Critically Analyse Change Process

Critically analyse

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
Diminishing operating profits the key strategic issue in Aldi, UK........................................2
The rationale behind the initiation of the change process......................................................3
The key stages involved in the change process......................................................................4
Challenges that threatened to derail the change process........................................................6
Strategic Models.....................................................................................................................7
SWOT Analysis............................................................................................................8
PESTLE Analysis.......................................................................................................10
Porter Five Force Analysis..........................................................................................12
Ansoff Matrix..............................................................................................................14
McKinsey 7S Model...................................................................................................15
VRIO Analysis............................................................................................................17
End Result............................................................................................................................17
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19

INTRODUCTION
Strategies and plans are developed by the management of firms in order to enhance the
existing performance and robust the position in the market. The present era is characterised by
intense competition due to drastic change in taste and preference of consumers as well as
increase in globalisation. In order to sustain in the competitive environment, it is vitally
important for firm to develop precise and appropriate strategies. In this context, the present study
will be focus on analysing corporate strategies and structure of Aldi which undergoes major
changes that affects its profitability.
Aldi has reported record sales in the UK and Ireland for last year but its profits have
fallen sharply amid a fierce price war among supermarkets. In this context, the key strategic
issues in the organisation will be described in the study and rationale behind the initiation of
change process will be explained. The key stages in the change process will be demonstrated in
the study which has been implemented by the organisation and by using specific strategic models
like PESTLE, SWOT, Porter Five Forces, Ansoff Matrix, McKinsey 7S model and VRIO
analysis, the recommendation to organisation will be provided.
MAIN BODY
Diminishing operating profits the key strategic issue in Aldi, UK
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Aldi is one of the biggest discount supermarket chain with over 10000 stores in more
than 20 countries. Aldi's headquarter is in Germany and it is expanded in different countries like
Australia, China, United States, United Kingdom, etc. In the market economy of United
Kingdom, the firm was able to capture immense attraction of consumer by offering them quality
products at lowest price as possible (Fazli and Shulman, 2018). This strategy becomes its core
issues due to which the firm was not able to attain its target. Despite, the company able to record
sales in UK and Ireland in year 2017, its profits have diminished sharply amid a fierce price war
among supermarkets.
The management of Aldi contends that sales for year 2016 rose by 13.5 per cent to 8.7
billion pound but the operating profit dropped by 17 per cent (Aldi reports record sales but
profits drop amid price war. 2017). The reason for frequent diminishing profits stated by the top
management was continuous investment in developing price strategies, infrastructure and
installing advance technologies. Aldi in United Kingdom faced stiff competition with giants like
Tesco, Morrisons, Asda and Lidl. Moreover, with agile governmental policies, many new small
and medium scale supermarkets have been emerged in the economy that were able to attract
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Illustration 1: Aldi profits fall by almost a fifth as supermarket price war takes toll
(Source: Armstrong, 2017)

customers more effectively and efficiently. Aldi has undergone several changes and
transformations like developing new infrastructure, implementing digital technologies, re-
designing business operations, etc. in order to strengthen its existing performance and
profitability. Despite of undertaking these changes, the firm was not able to accomplish its
desired targets due to varied reasons.
According to Armstrong (2017) the profits of Aldi have been declining for the third year
in a row after the discount supermarket invested money into developing and opening new stores
and also offers more discount to customers in order to gain competitive advantage. This strategy
indeed work as it surpasses big 4 supermarkets; Tesco, Asda. Sainsbury and Morrisons in terms
of price.
After the recession in United Kingdom, the cash-strapped consumers move towards
stores of Aldi as the organisation provides quality products at relatively lower price. Moreover,
the organisation opens hundred more stores whereas its rivals closed down few stores in UK. At
the same time, Aldi lured middle-class customers with more upmarket products such as Prosecco
and pastrami (Yan and Cao, 2017). The sales have been substantially increased in United
Kingdom by 13.5 per cent after attracting new shoppers and the market share of the organisation
rose by 6.9 per cent.
The focus of Aldi is on providing high discounted products and rampant store expansion
strategy dragged its overall operating profits down. With over 726 operating stores in United
Kingdom, the organisation able to enhance its customer base effectively and efficiently.
However, the pricing strategy and new infrastructure development greatly impacted on the
profitability of the firm. In order to enhance its profitability, the firm needs to concentrates on
improving its strategy. This strategic issue faced by the firm affects its profits and revenue in
United Kingdom.
The rationale behind the initiation of the change process.
Organisational change and transformation is done for the purpose of growth and
development. Change is necessary process of firms and in order to sustain in the competitive
environment it is essential to make necessary change and transformations (Draheim and Franke,
2017). The major motive of initiating change within the firm is to develop the existing work
process and business operations into more robust and efficient structure so that desired goals and
objectives of the organisation can be attained. The top management of Aldi in United Kingdom
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in order to stay ahead of its competitors, firm initiated several transformations in their existing
strategies and policies. The motive was to gain competitive advantage and enhancing customer
base within United Kingdom. The organisational change turns out to be successful as customer
base and competitive advantages has been gained within the market economy (Jenkins and
Williamson, 2015). However, it indeed compromised its operating profits and revenue as 2017
became third consecutive year where profits of Aldi declined substantially. Albeit, the top
management stated that all the changes and transformations in the past was made in view of
future perspective.
The investment done in establishing stores will surely cover all the loss and also assists in
raising the operating profits of the firm. Organisational transformation is necessary as it helps the
business to thrive in the global competitive environment. If transformation has been done
properly and in precise manner, then there is higher possibility for any organisation to sustain
their business and profits effectively and efficiently. Managing change is complex part as
management has to carry out extensive research and analysis before articulating and
implementing change in the organisation.
Theorists and philosophers like John Kotter and Kurt Lewin have developed various change
management theories which can be utilised by the organisations in order to implement and
manage change within firm. Transformation is done for a reason and in case of Aldi, the reason
for transformation in strategies was to gain competitive advantages in United Kingdom. With
competitors like Tesco, Sainsbury, Morrisons and Asda it becomes difficult for the firm to gain
customer's attraction (Borland and et.al., 2016). In order to enhance attraction of consumers of
United Kingdom, the change has been initiated by the firm.
The key stages involved in the change process.
Change is not a single step process as organisation has to undergo various steps to successfully
implement the transformation. In order to successfully implement the transformation within firm,
the management applied concepts from Kotter 8 steps change management theory. In this
context, the key steps in the change are provided below:
Creating an urgency
The first step in change process is developing sense of urgency by making employees
aware about the need and necessity of change within the organisation (Simon, Fischbach and
Schoder, 2014). In Aldi, the managers first explain the benefits of change to the employees in
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