Strategic Management and Business Environment Analysis

This assignment is based on the topic of strategic management and business environment analysis. It includes a detailed discussion of the PESTEL framework, Porter's five forces, and SPACE matrix chart. The assignment also provides an analysis of the business model of Aldi using these frameworks. It includes references to various academic sources and online resources. The summary provides specific details about the assignment, including its purpose, scope, and expected outcomes.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
1.1 Assessing the goals, mission, vision and objectives in strategic planning............................1
1.2 Factors needed to be focused while formulating strategic plans...........................................2
1.3 Evaluation of usefulness of different methods by explaining BCG growth matrix, SPACE
and PIMS techniques...................................................................................................................3
2.1 An audit and explanation of the current business strategic of Aldi......................................5
2.2 An environment audit for Aldi..............................................................................................5
2.3 Assess the significance of stakeholder analysis for Aldi when formulating new strategy. . .7
2.4 New strategy of Aldi.............................................................................................................8
Task 2 ..............................................................................................................................................8
3.1 Analysing appropriateness of suitable strategy.....................................................................8
3.2 Justification of limited growth strategies for market entry and growth..............................10
Task 3.............................................................................................................................................10
4.1 Assessing the roles and responsibilities of personnel which are involved in strategic
planning.....................................................................................................................................10
4.2 Analysis of the resource requirements for the implementation of new strategy.................11
4.3 Evaluating contribution of SMART targets in achieving the strategic objectives..............12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business is the method which is used for implementing new techniques in order to
achieve long term objectives and goals. It is the process which helps in establishing the vision,
mission policies, plans etc. Strategic management assist in coordinating and managing different
functions of various areas of the business. Aldi is retail industry which sells food products,
beverages, household goods and sanitary articles. It has 10,000 stores in 18 different countries of
the world. It was established by two different groups in 1962. It was later named as Aldi Nord
and has total revenue of €53 billion (Sia, Soh and Weill, 2016).
In this report the main tasks involved are Aldi's mission, vision, goals, core
competencies. Further, the analysis on the factors of strategic planning are considered.
Organisational and environmental audit for Aldi is conducted. Importance of stakeholder in
Aldi's new strategy are assessed. Additionally, new strategy is made and its appropriateness in
terms of growth is analysed. Moreover, roles and responsibilities of personnel are defined for
implementing new strategies. Analysis of different resources which are essential for new plans
are discussed. Moreover, evaluation of how smart targets helped in accomplishing objectives of
the organisation are considered.
Task 1
1.1 Assessing the goals, mission, vision and objectives in strategic planning
Mission:
The main vision of Aldi is to provide the best customer services by providing them high
quality of goods and products. It also offers their services in most innovative way.
Vision:
Vision of Aldi is to increase its profits by valuing their customers, stakeholder etc. The
company is focusing on providing their services globally.
Objectives:
Objective of Aldi is to grow its business and diversify their retailing services. They have
given more concentration on increasing their marketing strategies to increase their sale. Core
goal of the organisation is to gain customer loyalty towards their product (Agrawal, 2016). They
are also focusing more on providing the branded goods and services at lower price so that it can
be afforded by every level of people.
Core competencies:
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Business network of Aldi is the main factor that assist it to achieve its long term
objectives and goals. Further, it has focussed on its brand quality and price which can attract
more customers and increase their volume.
1.2 Factors needed to be focused while formulating strategic plans
Political, economical, social, technical, legal and environmental are the main factors that
should be more focused by the organisation while implementing new strategies. These factors are
defined as follows:
Political factors:
Political factors includes government policies and plans. Aldi is affected by the political
factors as the government of different countries has different rules and regulations which affects
the company growth and business strategies. Aldi has to set their prices by including tax and
other government charges so that it can increase its overall sale. Different countries has different
rules which the company has to follow to increase its sale.
Economic factors:
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Illustration 1: PESTLE analysis
(Source:PESTEL Framework , 2017.)

This factor impacts the economy of Aldi as they affect demands, costs and profits. Major
factor that have affected the economy of UK is high unemployable which directly affect the
demand and price of the products (Leonidou and et.al., 2017). This factors are out of control of
the company but they can increase their performance with the help of implementing new
business strategies which are suitable in competitive market.
