Aldi's Global Expansion Strategy

This assignment analyzes Aldi's core competencies and strategies that have driven its success. It examines Aldi's unique business model, emphasizing its focus on low prices and operational efficiency. The assignment then explores the potential for Aldi to expand into India, outlining key factors for a successful entry strategy, including market analysis, localized offerings, and partnerships.

Contents
INTRODUCTION.......................................................................................................................................3
1.1 EXTENT TO WHICH ALDI’S MISSIONS, VISIONS, OBJECTIVES, GOALS, CORE
COMPETENCIES INFORM STRATEGIC PLANNING...........................................................................3
1.2 FACTORS TO BE CONSIDERED BY ALDI WHEN FORMULATING THEIR STRATEGIC
PLANS........................................................................................................................................................4
1.3 EVALUATE THE WORTH OR USEFULNESS OF TECHNIQUES USED WHEN BUSINESSES
DEVELOP THEIR STRATEGIC PLANS..................................................................................................4
2.1 ORGANIZATIONAL AUDIT FOR ALDI AND PROVIDE AN ANALYSIS OF THEIR CURRENT
STRATEGIC POSITION............................................................................................................................5
2.2 ENVIRONMENTAL AUDIT FOR ALDI BY THE USE OF PORTER’S 5 FORCES ANALYSIS....6
2.3ASSESS THE SIGNIFICANCE OF STAKEHOLDER ANALYSIS FOR ALDI WHEN
FORMULATING NEW STRATEGY........................................................................................................7
2.4 USING THE RESEARCH AND INFORMATION COLLECTED ABOUT ALDI, PRESENT A
NEW STRATEGY ALDI CAN FOLLOW.................................................................................................7
3.1 ANALYSES THE APPROPRIATENESS OF SUITABLE STRATEGY FOR ALDI IN RELATION
TO SUBSTANTIVE GROWTH, LIMITED GROWTH OR RETRENCHMENT......................................8
3.2 PROVIDE A JUSTIFICATION OF LIMITED GROWTH STRATEGY THAT YOU HAVE
DISCUSSED IN 3.1....................................................................................................................................9
4.1 PROVIDE AN ASSESSMENT OF THE ROLES AND RESPONSIBILITIES OF PERSONNEL
WHO ARE INVOLVED WITH THE IMPLEMENTATION OF THE STRATEGY.................................9
4.2 PROVIDE AN ANALYSIS OF THE RESOURCE REQUIREMENTS FOR THE
IMPLEMENTATION OF THE STRATEGY...........................................................................................10
4.3 EVALUATE HOW THE USE OF SMART TARGETS CAN CONTRIBUTE TO ACHIEVING THE
STRATEGIC OBJECTIVES.....................................................................................................................11
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INTRODUCTION
Business environment is the sum total of all the factors being internal and external that
impact the overall working of company (Voigt, Buliga and Michl, 2016). Hence in this regard
the need of the company is to make use of strategies so that business can be run in proper
manner. This is essential as strategizing aids in long term future sustainability of business
(Verbeke, 2013). The present report has thus made an attempt to study the business strategies of
Aldi. Here emphasis has been made on carrying out a proper assessment with respect to mission,
vision, goals; conducting organizational as well as environmental audit. This is followed by
evaluating the strategy of Aldi to make an entry into Indian market followed by making the
strategic choice and carrying out its successful implementation.
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1.1 EXTENT TO WHICH ALDI’S MISSIONS, VISIONS, OBJECTIVES, GOALS, CORE
COMPETENCIES INFORM STRATEGIC PLANNING.
 Mission – The mission statement of Aldi is providing top quality products at incredibly
low pricing.
 Vision –With respect to the vision statement the company wants the shoppers to live rich
lives in lesser amount.
 Goals and objectives – As per its goals, it wants to provide the consumers with products
that can be bought regularly and also make sure that they are of high quality and low
prices (About Aldi, 2017).
