Strategic Management: Evaluating Aldi's Operational Activities and Strategic Approaches

This report focuses on the strategic management of Aldi, a supermarket chain brand, including evaluation of operational activities, strategic approaches, and response to macro environmental issues. It explores the impact on future strategies and capabilities using Porter's value chain and VRIO analysis. The report also discusses the challenges faced by Aldi and provides recommendations for improvement.

Strategic Management

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
1. Theoretical models and their potential to develop effective strategic decisions..........................3
2. Major macro environmental and industry issues faced by Aldi in past with their response and
its impact in operational decisions with its reflection in company's future strategy........................5
3. Using Porter's value chain and VRIO to determine Aldi's strategic capabilities.........................7
4. Evaluating previous strategies using Porter's Generic strategy framework and Ansoff matrix
and Analyse the approach to internationalisation that Aldi has adopted and assess the extent to
which that approach has been appropriate.......................................................................................7
CONCLUSION..................................................................................................................................10
REFERENCES...................................................................................................................................11

INTRODUCTION
Strategic management refers to the process which is an inclusion of planning, organising as
well as monitoring various operational activities being performed in an organisational structure.
Considering fluctuations in modern business environment, any strategy or plan developed by
operational management of a business firm is at huge risk (Shiu and Yang, 2017). As any little
changes or fluctuation in operational environment of the business firm might lead to failure of such
plans and strategies. In this report operational working of Aldi is being taken into consideration as
well as various strategic plans and policies adopted by firm in its respective marketplace. Aldi is a
supermarket chain brand with over 10,000 stores in around 20 countries, which operates from
Essen, Germany. The company was founded in 1946 by its two founder namely Karl and Theo
Albrecht respectively (Hiriyappa, 2018). The present report will focus on various operational
activities as well as strategic approaches of the business firm for dealing with its dynamic business
environment. With addition to that, various theories as well as models are being used for evaluation
of strategic decision made in operational firm to react effectively as per trending needs and
demands of given market customers. Moreover, analysis on strategic capabilities by using various
approaches is being performed in context to chosen company and conclusions are being drawn for
giving a clear understandings in mind of reader of the report.
MAIN BODY
1. Theoretical models and their potential to develop effective strategic decisions.
Developing a strong strategy plays an important role in achievement of desired goals and
objectives of a company in given specified time and by ensuring better utilisation of valuable
resources of a given business firm. For ensuring better productivity of a business firm, managers as
well as leaders of a business firm has to invest their best resources and develop effective plans and
strategies for ensuring smooth conduction of various operational tasks in an organisational structure
(Sternad, 2019). However, complexities and uncertainties in business environment makes it difficult
for concerned departments of the business firm to implement such strategies and drive maximum
output from respective resource being invested in a business firm (Mazzei and Noble, 2017).
Therefore, strategic management is an important activity which needs to be concentrated by various
managers and leaders of the workforce while formulating any plans and strategies aimed at
completion of desired aims and objectives of a business firm. In context to chosen company i.e.
Aldi, concerned department of the business firm, ensures better productivity and performance by

making up of effective strategic management. Marc Heußinger, being the current CEO of respective
company, develops flexible plans as well as strategies, which somehow helps in reducing
uncertainties in a business firm and enable firm to function effectively in its uncertain business
environment. There are various strategic management approaches which are undertaken in
respective firm. This helps firm to function at its best considering minimum amount of investment
of company's resources and extracting maximum output of efforts from various individuals working
in a business firm. Various approaches adopted by management department of respective business
firm for ensuring strategic management are listed below:
Approaches to Strategic management
There are various strategic management techniques used by management departments of
different firms. However, approaches to such strategies are different as per requirement of
respective business environment in which particular firm is operating its business activities. In
respect to Aldi, management department of the firm follows “Classical” strategic management
approach to ensure effective working environment in given business environment of the
organisational firm;
Classical: This approach to strategic management came into presence in 1960s and was
developed and propounded by Igor Ansoff and Alfred Sloan. As per this approach all aims and
objectives of strategic management is being focused towards diving out maximum organisational
profits by focusing in effective operational working of a business firm.
Evolutionary: This approach got its name after Darwinian theory in biology. As per this
approach, various plans as well as strategies are being driven out in an operation firm considering
uncertainties in the business environment (Tomczak, Reinecke and Kuss, 2018). This approach of
strategic management dedicates its attention towards development of respective plans in an
organisation by ensuring flexibilities in planning structure of the business firm.
Processual: As per this approach, business environment of a company is being treated as
messy and largely unpredictable. In the process being managers and leaders of a business firm
develops different models and follows various theories for attainment of desired goals and
objectives of a business firm (Ibrahim and Abou Naem, 2019). As per this theory, its is being
assumed that following a respective theory or model in an business firm could prove to be useful for
attainment of desired results and effective functioning of firm in uncertain business environment.
Systematic: This element of strategic management ensures completion of desired
operational objectives and plans of a business organisation in a systematic manner taking
consideration of various laws and regulation being imposed by governing body of particular region.
For instance, with introduction of globalisation various business organisation developed the ability
to operate in different region. Therefore, such business organisation have to take care if various