Socio-cultural factors:
Social factors includes beliefs, culture of the country. The organisation has to develop
their products by focusing on the demands and culture of the people. The choice and demands of
customers vary from one region to another due to which company found it difficult to fulfil the
demands of different people.
Technological factors:
It plays an important role in making shopping effective. It helps in making the company
more powerful and flexible. Technical advancement in the market has forced the company to
provide technical facilities to their customers and employees. Aldi has to provide new technical
equipment to the employees so that they can increase their productivity which affects overall
revenue of the company.
Legal factors:
Aldi has to follow all legal rules and regulations to maintain the peace and well
functioning of the company. The organisation has to provide suitable price products to their
customers by following all the legal rules of the government and different countries. Further, the
market of UK is very competitive for which the company found it difficult to enter in the market.
Environmental factors:
Environmental factors also plays an important role in maintaining the position of Aldi.
The company is forced to adopt sustainable approaches to increase their sale which cost them
very high and affects their budget (Hess and et.al., 2016). The organisation has developed
various strategies to provide hygienic and nutritional food to their customers so that they win the
confidence and trust of their customers.
1.3 Evaluation of usefulness of different methods by explaining BCG growth matrix, SPACE
and PIMS techniques
Aldi has used various business strategies to increase its performance. The organisation
has used BCG growth matrix to evaluate the usefulness of the techniques which it is using to
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develop its business. It helps Aldi to evaluate its market share and market growth rate. Further, It
has assisted the company to evaluate its brand portfolio and its capability. BCG matrix
categorises business portfolio on the basis of company's attraction and competitive position.
These two factors help Aldi to determine their profits in terms of cash which required to support
particular strategy or cash generated by it. BCG growth matrix helps the organisation to
determine the brand in which they have to invest more so that they can increase its sale in the
market (Khan, 2017).
SPACE matrix is used mainly to determine the status of Aldi. It has four quadrants which
performs different role. First quadrant help Aldi to determine its financial and industrial strength.
Second quadrant examines the company's competitive advantage. Third quadrant determines
environmental stability and fourth quadrant evaluates industrial strength and environmental
stability. This matrix helps the organisation to determine its strategic agenda. PIMS technique
helps Aldi to understand the market scenario and competition. It helps the organisation to
identify winning strategy and guides in diagnosing business problems. Furthermore, it assists
Aldi to understand the market scenario and competition.
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Illustration 2: SPACE matrix chart
(Source:Strategic Analysis: A Choice of Business Tools,2014 )

2.1 An audit and explanation of the current business strategies of Aldi
Aldi is a well-known supermarket brand, and is the 9th largest grocery retailer in Europe
by sales volume and currently hold 1% of the UK’s market share. This have beenachieved by the
adopting simple strategy of reducing company’s operational expenditure. This means purchasing
only one line per item from the supplier.
Strengths, Weaknesses, Threat, Opportunities, (SWOT) analysis: -
Strengths
 The company is the leader in the discount market sector and continues to hold its
position till today.
 Their stores are present in different countries which has allowed it to expand its
business.
WeaknessesThe organisation has wide variety of stores which they find difficult to manage.
 The retailers opening hours and operational period are somewhat different to those of
their major rivals.
Opportunities
 Redeveloping their brand logo would be a good way to re-established itself in the market
and to overcome that perception that Aldi is 'down market' supermarket (Engert and
Baumgartner, 2016).
 Produce in a modern and professional shopping environment.
Threats
 Threat of new entry.
 Risk of product development.
 Grocery inflation and commodity shortage.
The current customer related marketing strategy: - The company focuses on targeting a
specific audience where customers are more concerned and focused upon price rather than
quality of product. They have achieved this by developing an understanding that customer will
chose carefully before they decide to purchase a product or use a service.
2.2 An environment audit for Aldi
Porter's five force Analysis is discuss below: -
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Bargaining power of the customer: - Here the economic situation of a particular
geographical area as well as the purchasing power of the customer should be analysed before
starting a store. It also depends on the other competitor’s products and customer choices and
preferences.
