Business Strategy Report for Aldi: PESTLE Analysis, Porter's Five Forces Model, Ansoff Matrix, SAF Strategy Model

This report provides a comprehensive analysis of Aldi's business strategy including PESTLE analysis, Porter's Five Forces Model, Ansoff Matrix, and SAF Strategy Model. It also includes an international and innovation strategy, directions and methods, and stakeholder analysis.

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Business Strategy
Report
7/25/2018
Student Name

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Contents
Introduction...........................................................................................................................................2
Task 1....................................................................................................................................................2
Pestle Analysis..................................................................................................................................2
Porter’s Five Forces Model................................................................................................................4
Stakeholder analysis..........................................................................................................................5
Task 2....................................................................................................................................................7
Ansoff Matrix....................................................................................................................................7
International and Innovation strategy................................................................................................8
Directions and methods.....................................................................................................................9
SAF strategy Model...........................................................................................................................9
Outline of the action plan................................................................................................................11
Conclusion...........................................................................................................................................12
References...........................................................................................................................................14

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Introduction
Albrecht Discount Inc., globally known as Aldi is a German-owned discount supermarket
chain. Aldi opened its first supermarket in Ireland in 1999. Aldi is considered the market
leader in industry of international grocery retailing, owns, and drives chain in the discount
grocery stores in Europe, Australia, and the United States. The company is dealing in retail
stores and supply chain merchandise and food including meat products, frozen and
refrigerated food, sweet and snacks, dairy and bakery products, beverage and pantry products
in addition to the home care and personal care products. The company does not disclose its
sales or profits in Ireland. The company has over 10000 stores worldwide. The company has
a turnover of more than Euro 1.3 billion turnovers with more than 3500 employees, which are
performing at their best level (Aldi, 2018).
In present Aldi is using the analysis, which is done to identify and evaluate the strategies,
which can operation in the business environment. These strategies are used by the company
to evaluate the strategic options available to the company. The strategy used while evaluating
Aldi performance and strength includes the Ansoff matrix and SAF strategy. In this, the
company competitive advantage can be evaluated and analyzed. These strategies help to
identify the direction and methods used by the company and if there is any deviation in the
expected performance, corrective measures will be taken (Kiplinger, 2018).
Task 1
Pestle Analysis
Economic factors
The slowdowns in the economy in the developed countries found to be affected by the crisis.
The industry and customer both are affected due to the less purchasing power in economy.

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This is the reason Aldi starts giving the products on discount so that more goods can sell in
the market. Larger revenues, as well as the market share, will be grabbed by the company
(Pestle, 2013).
Social and cultural factors
In society, nowadays individual become socially responsible and wants the company to
remain responsible towards the society. Consumer tries to purchase the goods from retailers
who are adopting the sustainable practices. Aldi also tries to adopt the socially responsible
activities to remain competitive in the market (Drucker, 2014).
Technological Factors
Technology is altering the method consumer’s shops retail products and the way retail
businesses function in bad and good ways. Technology has been improved in the market by
using the mobile phones and commerce media, which provided the benefit to the retailer to
interact with the customers and give them more knowledge about the services. A company
like Aldi is using the Radio Frequency Identification Device (RFID) to facilitate end-to-end
tracking of ingredients and better stock control through business intelligence tools
(Shanmugam, 2013).
Environmental Factors
Aldi has increased the use of eco-friendly packaging in providing the products from their
store. The company has prompted to not to use the polythene bags in their business and try to
reduce the amount of pollution in the environment (Pestle, 2013).
Legal Factors

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Aldi is following the Australian Common Law in its business. Company is abiding by the
laws and legislation in Australia. Aldi is trying to maintain better relationship with authorities
so that there will not be any restriction from Australian Retailers Association (Kolios and
Read, 2013).
Porter’s Five Forces Model
Bargaining power of Suppliers
The buyers in the supermarket are found to have the low negotiating power due to the
presence large sellers in the market. The industry of grocery retail, supplier’s fear to lose their
contracts in business as there is the large availability of the supermarkets. This gives Aldi the
power to get the products from sellers at lowest likely prices to recover its profit margins
(West, and Bogers, 2014).
Bargaining power of buyers
Aldi customer is found to have the high negotiating power due to the low exchanging cost in
shopping among the low priced supermarkets like Tesco, Asda. These are major competitors
of Aldi and give the extensive choice of food retailing consumers. Lot of power has been
given to choose between numerous supermarkets when shopping around, which is exactly
what they do (Dobbs, 2014).
The threat of new entry/Barriers to entry
In the UK food retailing industry, the entry of new entrants is found to be the relative case
with which many firm can enter the market of food retailing. The only threat is of the big four
present in the market. Aldi has managed to compete with big four by introducing the strategy
of offering the discounts up to 40% below the competitor’s prices for related products (Gawer
and Cusumano, 2014).