Core competency – Adherence to Cost leadership strategy
Low pricing but quality products
Keeping the cost of company as low as possible (Aldi supermarket core
competencies, 2017).
The above given core competencies has aided in strategic planning of Aldi as the
company tries to maintain a strict focus on price. It further keeps limited stock of items
that are of high quality which can then be offered so as to set competitive prices thereby
doing justice to the overall mission. Focus is also given on own brands followed by
keeping small store size, labor cost and no marketing to save on cost factor. In this way,
the company ensures that consumers have a presence of a smarter way to shop and the
firm is also able to attain the leadership status on the basis of prices that are offered to the
consumers (Ododo, Mulholland and Turner, 2015). Moreover, the stores are also small in
size hence it is easier to find them by the consumers. This is followed by keeping the
store design simple but efficient one which can assist in saving the overall logistics cost
with the help of shelf management. It further focuses on not keeping casual staff and the
normal staff is also less in number which aids in providing comparable salaries. This
strategy then contributes to higher profit margin for the company (Aldi supermarket core
competencies, 2017).
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1.2 FACTORS TO BE CONSIDERED BY ALDI WHEN FORMULATING THEIR
STRATEGIC PLANS.
There is a presence of varied factors that are required to be considered by Aldi when it
makes the strategic plans. These can be explained with the help of Ansoff matrix.
 Market penetration – when focusing on strategic planning, Aldi is required to sell
products in existing market which can be done by increasing market share of current
products; undertaking aggressive promotion to drive out the competitors or introducing
loyalty schemes (Butler, 2017).
 Market development – in this strategy, the firm can sell products in new markets by
starting operations in a new nation, introducing new product dimension or distribution
channel or adhering with different policies so as to attract the consumers.
 Product development – this may involve for introducing new products into the market or
modifying the existing ones so as to appeal the masses.
 Diversification – this can entail for introducing an entirely new product for new market
but only after a thorough assessment of the risk factors involved in it (Voigt, Buliga and
Michl, 2016).
1.3 EVALUATE THE WORTH OR USEFULNESS OF TECHNIQUES USED WHEN
BUSINESSES DEVELOP THEIR STRATEGIC PLANS
Various techniques can be used for strategic planning by firm and one such is BCG matrix whose
overall worth or usefulness has been discussed below;
As a part of its strategic planning, Aldi is planning to make an entry into India the company may
focus on launching its star products and concentrate on bringing an improvement in the cash
cows so that they can be launched in India with some modifications. They should not launch
products in the category of dogs and question mark in India as they have low growth potential as
well as market share (Gassmann, Frankenberger and Csik, 2016).
SWOT analysis can further be used as strategic planning by Aldi as it can concentrate on its
strength of good brand image all over the world while launching itself in India. Moreover the
presence of quality products and affordable pricing is also going to help in successful entry. It is
however required to work on its weakness within Indian market and convert them into strength.
This can be done by making the interiors of store attractive one and increasing the staff members
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in every store so that they are able to serve the indian consumer in a better manner. As an
opportunity within Indian market Aldi is required to focus more on advertising so as to beat the
existing competition (Parnell and et.al., 2017).
2.1 ORGANIZATIONAL AUDIT FOR ALDI AND PROVIDE AN ANALYSIS OF THEIR
CURRENT STRATEGIC POSITION
Organizational audit for Aldi can be done by the usage of Porters generic strategies that is most
likely to assist in finding out its current strategic positioning.
 Differentiation focus – Aldi has been able to differentiate itself from competitors such as
Tesco, Asda etc. by targeting middle class people who focus on pricing as a buying factor
rather than quality. This creates excellent value for money deal for the consumers.
 Cost leadership – Aldi as a supermarket chain offers products at lowest possible prices by
working on approaches being low price philosophy and no frills. This is attained by
ensuring towards minimal operational cost through strategies such as keeping the goods
directly from warehouse to store (less transport cost) (About Aldi, 2017). There is further
a presence of checkout system at Aldi which avoids the issue of long queues and is also
efficient in spite of the less number of staff (Alon and Lattemann, 2016). The saving thus
made by the company is then passed on to the consumers. This makes Aldi as a low cost
producer and consumers thus gets offerings at fairly low prices followed by attainment of
profit which provides them a competitive advantage over the rival firms.