Bargaining power of the suppliers: - Every organization have needs of raw material for
producing goods. Suppliers of Aldi has shifted their interest towards other competitors as they
provide raw materials at higher cost. Some low-price suppliers may not maintain good quality of
material. Supplier will shift towards other competitors if the company has low market share. So,
Aldi has to maintain their market share to attract more suppliers towards their company.
Threat of new entry: - Other Low-cost grocery stores are Walt-mart, or any local
farmer selling their home made fresh dairy product, vegetables, daily use basic items entering the
market can chew up Aldi's customer's and profit by providing fresh product at lower cost directly
to customers. Further, these competitors create problem for Aldi as they provide the best quality
of products at lower price (Business Model of Aldi PEST, 5 Forces, 2017). This will be the
biggest threat for the organisation as it leads to decrease in customers database.
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Illustration 3: Porter's five forces
(Source: Porter’s Model of Industry Rivalry (Five Forces), 2015.)

Threat of substitute product: - Threat from substitute product for the company is quite
less but can cause major problem. Aldi deals in the basic daily use items where the best quality,
fresh and organic products at low price is main factor but customer service could be an issue.
The best quality of product requires proper management so that it can be easily available to the
customers (Woodside, de Villiers and Marshall, 2016).
Competitive rivalry: - Woolworth, Coles is among the main competitors for Aldi in the
market. They entered in the market with good strategy such as higher package to employees as
compared to Aldi or
2.3 Assess the significance of stakeholder analysis for Aldi when formulating new strategy
Stakeholders plays an important role in maintaining the well-functioning of the
organisation. Stakeholder includes community of various people like customers, employees,
government, competitors etc. They force the company to take effective measures to increase their
productivity. Competitors impacts positively and negatively to the performance of the
organisation. They produce competition for the company by bringing different variety of
products at lower price. Positive impact of the competitors on Aldi is that they encourage the
company to develop better business strategies to promote their product in the market. These
strategies will further help the company to increase their profits.
Employees and customers also affects Aldi in planning its new strategies. The
organisation has to develop its products by keeping in view the choices and demands of their
customers. Further, employees provide their innovative views and ideas to increase their
productivity (Flessa, 2016). Workers interact more with their customers so they better know their
choices and demands. Therefore, they suggest various methods which the company can use
while implementing their new strategies.
Government also affects the policies and strategies of Aldi. High tax rates and interest
policies will affect the company's revenue and profits. They also affect the company's market
position. Further, high tax rate will force Aldi to increase the price of their products. This
increases the burden on the company as well as the organisation. This is because high price of
the products will discourage the customers to purchase the product of Aldi and they will be
attracted more towards the products and services which are available to them at lower rates. On
the other hand, if the company provides their goods and services by reducing prices to customers
then they have to suffer loss and this will affect their overall profits and income.
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2.4 New strategy of Aldi
Aldi has focused on increasing their sale by developing 'low price product development'
strategy. Mission of developing this strategy is to increase their volume of sale by providing the
best products to the customers at reasonable rates. Vision of the company is to provide high
quality products to their customers at low prices. The organisation believes that low price of the
products will encourage the customers to buy more products which helps them to increase their
sale. Further, branded products with low price will attract more customers (Zhao and et.al.,
2017). It also helps the organisation to win back the confidence of existing as well as new
customers.
The main objective of making this strategy is to make effective position in the market and
giving tough competition to their competitors. Aldi believes that their market value will increase
if they achieve customers satisfaction. Further, they have adopted team building strategy to
increase their productivity. Aldi has divided its tasks in different teams so that they can achieve
their targets on time. Effective team will help the organisation to improve its performance by
understanding the needs and demands of their customers. Further, Aldi has given focus on
developing technical facilities to their customers and employees. The organisation has developed
its own website which helps the customers to know about their offers, services and ratings of the
company (Kew and Stredwick, 2017). Company has also provided home delivery services to
their customers which helped them in easily accessing the products of the company at lower rate.
