Global Market and Digital Business: A Case Study of Aldi

This report examines the key aspects of Aldi's global market and digital business strategies. It analyzes the company's human resource management, industry analysis using Porter's Five Forces, PESTEL, and SWOT frameworks. The report also explores Aldi's value chain, internationalization theory, cultural factors, marketing activities, and online presence. It concludes with recommendations for Aldi's future growth and success in the global market.

GLOBAL MARKET AND DIGITAL BUSINESS
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Table of Contents
INTRODUCTION................................................................................................................................4
ORGANISATIONAL PROFILE AND INDUSTRY ANALYSIS...................................................................5
BACKGROUND OF THE COMPANY...............................................................................................5
PORTER’S FIVE FORCES ANALYSIS................................................................................................5
SITUATIONAL ANALYSIS...................................................................................................................6
PESTEL ANALYSIS.........................................................................................................................6
SWOT ANALYSIS...........................................................................................................................8
VALUE CHAIN ANALYSIS...............................................................................................................9
MODELS AND THEORIES................................................................................................................10
INTERNATIONALISATION THEORY.............................................................................................10
CULTURAL FACTORS..................................................................................................................10
STANDARDISED AND ADOPTED STRATEGIES.............................................................................11
MARKETING ACTIVITIES.................................................................................................................12
SEGMENTING TARGETING AND POSITIONING..........................................................................12
BRANDING.................................................................................................................................13
CONSUMER TRENDS..................................................................................................................14
ETHICAL ISSUES..........................................................................................................................14
ONLINE ACTIVITIES........................................................................................................................16
EFFECTIVENESS OF ONLINE PRESENCE......................................................................................16
E-COMMERCE............................................................................................................................16
RECOMMENDATIONS....................................................................................................................17
CONCLUSION.................................................................................................................................18
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REFERENCES...................................................................................................................................19
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INTRODUCTION
In this report, we will study about the key aspects which are used by the Aldi in managing its
Human resource situations as well as the analysis of the Aldi's work via Porter's five sources,
PESTEL and SWOT analysis. The use of value chain is also carried out in an effective manner. We
have taken the approach of various theories for the explanation of Aldi's success. The influence
of cultural factors has been explained by the Hofstede theories. The various marketing activities
empowered by the Aldi have been explained in an efficient manner. Use of Online activities for
the empowerment of branding and positioning in the market has been explained in the report.
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ORGANISATIONAL PROFILE AND INDUSTRY ANALYSIS
BACKGROUND OF THE COMPANY
Aldi is a supermarket chain which is been operating in 18 countries with approximately 10,000
stores. It is a German-oriented company which is having its operation in UK's leading
supermarket chains (Lynch et. Al, 2011). It was originated in 1946. Aldi has specialization in
beverages, sanitary, food and many more household items. The Vision of the company is to
become world’s best supply chain offering lowest rates.
PORTER’S FIVE FORCES ANALYSIS
We will analyze Porter's five forces analysis in accordance with the host country.
 COMPETITIVE RIVALRY
Aldi is having a highly competitive rivalry with its marketing rivals such as Tesco, Sainsbury's,
Lidl, Netto etc. since Aldi is offering high discounts on the products. The competitive rivals have
also started offering discounts and due to this
 THREAT OF NEW ENTRY:
The threat of new entry is medium in accordance with Aldi because new entry will take a lot of
time to establish its name in the country’s supermarket bench. The new entry will have to face
competition with already benched names too.
 THREAT OF SUBSTITUTES:
Aldi faces a high threat of substitutes because Aldi is not specialized in any specific products
whatever product is found in Aldi can be found in any of the outlets (E. Dobbs, 2014).
 BUYER’S POWER
Since Aldi offers products with high quality and discounted prices the buyers keep the power to
keep the price as per their value.
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 SUPPLIER’S POWER
If Aldi doesn't get the rate on which they are supplying then Aldi can switch to other suppliers.
SITUATIONAL ANALYSIS
Situational analysis of Adli can be described by analyzing the PESTEL AND SWOT.
PESTEL ANALYSIS
Pestle analysis is used to identify the external factors which affect company’s characteristics.
 POLITICAL
As the government changes the new political parties impose new regulations and these new
policies affect the ongoing policies of the Aldi. After BREXIT the new laws imposed according to
the EU has affected the policies a lot.
 ECONOMICAL
As the UK has moved out of the recession it will impact the buying behaviour of the customer
from low-cost market to buying from supermarkets. During the financial crisis, the consumers
purchased food items from discount providing showrooms which have created a market for the
Aldi.
 SOCIAL
Discounted chains have met with the social stigma. With the increment in living standards of
the citizen, Citizen tries to purchase items from the brand names such as Aldi which is providing
a great exposure to its supplying terms.
 TECHNOLOGICAL
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Online shopping has proved very beneficial for the customers, as they can buy items online and
can choose between varieties of products online and at the same price offered by the
supermarket outlets (Jurevicius, 2013).