The above two strategies has already been applied by Aldi however there is a need to apply
differentiation focus strategy wherein the company can try to exploit special needs of certain
buyers such as old aged people by offering them products as per there need.
2.2 ENVIRONMENTAL AUDIT FOR ALDI BY THE USE OF PORTER’S 5 FORCES
ANALYSIS
 Threat of new entrants – This threat is very low for Aldi as the cost of building a brand as
powerful as the company is very high. Moreover building of a high retail estate network
as well as stock levels involves for significant amount of investment. Small and new
stores almost end up as being merged or acquired by larger companies.
 Threat of substitute products - This threat is moderately medium or even high for Aldi as
the company offers a very narrow range of products to the consumers and also has a
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presence of limited stores which keep less number of offerings (Voigt, Buliga and Michl,
2016). Substitutes in this regard can be the ones offered by larger stores and those with
more product range such as Tesco.
 Bargaining power of suppliers – the retail industry where Aldi operates is full of suppliers
that are ready to meet the needs of firm. Hence they are also ready to offer discount and
keep favorable terms with retail firms like Aldi (Parnell and et.al., 2017).
 Bargaining Power of Buyers – this threat is very high for Aldi as most of the store outlet
lie close to each other and thus consumers do not have to put much effort while switching
from one to other brand (Zhang, Zhou, Zu, 2015). Large number of stores offers loyalty
schemes to consumers but Aldi does not have much to offer as it already offer reduced
prices to consumers which increasing buyer bargaining power.
 Rivalry among Existing Firms - the amount of rivalry in between these firms is of a very
fierce nature as all the players compete at same price and also offer similar products in
the industry. Hence, Wal-Mart, Cole, Tesco etc. are some of the notable competitors of
Aldi (Gassmann, Frankenberger and Csik, 2016). Market campaigns are also aggressive
in nature which is done with a view to snatch the market share from each other.
Although, Aldi tries to keep marketing, advertising, fixed cost and prices low one but still
the rivalry is very high.
2.3ASSESS THE SIGNIFICANCE OF STAKEHOLDER ANALYSIS FOR ALDI WHEN
FORMULATING NEW STRATEGY
Stakeholder analysis is the process by which information can be gathered as well as analyzed
systematically while developing a plan or even implementing a policy or program. This process
plays a key role while formulating a new strategy such as making a successful entry into India by
Aldi. This is as the management gets to know about overall viewpoints of stakeholders with the
help of which strategic planning can be done. For example, consumer reaction within Indian
market can also be gauged with respect to goods offered by Aldi and they can then be satisfied
by working on what products are to be introduced in the country. Stakeholder analysis further
aids in creating a satisfied set of employees so as to maintain the overall long term sustainability
by understanding what they expect from the management of Aldi. In the same manner, analysis
of the stakeholders in form of government, community and suppliers is are required so that no
issue arrives from their part (Ododo, Mulholland and Turner, 2015).
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2.4 USING THE RESEARCH AND INFORMATION COLLECTED ABOUT ALDI,
PRESENT A NEW STRATEGY ALDI CAN FOLLOW
New stratregy of Aldi – making an entry into Indian market.
Where we are now - As of now, the company has good presence in around 18 nations with a
presence of more than 10,000 stores and a complete turnover of 50 billion Euros (About Aldi,
2017). The mission and vision statement is also great for making an entry into Indian market
which all revolves around providing low priced but high quality product. The operation of the
company is further based on three core values which is of consistent operations, simplicity, as
well as responsibility. These values are most likely to support its operations in the Indian market.