Task 2
3.1 Analysing appropriateness of suitable strategy
Market entry growth:
Organic growth:
Organic growth helps in determining the actual progress of the company. The company evaluates
its progress by making progress reports. It helps the company to know its profits and revenue.
Merger:
It is the method in which two companies come together and act as a single entity.
Acquisition:
This takes place when the company buy 100% ownership of another organisation. Small
companies use this approach in order to develop its products and enter in new market.
Strategic alliance:
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Strategic alliance occurs when more than two companies share their valuable assets and
property to each other in order to achieve the common goal (You and Barry, 2016). This will
help both the companies to increase their sale and profits.
Limited Growth:
Many uses growth strategy to explore their business which is dependent on government rules,
financial condition and competition.
Market penetration:
In this strategy, the company will try to increase their market growth by protecting its
customer base. The organisation uses this strategy when it wants to enhance sales of its products
in the existing market. Market share can be increased by reducing the prices of products.
Market development:
It provides new opportunities and development chances with different customers which
helps the company to increase their market share. Market development strategy uses different
methods to sell their current goods in new market. This strategy is used by the company to
increase their sale and opportunities to develop more in competitive market.
Product development:
It helps in expanding the range so that business can be diversified. This helps in
increasing the long-term profit for the company. In this the organisation uses different methods
to increase the publicity of their products. The main aim of adopting this strategy is to improve
their sale and profits.
Aldi has adopted limited growth strategy as it helps the company to increase its revenue.
This strategy is appropriate as provides various opportunities and chances to the company to
grow their business. It also helps the organisation to increase its product range by developing
various business strategies. Limited growth strategy allows the product development strategy of
the company to develop its popularity in the market (Tidy, Wang and Hall, 2016). Aldi is
grocery retail company in UK which has focused on increasing its sale by providing the best
products at lower price. Further, the organisation has developed product development strategy
which helped them to increase their business in other countries as these strategies have gained
popularity from the people of other regions. This strategy is useful in new market where the
company has tried to develop its new business. It is an effective method to attract more
customers and increase the sale.
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3.2 Justification of limited growth strategies for market entry and growth
Limited growth strategy is helpful for Aldi to diversify its business. This strategy helps
the organisation to increase their economic scale and prevents the company from massive debt.
This strategy helps the company to increase their market position and profit margin. This
strategy is adopted by Aldi to manage their activities in effective manner. This will help the
company to enhance their performance and increase their sale. The great advantage of using
growth marketing strategy is to give tough competition to the competitors and increase their
position. Further, the organisation has increased its revenue by giving them tough competition.
Further, product development strategy is proved to be helpful for the company as it ghas
attracted more customers to purchase their brands (Haleem and Jehangir, 2017). Aldi has
provided discounts, offers and best services at lower price which has helped them to increase
their sale.
Growth strategy has provided big picture not only to the employees but also their
customers. Consumers believe that big firms provides real products at lower price and with
smaller firms there is chance of selling duplicate products. This strategy has increased the
customers' confidence and trust towards the goods and services of Aldi which in turn help the
company to increase its customers base. The organisation has adopted this strategy as it gives
various chances to grow more in new as well as existing market. It also helps in increasing larger
turnover though it depends on overall profit (Brunvall and et.al., 2016). Further, it reduces risks
from technical advances and external factors. Moreover, this strategy is adopted by the company
as it helps in making more secure business and profits.
Task 3
4.1 Assessing the roles and responsibilities of personnel which are involved in strategic planning
Various people of Aldi are responsible in making the strategic plans. It involves top
management, team leader, employees and human resource management. Top management looks
after all the progress reports and takes care in providing essential tools and resources to their
employees. It also looks after trends and choice of the market. It ensures that all the activities of
the business are performing well or not. The company can increase its sale if all these people will
seriously perform their duties and responsibilities. Further, middle management plays an
important role in setting strategic plan. The organisation can increase their productivity and sale
with the help of business strategies (Zentes and et.al., 2017). Middle management observes the
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functioning of the organisation and report its activities to top management. This report will help
top authority to determine the problems and critical situations of its employees. It also
determines the requirements of developing new strategies in the organisation so that they can
increase their productivity.