 ENVIRONMENTAL
As Aldi is a big supermarket chain and is a big grocery chain it offers the buying from the local
farmers. They empower the farmers by buying the items from them thus maintaining the
environmental stability.
 LEGAL
Grocery and food chains are legally affected by the food security industries and they are
regularly checked about the contents and other ingredients and are legally penalized if found
any deviations in the food sources (Yüksel, 2012).
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SWOT ANALYSIS
STRENGTH WEAKNESS
 Named as the best supermarket for
the consecutive Fourth time. This
will increase the credibility of the
Aldi
 After the economic crisis, customers
are switching their way back to the
supermarket.
 The increment in the living
standards of the people has led the
new trends in buying the power of
the customers.
 Fall in the pound has caused the
rise in the prices of basic items such
as Bananas, Milk etc.
 Despite having a wide profit, it is
behind the four retailers in UK
grocery chains.
 Aldi is just 1% cheaper than Tesco,
Morrison’s and Sainsbury making
them as the substitute of Aldi
OPPORTUNITIES THREAT
 Aldi gin has been applauded widely
in the beauty products market.
 Tapping the untapped segments is
the new opportunity trend for the
Aldi.
 Aldi products are more famous
among the young dwellers and
they are attracted towards the
designs and qualities adapted by
Aldi.
 Falling in the pound may cause in
the rise of the price of products.
 The offers and marketing strategy
adopted by other competitive rivals
have impacted the internal policy of
the Aldi.
 Growing incomes of consumers are
disposable causing threat to the
Aldi’s pricing policy.
(Amin et. Al, 2011)
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VALUE CHAIN ANALYSIS
Aldi is a hard discounter giving discounts in almost all the products supplied by it. Values are
essentially the cost that customers are willing to pay for it and any increment upon that cost is
the profit gained by the company. Value creation becomes the main part of the company’s
strategy. Every value of the product employs the activities such as the employment power,
costing and any other factor influencing the cost. Crafting a value chain is the essential part of
the company.
The second part of the value chain is the activities such as labelling and advertising. The primary
activities include the inbound and outbound logistics, operations, marketing and sales and
services (Gereffi and Fernandez-Stark, 2016). Comparing cost by activities and the benchmarks
associated costs a lot in the value chain analysis and cost analysis.
The analysis of the cost and the values makes the immense profit and helps in the scenario
because Aldi is a grocery chain they buy a product from other markets and their profits in the
actual costs. Thus it is necessary for the Aldi to have the value chain analysis.
Figure 1: Value Chain Analysis
Source:[http://www.studylecturenotes.com/management/porter%E2%80%99s-value-chain-
analysis-primary-secondary-activity]
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MODELS AND THEORIES
INTERNATIONALISATION THEORY
The economic theory of internationalization states that the inner instinct of firms and to gain
profits advantages they expand their wings to other grounds and expand their boundaries in
order to gain economic advantages (Jindra, 2011). The commencement of FDI in the country
has enabled Aldi to establish their lands in other untapped nations. The internationalization
theory has made advantages in other countries to operate, produce or market in the nations
where there are no opportunities. Internationalization theory suggests the assembling of assets
which no other company can replicate thus the assembly of the products will have higher
marketing qualities.
CULTURAL FACTORS
Hofstede theories
Aspects Home Country Host Country
Communication The communication in home
countries suffers no Bars as
the local language is spoken
by all individuals.
In host countries, the
difference between the
languages acts as the barriers.
Society-culture The Social-culture is
established as the home
country’s social aspects are
understood by all the
members of the company.
Companies need to take care
of the social cultures practised
in the host countries.
Values of its members The members understand the
value of the company and
thus the company
understands the value of its
In host countries, the workers
are working for their
livelihoods and thus the
company makes the
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members by raising incentives
and providing family support.
arrangements for its members
according to the provisions of
host countries.
Individualism The employee understands its
unique identity in the
company and feels motivated
in the culture of the company.
In the host country, they are
recognized and work
collectively to achieve the
targets oriented.
Masculinity In-home countries, the male
and female members are
given the common
opportunities and thus the
masculinity and feminism go
hand in hand.
Companies have to
understand the masculine
power, as in the case of some
south-east countries and have
to make arrangements
according to it.
Uncertainty avoidance According to the Hofstede
theories the companies need
to make arrangements like
infrastructure and another
measure so that they will not
leave the countries.
In the host countries, the
culture consciousness avoids
the uncertainties in the
process and methodologies.
(Minkov and Hofstede, 2011)
STANDARDISED AND ADOPTED STRATEGIES
Strategies adopted for expanding the product globally needs strategies and there is a number
of standardized strategies among which some are selected by Aldi in its production process.
Some standardized strategies
 Providing discounted offers and schemes:
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This is the standardized strategy and it is adopted by the Aldi for expanding its wings and
becoming a globally recognized company. These strategies are stated because there are many
companies in the competitive rivalry and it is very important to move ahead of the other
companies by implementing strategies which are beneficial.
