to provide consumers the
equally same advantages that are given to the customers of ALDI Company (Pisano, 2015).
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2.3 Assessing the significance of stakeholder analysis for ALDI when formulating new
strategy
The stakeholder analysis is very important in formulating a new strategy. The Interesting
Meaning Grid helps to analyze the importance of stakeholders in a business. It helps
categorize the interests of a company according to their growing power and interest in the
company. It helps to focus on key players who can make and break the business.
The stakeholder analysis helps ALDI find the power and interests of the organization's
stakeholders and help manage the organization's engagement with the organization's
stakeholders. Both external and internal stakeholders have a major influence on ALDI
Company. ALDI's activities will be directly affected if the interests and powers of the
stakeholders are not taken into account. For this reason, it is important for ALDI Company to
conduct a stakeholder analysis to formulate a new strategy for the organization in order to
keep the interests of stakeholders intact and to continue their activities effectively.
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LO3. Understanding approaches to strategy evaluation
3.1 Identification of a market and analysis of the aptness of the suitable strategy for
ALDI in relation to its limited growth, substantive growth, or retrenchment
As per the given case study, the management of ALDI is planning to expand the business in
the market of UK. This strategy has been taken by the management to make the business
stronger and more competitive in the international market. However, in order to enter into the
UK market and sustain in the market, the company needs to take right strategy. In order to
enter into a market like, UK, the management of ALDI has three strategic options – organic
growth, strategic alliance and merger and acquisition.
As ALDI is already a popular supermarket chain, the company can easily select the strategy
of organic growth to enter into the UK market. Under this strategic choice, the organization
needs to develop the business strategy based on its own capabilities (Chen et al., 2017). For
example, the management of ALDI may focus on the promotional strategies while entering in
UK market. In UK, several large supermarkets are already present. In this situation, focusing
on the promotional strategy is very important (Kim and Kim, 2018).
On the other hand, in order to maintain substantive growth, the company may focus on the
related and unrelated diversification. It has been mentioned before that there are several large
supermarkets in UK; therefore, to enter in this market, diversification is essential (Williams
and Vrabie 2018). The company may diversify its business in the electronics and clothing
sectors. This will enlarge the prospective market for the company.
The company may also focus on the innovation and product development strategies. If the
company introduces some innovative electronics or some other products, the demand for the
products of ALDI will increase in the UK market. The people in UK are fond of innovation;
hence, the company can easily crack the market by focusing on innovation and new product
development (Ulwick et al., 2017).
However, in this context, the management of ALDI must consider the cost factor. The
management needs to select the strategy that is less costly but provides maximum benefits to
the company.
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3.2 Providing a justification of one of the strategies of ALDI for market entry and
market growth discussed in the earlier portion
In the above discussion, it has been identified that the organic growth strategy and the related
and unrelated diversification are the two strategies that will be suitable for market entry and
growth of the business of ALDI in the UK market. The justifications for the selection of these
two strategies are stated below:
Justification for the selection of organic growth strategy – As stated above, in the organic
growth strategy, the management of the company needs to develop business strategies based
on the capabilities of the company or business. If the management of ALDI selects this
particular strategy, the company may enjoy several benefits. For example, the risk involved in
this particular market entry strategy is very low. In the case of merger and acquisition or
strategic alliance strategies, there is a risk of losing control over the business and at the same
time, the cultural issues may also take place (Filatotchev et al., 2017). However, if the
management of ALDI selects the organic growth strategy, this risk can be easily avoided.
Moreover, as this strategy is based on the capabilities of the business, the company does not
require depending on the effectiveness or efficiency of the other business (Bruni-Bossio et al.
2017). However, this facility is not available in the cases of merger and acquisition or
strategic alliances.
Justification for the selection of related and unrelated diversification – This is suitable
strategy for the growth of the business of ALDI in UK market. Diversification is such a
strategy that can help a company establishing itself as the unique one and if a company can
prove that it is unique in the market, it can easily grab the market share (Filatotchev et al.
2017). As UK is highly competitive market, it is very important to ALDI prove it as the
unique company in the market. It means diversification can create a strong place for the
company in UK. It means the company can easily enhance its sales and market share by
concentrating on this strategy of growth (Ulwick et al., 2017).
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LO4. Understanding how to implement a chosen strategy
4.1 Assessing the roles and responsibilities of the personnel who are involved with
strategy implementation
In the above discussion, the strategies for market entry and growth of the business of ALDI
have been identified. In order to implement these strategies, the company needs to appoint
some personnel. The roles and responsibilities of these personnel will be as follows:
 The personnel will be responsible for maintaining proper communication within and
outside the organization. This communication can be done through phone, email or
direct face-to-face conversation (Bens, 2017).
 The personnel will be responsible for develop different project teams. These teams
must include efficient people as per the requirements of the job role.
 Another role of the personnel will be setting targets for each of member within the
team. This must be done after analyzing the capacity of each team member
(Woodcock, 2017).
 Setting the benchmark for the teams will also be the responsibility of the personnel,
who are responsible for implementing the strategies.
4.2 Providing an analysis of the requirements of resources for the successful
implementation of ALDI’s strategy
In order to implement the new strategies, the management of ALDI will require the following
resources:
Finance – It is one of the most important resources that the management of ALDI will require
while implementing the new strategies and expanding the business in UK market. The
company needs to arrange required finance from different internal and external sources (Kim
and Kim, 2018). As the company is following the organic growth strategy, it is expected that
the company will use its own funds to grow the business in the market of UK.
Human resource – The Company needs to recruit efficient employees for handling or
managing the business in the UK market. The company also needs efficient and highly
skilled employees for implementing the strategies in the UK market.
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Materials – The Company needs to arrange more materials to build a new setup in the new
market of UK.
4.3 Evaluating how the use of SMART targets can contribute towards the achievement
of the strategic objectives of ALDI
ALDI's SMART objectives can have a major impact on the company's goals and contribute
significantly to achieving ALDI's strategic goals. The contribution of the SMART objectives
of the organization can be reviewed and evaluated by measuring the comparative results of
the organization during the period with regard to the operational objectives of the
organization (Bharadwaj et al., 2013).
ALDI's specific SMART goal is, for example, to increase the satisfaction of ALDI
consumers. ALDI's goal can be evaluated by evaluating the difference between existing
ALDI customers and their clients, which ALDI will achieve after a year of ALDI's business
strategy. ALDI's measurable SMART target is to increase ALDI's share in the UK market by
4%. However, the contribution of this goal to achieving ALDI's strategic goals can be
measured by evaluating the difference between ALDI's current market shares and ALDI's
market share in implementing ALDI's commercial strategy. In this way, the use of SMART
goals can help achieve ALDI's strategic goals.
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Conclusion
All the discussions in the report contribute to the successful acquisition of ALDI from a
significant position and market share in Germany. However, the organization plans to expand
to the United Kingdom. The report helps to obtain all relevant information on ALDI
operations and plans. In order to achieve the organizational objective, various factors are
provided below. The assignment contains of ALDI’s strategic planning as well as the
formulation of the proper business strategy. ALDI needs to adopt specific business strategies
along with formulation of business planning and that’s why a proper description of the
innovative business planning is provided in this assignment. It also helps to formulate ALDI's
business strategy to develop its business on the UK market, together with the development of
the organization's goals, objectives and action plan to increase its participation in the UK
market. It also helps to understand how ALDI needs to form joint ventures or prosper in the
future and develop their business.
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