Team leader leads and guides their employees in achieving their goals and long term
tasks. They encourage their employees to solve their problems in innovative way. Further, they
also appreciate their employees for their outstanding performance which increases their
confidence which leads to their better performance. Further, team leader also resolves conflicts
among the employees and encourage them to work efficiently. Further, it helps in managing
time and accomplishing the task on time. All this helps the company to achieve their long term
objectives and goals. Therefore, team leader helps in improving the performance of their
employees which is very important in making effective strategies.
Aldi allows its employees to participate in providing their innovative ideas in making
effective business strategy. This helps the organisation in developing strong strategies so that can
make effective position in the market. Employees interact more with their customers and they
better know the areas in which customers are facing problems. Further, they also know the
demand and choice of the customers. So, their participation is very important in making different
decision and making better business strategy.
4.2 Analysis of the resource requirements for the implementation of new strategy
In order to grow the business, it is very necessary for Aldi to increase their business the
main resources it requires while implementing new business strategies are funds, technical
equipments, employees and time. The organisation has to provide various technical equipments
and purchase different software for their company so that they can decrease the cost and increase
their productivity (Santos and et.al., 2017). Technical advancement in the company is very
essential as in today's era, most of the people are using internet and believes in purchasing the
products online.
The organisation also requires funds for implementing their business strategies. They
have to arrange funds for investing in implementing new products and services in new a s well as
existing market. This creates problems for the company as it has to arrange large amount of
money and they are not sure that their business strategy will lead to success or fails. The
organisation requires manpower to diversify their business and increase their productivity. They
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require skilled and talented workers which can easily handle their customers and increase their
productivity. Further, the organisation has to implement their strategy on time. Time
management is very necessary for Aldi to consider as it will help them in meeting their goals and
objectives. Moreover, Aldi has to accomplish their task on time in order to make their business
strategy successful. Completing their projects and tasks on time will increase the customer's
confidence and trust which in turn help the organisation to increase their sale. Organisation has
to implement their strategy on proper time so that they can increase their performance and
productivity.
4.3 Evaluating contribution of SMART targets in achieving the strategic objectives
Smart targets helps Aldi to perform better and diversify their business in right manner.
They help in achieving their long term objectives and profits. Smart objectives encourages the
organisation to increase their position and develop the quality and brands of their products. The
main role of setting target is to achieve the goals on time so that they can successfully implement
their strategies in the market and give competition to their competitors (Brunvall and et.al.,
2016). The organisation has also made different targets to win back the trust of their old and new
customers and increase their database.
Smart target must be realistic and proper so that they can properly direct the effective
path to the company in making correct decisions. Further, this targets helps employees to face
challenges and risks and also guides them how to handle critical situations. These smart targets
also helps top management authorities in understanding future goals and challenges (Kew and
Stredwick, 2017). They help the organisation to make progress and implement their strategies on
time. Smart targets are created before launching new projects so that Aldi can effectively
accomplish their long term goals and objectives.
CONCLUSION
Summarizing above report it can be concluded that business strategy is very important for
Aldi to achieve its desired goals and objectives on time. It guides the organisation to enhance
their performance and productivity. Vision, mission and core competencies of the organisation in
developing the business strategies are discussed in this report. Political, legal, economic, social,
technological and environmental factors are evaluated in formulating in new strategy of Aldi.
Further, organisational audit and current strategic position of the company is discussed. Porter's
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five forces are discussed to carry out environmental audit for the firm. Importance of employees,
government, senior authority etc. are assessed in implementing new strategy.
In this report, new product development strategy for Aldi is created which helps them in
increasing their sale and profits. Further, growth strategy is used by the company to increase
their productivity. Justification of growth development strategy is given. Additionally, different
roles and responsibilities of top management, team leaders, middle management authority and
employees are discussed in this report. Resources like funds, technical equipment and other
valuable resources are analysed. Moreover, evaluation of Smart targets contribution in achieving
company's goals and profits is done.
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Santos, R. R. D. and et.al., 2017. Model for formulating competitive strategy: the supplementary
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Sia, S. K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS
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