 Collaboration with other niche companies
For expanding business in local market it is very essential to collaborate with the local market
companies. This local market companies have the wide knowledge of the areas in which they
are being operated. Collaborating with them will help in gaining the knowledge of the
marketing procedure in the regions.
 Making an effective working environment
It is an essential strategy to make the environment effective by making procedures in which the
employees can get motivations. The motivations enhance the workability of the employees
working in the company.
Home nations provide competitive advantages over host nations because the resources
available in the home countries cannot be found in the host countries, moreover the local
peoples sense a nationalism in working with the company of home nation. This all factors
provide competitive advantages in the home nation.
MARKETING ACTIVITIES
For Aldi to establish its position in the host country many marketing activities have to be taken
out these marketing activities can be understood by taking the following considerations:
SEGMENTING TARGETING AND POSITIONING
Segmenting refers to segmenting markets according to local or international according to needs
of the customers and by approaching the potential customer and make an effective marketing
image to deliver a message to a wide range of people (Wood, 2013). The needs of all the
segments are same and it is required to make the message which can be best fitted to all the
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segments. The segmenting the market according to the needs will help in an effective
marketing campaign. The segmented market must be:
 Measurable
 Accessible
 Sustainable
 Actionable
Targeting comes after the segmentation, once the market is segmented it is now needed to be
targeted and targeting can be done by the adverts and other assessable methods which can be
done by the print Media, social campaigns and other methods. Behavioural targeting can also
prove fruitful in this case.
Positioning is the perception of customer's view of the product. The comparison of the product
with other available products and how the customer treats the product is the position of the
product in the current market.
BRANDING
Branding is the establishment of the company's name in the image of the company. Branding is
the very important thing for a company. In the era of increasing living standards of people,
people are switching towards the brands. The brand positioning can be done by effectively
campaigning the name and by promoting promotional events (Qu, et. Al, 2011). The
promotional events help in establishing the brand's identity in the eyes of the customers. Once
the brand is established the value of the product increases. Brand contains logos and mottos
which are acceptable to all the customers. The branding can also be done by the celebrities
because celebrities influence large numbers of people.
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Figure 2: BRANDING
Source: [http://www.infinity-intellectual.com/importance-of-branding-advertising/]
CONSUMER TRENDS
Habits and behaviours showed by the consumers of goods and services are known as the
consumer trends. Consumer trends are changing trends and these are needed to be analyzed
every time. Consumer trends are mostly affected by the social sites and cultural influences.
Consumers now a day’s want to have the tests before they purchase anything the ongoing
distrust among the consumer is a thing to study and consumers are influenced by the review
they get from other customers, thus it is mandatory to follow the consumer trends effectively
for the effective marketing activities.
ETHICAL ISSUES
Ethical issues are the issues which are very important to be considered by doing marketing
activities. Advertorials must not contain the contents which are hurting sentiments of any other
communities or nations. Cultural traditions, beliefs and explicit contains must be removed from
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the marketing activities. There must be respectful of the core human values and the core
human traditions and as a moral responsibility, they must respect the local business prevailing
in that region.
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ONLINE ACTIVITIES
EFFECTIVENESS OF ONLINE PRESENCE
The online presence of company provides the effectiveness and efficiency of the global
marketing environment of the company as the presence of the company available globally
online will attract the customers and the consumers will buy the items. The online presence can
be in any form it can be available through social sites, bulk SMS or any other online
campaigning. In today's time each consumer uses any of the social sites, the availability of the
company online will attract the consumer and the consumers will buy the product. This online
presence is very effective for increasing the sales.
E-COMMERCE
Every consumer is busy nowadays and everyone wants alternative shopping options and this
alternative can be found in online shopping. The commercial sale of products online is termed
as E-commerce (Laudon et. Al , 2013). In E-commerce the consumer chooses the alternatives
from the available products, place the order online and they will get the home delivery of the
purchased items. Online sale of the products via E-commerce sites has made the increments in
the profit of the company’s.
RECOMMENDATIONS
For an effective global market trading, it is recommended to use ERP software. Entrepreneur
Resource planning software enables the companies in different host countries to have clear and
concise data on the trading in different regions. The use of E-commerce must be promoted and
the collaborations with the other niche companies will add boons in the profit of the company.
It is also recommended to have proper planning before the execution of the company in other
countries because lack of planning will be disastrous.
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CONCLUSION
It can be concluded from the above report that for a company to expand it is very necessary to
analyze internal as well as external factors. These factors can be negative or positive. The
assessment of this factor will be very helpful in increasing the profits by eradicating the flaws
and mistakes prevailing in the industries. Aldi, a renowned grocery firm in the UK is a global
company with origination from Germany also follows many internationalization theories as well
as cultural theories. It can also be concluded that for a company to be successful in every zone
it is very essential to increase its online activities as well as its E-commerce. The availability of
the product online will influence the young minds and these young folds will be the potential
customer of the company. Thus it can be concluded that for a company to increase its global
market and digital business they must follow all the current trends and theories to execute it.
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