Where are we going – The competitive advantage of Aldi lies in the efficacy of overall business
operations by which the company is able to minimize cost so as to provide the consumers with
value for money products. This is also the core purpose of Aldi which is to provide value and
quality to the shoppers by maintaining fairness and efficiency in whatever is done by them. It is
because of this competitive advantage of efficiency that the company is able to invest the profits
back into business (Pieper, Astrachan and Neglia, 2016). As of now the company is heading
towards the direction of opening up a new outlet in India so as to fulfill the goal of market
penetration and also increase the overall sales volume
How we will get there - In order to reach at this stage, the need is to carry out a thorough analysis
of Indian retail market in terms of consumer needs and preference, competitor analysis,
government regulations, legal requirements among others (Parnell and et.al., 2017). Then the
requirement is to match the environmental analysis with the internal strengths and core
competencies of Aldi.
3.1 ANALYSES THE APPROPRIATENESS OF SUITABLE STRATEGY FOR ALDI IN
RELATION TO SUBSTANTIVE GROWTH, LIMITED GROWTH OR
RETRENCHMENT.
There can be use of limited growth strategies by Aldi in order to ensure towards success of
businesses venture in Indian market. The very first strategy that can be followed by Aldi in
limited growth for Indian market is of market penetration. Here the aim is to increase the sales of
existing product offering that are there in other nations. This is required so as to garner a
substantial market share in Indian retail sector thus be able to compete with rival firms in a better
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manner. Aldi in this regard is required to focus on promotional strategies such as advertising
wherein emphasis can be given on impersonal presentation of its brand on TV, newspaper, radio
etc (Gassmann, Frankenberger and Csik, 2016). This will aid in increasing the brand awareness
of the consumers who are then most likely to get attracted by low pricing that is already offered
by the company (Lee and Vachon, 2016). It can further make use of printed leaflet in stores;
posters etc. so as to emphasize on the core message being low price but high in quality. Social
media websites can further be used by company so as to interact directly with consumers so as to
garner there critical feedback.
The next strategy that can be followed in this regard is of market development where the need of
Aldi will be to focus on its exiting competency being low price and increased quality. However,
other than this, the company will also be required to give increased emphasis on developing new
competencies so as to serve the needs and requirement of Indian consumers. The competency in
this regard will be to focus on use of technology to connect with suppliers, partners as well as
consumers (Voigt, Buliga and Michl, 2016). This is as the company will open its branch in metro
city only for the first few years. The need is to adapt technology which is usually used by metro
population. The technology can be in form of maintaining inventory, billing among others. One
such can be in terms of introducing pick up tower where clients can order online and go to stores
at Wal-Mart for picking the goods that are stored in tower with their order as well as name
(Ododo, Mulholland and Turner, 2015). This will aid in reducing the billing time to a great
extent.
Product development strategy can further be used by the company where need will be to launch
new products in the Indian market. This can be done by investing in market research so as to
identify needs and requirements of Indian consumers with respect to retail products, investing in
research and development technology to build in new products; buying product from suppliers
and branding it as their own (Parnell and et.al., 2017).
3.2 PROVIDE A JUSTIFICATION OF LIMITED GROWTH STRATEGY THAT YOU
HAVE DISCUSSED IN 3.1.
As discussed above the usage of market penetration strategy through promotion and low price is
most likely to provide the company an increased awareness among the consumers followed by
enhancing the product demand as well as overall market share. Moreover as best prices will be
offered by Aldi within Indian market hence consumers will be lured towards the brand more.
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This is most likely to create a higher impact in the minds of consumers. In the same lines;
utilizing a successful combination of market and product development strategy, the company can
make itself as an industry leader (Davies, Jones and White, 2016). There can be an expansion in
overall consumer exposure followed by providing an increased recognition to the company as
well as product name in the minds of consumers. Most importantly these of product development
strategy are likely to create a culture within company thereby making the brand as an innovative
one. It can aid in generation of higher value proposition as making of new products is most likely
to assist in meeting overall consumer needs which in turn may led to creation of repeat buyers,
positive word of mouth publicity followed by high revenues.