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Threat of substitutes
In the grocery market, the threat of substitutes is found to be high for food items. As Aldi has
not specific in products or services, the products, which are offered by the Aldi, can be found
at other supermarket stores also. The only change between the Aldi is that they offer the
product at a very low cost (Porter and Heppelmann, 2014).
Competitive Rivalry
The rivalry in the retail industry is found to be intense in nature. As all the players are
offering almost the same products and services at the same price in the market. Woolworth,
Coles, and Wal-Mart are some of the competitors of Aldi. In addition, the company drives on
the principle of reducing fixed costs just like all of its competitors. Thus, the rivalry in the
sup[ermarket industry is found to be high and intense in nature (Yunna and Yisheng, 2014).
Stakeholder analysis
Keep Satisfied
The stakeholders are engaged in and consult on the interest area of their stakeholders. These
interests include safety measures in a food item, the system of delivery in business. In Aldi,
the shareholders are found to become the key player and want to shifts to the right
(Sutherland, 2014).
Manage Closely
In this, stakeholders are the key players in the market and try to remain in this group. Aldi
stakeholders are involved in the decision making of the business to remain updated the
performance of the company. Aldi shareholders have also involved themselves in the
governance and social responsibility top remain the positive image of the organization in the
mind of the public. The employees of the company become the key player. As they are, found

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with the more power and can hinder the performance and implementation of the new strategy
(Telegraph, 2018).
(Source: Moriarty, 2014)
Monitor
The Aldi stakeholders are not finding to least informed about the happening in the business.
The stakeholders are finding to inform by the company in every step performed by the
managers. However, in this step, the information transferred through the newsletter, website,
and emails shots (Hörisch, Freeman and Schaltegger, 2014).
Keep informed

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The requirements and needs of stakeholders are taken as a priority by Aldi. Products are
made according to customer needs and requirements. In this, stakeholders are keeping
informed about activities and operation, which are done, in the near future by the
management. This will increase the goodwill of the business (Bridoux and Stoelhorst, 2014).
Task 2
Ansoff Matrix
Market Penetration
Aldi should open new retail stores and put their attention on developing different types of
customers. Aldi is targeting the different set of customers ranging from high class to the
middle class by offering a large variety of products. The company is making the loyal
customers by introducing the loyalty cards to them. Aldi must make the initiatives towards
introducing the sponsorship of sports (Gregor, and Hevner, 2014). The next target of Aldi is
to continue growing in the UK. Moreover, the company is planning to open new outlets and
emphasis on different target customers, not only from social backgrounds.
Product development
In this, the company tries to develop the new product in the existing market. Aldi tries to put
its cost lower in the market to have the large assorted area. Introducing the new product by
Aldi increases their revenues in the future. Aldi is also planning to introduce a new delivery
system that will satisfy the customers and put their focus on quality (Alstete, 2014).
Market development
In this, Aldi is trying to cover and capture the new market by offering the existing product. In
future Aldi is planning to internationalize its product overseas. Moreover, the company is

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planning to explore its business in a different sector of the market to grow their business
(Zeschky, Winterhalter, and Gassmann, 2014).
Diversification
This strategy is considered risky in nature. The company is planning to diversify its product
range. The Aldi success in the market depends on introducing new lines and service of
product s in their business operations. In addition, to gain, the large market in near future, the
company is trying to emphasis on offering a broader range of products to attract the
customers in Australia (Proctor, 2014).
International and Innovation strategy
From the analysis, it can be evaluated that the international strategy of Aldi from the example
of the UK, also taking into accounts the international background. Therefore, the study
proposes that Aldi position in the market is very sturdy. As related to its competitor Lidl and
Tesco, Aldi has the biggest market share. Moreover, Aldi is found to more receptive in the
local market to grab the large area not only in the UK but also to another market where it
operating its business. In the strategy adopted by Aldi, focus is given on providing the
product at a low cost and low price. The environmental protection is also taken care by the
Aldi by focusing on reducing the carbon footprint emissions (Ferrero, Hoffman and McNulty,
2014).
The recent innovation done by Aldi includes using the environment-friendly approach to
attract the customers. In this strategy, the company focus on providing the positive e
contribution towards local communities and provide efficiency in Health and Nutrition of
their customers. Various sustainable strategies are used by the company to create a large
customer base while manage to producing their innovations (Feedough, 2018).

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Directions and methods
(Source: Learning Centre, 2010)
The Johnson and Scholes suitability, feasibility, and acceptability model have been used in
evaluating the strategic evaluation and selection of resources.
SAF strategy Model
Suitability
From the PESTLE analysis, it can be analyzed that the political and economic factors are in
the favor of Aldi Company as they are providing the products at low cost to the consumer,
which increases their market in the market. Customer and market demand also plays an
crucial part in the suitability analysis. In the UK, Aldi has many opportunities to explore in
the market and have the ability to face the challenges present in the market in the form of
competitors and political instability in the environment (The Irish Times, 2018).

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Another strategy that is Porter's five forces model can be used to determine the suitability of
the strategic choice in the market. The company is using its strength to remain competitive in
the market. Aldi is considered the low-cost provider in the market. This is considered to be its
biggest strength which will work anywhere in the country (Learning Centre, 2010).
Feasibility
Feasibility focuses on the inside abilities of the company. The internal capability of the
company lies in 6M, which are money, manpower, machinery, market, material, and makeup.
From these factors, Aldi is finding to have the money, manpower, material, machinery, and
market which make them survive and sustain in the environment for the long span. From the
Ansoff matrix, it can be analyzed that Aldi has the fast production in its operation and uses
the concept of economies of scale, which makes per unit cost of product low (Learning
Centre, 2010).
Feasibility can be analyzed checked by the market area covered by Aldi in the UK and
targeted market. From the PESTLE and porter five forces analysis, it can be evaluated that
the company is growing and able to increase its market share while providing the good
services to their customer.
Acceptability
Acceptability focuses on the other two concepts of the strategic choices, which are related to
stakeholders and financial aspects. From the stakeholder’s analysis, it can be evaluated that
the stakeholders of Aldi are found to be satisfied with the information given by the company.
The employees in the company become the key player with high power and this group can
hinder the overall performance and implementation of the strategies (Oxford, 2018).

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Outline of the action plan
Activities Objective Action Strategies
Goal/objective of
Promotion
Increase brand recognition,
and growth in sales
Advertisement through T.V
and introduction of loyalty
cards
Responsible Team Increase in sales The company focus on
increasing the sales by
offering discounts and other
schemes. The marketing
department will be
responsible to create
attractive messages to spread
knowledge about the
company and products.
Increase in market share Offering Quality and
reasonable products
By providing the product at a
low cost
Time period To establish and promote
sales in other countries
possible
6 Months
Review of Action plan To identify the deviations in
the plan
Managers will properly track
the progress of the plan and
will make changes wherever
possible.
Implementation Successfully implementing
the plan in order to grab sales
Promotion of the product will
do through communications

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from the target market channel under the guidance
of marketing team.
After implementation
review
Review of the customers, an
increase in the sales
Checking the effectiveness
and success of the plan
Conclusion
From the above discussion, it can be concluded that the supermarket chain is considered one
of extremely focused and competitive markets. Aldi is competitng with the companies like
Woolworth, Asda, and Tesco. Despite competing with these big firms, company has been
found to establish the market in which created values are served to its customers. The overall
strategy choice and implementation of strategy done by the Aldi is found in favor. From the
PESTLE analysis, it is evaluated that factor like political, economic factors and
environmental factors are in favor of Aldi and company can run its business while capturing
the large portion. From porter five forces, it is evaluated that the buyers have the bargaining
power in the market, which makes the company lower their prices but has less threat for the
substitutes and new entrants. As all competitors are selling the same products and services.
From stakeholder’s analysis, the stakeholders are informed well about the services and new
strategies implemented by the company but one of the stakeholders that are employees found
with the high power, which can harness the implementation of new strategy, by Aldi. The
company is moving in the direction where it has a competitive advantage in the market by
lowering the cost of its product. Aldi positioned itself in the, market as the low cost provider
from which the market penetration can be done. This strategy is also useful for

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internationalising the business. By using SAF strategy, it can be evaluated that Aldi is
acceptable in the market.

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References
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[Accessed on: 23rd July 2018]
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Drucker, P. (2014) Innovation and entrepreneurship. Oxon: Routledge.
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