4.1 PROVIDE AN ASSESSMENT OF THE ROLES AND RESPONSIBILITIES OF
PERSONNEL WHO ARE INVOLVED WITH THE IMPLEMENTATION OF THE
STRATEGY
Varied roles as well as responsibilities are required to be played by the personnel of Aldi who are
involved in the process of strategy implementation of making a successful entry into Indian
market. These are at varied levels that are described as under;
Top level management – This will involve for the team of managing directors, CEO as well as
board of directors that will play a key role in giving strategic objectives as well as direction for
Aldi as to how it can make an entry into India (joint venture etc.) (Voigt, Buliga and Michl,
2016). Their role will further be to communicate with government and media present in India
through press release so that important decisions can be communicated.
Middle level management - this will involve for regional heads who will focus on fixing
resources such as infrastructure, finance, allocation of human resources so that operations can be
carried out. Focus will also be given by them on task scheduling and sequencing so that stores
can be run on full-fledged basis.
Lower level management -This will involve for department heads, supervisors etc who will
perform planning task such as who will be the suppliers, what kind of products will be kept in
the outlets what will be the layout be like among others (Gassmann, Frankenberger and Csik,
2016).
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4.2 PROVIDE AN ANALYSIS OF THE RESOURCE REQUIREMENTS FOR THE
IMPLEMENTATION OF THE STRATEGY
Aldi will be in need of varied resources while opening its new branch in India as a part of its
strategic implementation. These are as follows;
 Human resource – the firm will be in need of entire team of employees starting form
managing director, manager, department head,
finance/marketing/production/sales/promotion/research and development team among
others. The MD, director as well as manager will form the top level that will focus on
formulating strategies and targets for Indian operations; department heads will form
second level who will work on fixing the manner in which the targets are required to be
attained. This will be followed by the third level that will work on implementing the
strategy into practice.
 Technology – The company will have to make sure that it carries out the necessary
technological innovations so as to gain competitive advantage over the rival firm. This
can be in form of setting of pick up tower; creating India based website; changing the
billing system; making a tech oriented inventory process among others.
 Finance – As India is a big market hence financial resource for the company will also be
very huge. Hence the company will have to decide over the sources of finance very
judiciously (Voigt, Buliga and Michl, 2016).
 Time – The need here will be to set up a timeline so that entry into Indian market can be
made in successful manner. This can be done by deciding over the areas and allotting
required time for the same. The areas in this regard can be talking with firms for joint
venture and finalizing the process; deciding the location where outlet will be set, starting
the work; press release session among others (Ododo, Mulholland and Turner, 2015).
4.3 EVALUATE HOW THE USE OF SMART TARGETS CAN CONTRIBUTE TO
ACHIEVING THE STRATEGIC OBJECTIVES
The strategic objective of gaining a successful market entry in India by Aldi can be fulfilled by
making use of smart targets that are as follows;
Areas Objective set timescale
Leadership Appointing new 1 month
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management team for
India based operations
of Aldi
Policy Developing
appropriate policy,
aims and targets for
India based operations
(Gassmann,
Frankenberger and
Csik, 2016).
2 months
Resources Carrying out proper
resource allocation in
the area of personnel,
finance, materials,
technology etc.
3 months
Expansion
plan
Finalizing over the
method of expansion
and also
1 month
Market
opportunities
Choosing target
locations as to which
can give increased
success and focusing
on the likely issues to
be faced
3 month
Image and branding Focusing on brand
positioning
2 months
As per the above mentioned table, various targets have been set by the company so as to assist in
successful market entry into Indian retail. Objectives have also been set for the same followed by
suggesting the timeline in which they will be achieved.
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CONCLUSION
From the above report it can be concluded that business strategies has been playing a crucial role
for overall success of Aldi. It has been using the concept of low price but high quality which has
aided in generation of loyal consumer base. In this regard, if the company as a part of its
strategic planning wishes to expand in India then it can easily do so by focusing on limited
growth opportunities; fixing up the roles and responsibilities to be played by respective people;
deciding that time line for attaining the target among others.
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