regional laws and regulation in respect to prevailing cultured people living in respective areas.
Recommendation and Justification
Considering present businesses situations which consist of various uncertainties and high
competition in operational working of a business firm. This makes difficult to respective managers
and leaders of various business organisation to operate business operational strategies and plans
effectively. As being analysed from the above discussion, as Aldi is using “Classical” approach to
strategic management, this approach to strategic management finds management of the concerned
business firm in difficulties sometimes (Cicmil and et. al., 2017). It is to be recommended to the
firm to change its strategic management approach, as this approach falls short for attainment of
desired objectives of the firm considering dynamic business environment. Using mixture of
“Evolutionary” and “Systematic” approach to strategic management could prove to helpful in
attainment of desired goals and objectives of the business firm considering business environment in
which respective organisation operates its various business activities (Büchler and Decker eds.,
2018). By using these approaches management of the firm could bring in flexibility in its
operational working and also develop professionalism of efforts being performed by various
individuals or staffs working in an organisation.
Support required
Bringing light to the fact that changes in plans and strategies in operational working of a
business firm is necessary as per requirement and fluctuation in operational environment of the
business firm. Therefore, there is a need for keeping a regular check on firm's external environment
and monitoring up of respective performances being produced by various staffs working in an
organisation is highly appreciated for ensuring effective completion of goals and objectives of the
workforce. Support required for promoting development in respective company are:
 Employee appraisal
 Flexible plans and strategies
 Effective communication channels
2. Major macro environmental and industry issues faced by Aldi in past with their response and its
impact in operational decisions with its reflection in company's future strategy.
Macro environment in a business firm refers to taking into consideration respective factors
that affects working of a business firm and has its existence as external for a company. Managers
and leaders of a business firm with a view point to attain desired goals and objectives of an
operational firm have to consider micro as well as macro factors in formulation of respective plans
as well as strategies In operational structure of the workforce (Anwar, 2018). With respect to chosen
business firm i.e. Aldi, managers of the firm keeps in mind various external as well as internal

factors that directly impact in effective operational working of the workforce. However, there are
various issues or challenges that are faced by operational management of the firm, as due to
presence of competition and various other factors that directly impact on effective working of a
business firm. Different issues and challenges faced by Aldi while operating in given business
environment are as follows:
Macro environmental issues faced by Aldi
Demographic conditions: It refers to difference in composition of size, density, gender of
individuals residing in particular region. In regards to chosen company, managers of the firm faces
such macro environment factor that makes it hard for management department of the firm to
formulate effective plans and strategies in its given marketplace. In context to chosen business
enterprises i.e. Aldi, managers of the firm have to keep in mind such factors while formulating
strategic decisions and plans in given marketplace of the workforce.
Changing age structure: As analysed in recent trending environment of various business
firms, due to regular changes in age structure in given business environment of respective
companies makes its difficult for the business firm to function effectively in given marketplace of
the workforce. With context to chosen business firm, management department of the company
considers such macro environmental factors (Kang and Lee, 2017). This helps firm to ensure
avoiding up of wastages of given resources of the business firm and enable firm to function
effectively without hampering quality of efforts being produced in the business firm.
Socio-cultural forces: With light to the fact that, due to adoption of globalisation by various
business enterprises, a manager of respective business firms were able to explore a new different
culture and customer trends in given marketplace of the company (Bel, 2018). Therefore, for
chosen firm managing various socio-cultural factors in an organisation is being considered as a
challenge and sometimes acts as a loophole towards completion of desired goals and objectives of
the workforce.
Technological forces: It refers to various technical factors that impact effective working
environment of a business firm. In regards to Aldi, managers of the firm considers various technical
factors that impact on effective working of the firm and little ignorance of such factors might lead
to face difficulties in conducting various operational environment of the firm.
Aldi’s responses to the major macro environmental and industry issues
Various counter plans as well as strategies are being formulated by management of the
business firm for ensuring effective growth of the business firm with regards to desired aims and
objectives of the workforce. Various tools and techniques used by Aldi, responding to macro
environmental issues are as follows:
 Innovation

 Flexible plans
 Using up to date technologies
 Effective management techniques
Impact of major macro- and competitive environmental issues currently facing Aldi
Micro environment is considered as the external environment that mainly affected by the
GDP, monetary policy, customer spending, fiscal policy and employment rate etc. micro
environment also provide the impact on the business decision including investment, borrowing and
spending . Competitive environment mainly describe that particular situation like how
companies can compete with their competitor at the marketplace as per their distribution channels,
suppliers, pricing methods and promotion method. In context of Aldi, macro and competitive
environment affect the performance of the company directly that's why this company pay more
attention because this company facing various issues which are provide the adverse impact on the
performance and productivity of the company. Aldi is the most famous largest company that is
contain the large supermarket and stores chain so it is important for the manager of the company to
focus on the various macro environment factors like political , social , environmental , technological
and legal factors. Aldi is operating business all around the world so it is essential to analyse the
impact of all these factors which can help to gain more competitive advantages as compared to
their competitors. It is determined that economical and social factors give the direct impact on the
performance of the Aldi so it is important to focus on to prepare the strategic plan and strategy that
can provide the benefit in future. Company need to conduct market research and observe current
marketing business environment and also take some suggestions and feedback to the customers so
that company can easily identify the those factors which create issues in their performance. Apart
from this , Aldi need to use porters five force models and identify the impact of these forces on the
business of this company. With the help of porters model, company easily understand and analyse
the effectiveness of their business which will help them to take more competitive advantage and
generate more profit and revenue.
3. Using Porter's value chain and VRIO to determine Aldi's strategic capabilities.
Porters value chain work, it under comes in strategic management tool. It works by breaking
an companies activities down into strategically relevant pieces. It analyse the internal firm
activities. It responsible to show all internal activities that engages into produce goods and services.
It is depend upon the view of organization that seeing a manufacturing company as a system, that
made up of subsystem each with inputs, transformation process and outputs (Buchanan and
Huczynski, 2019). It involve the acquisition and consumption of resources that include money,
labour, material, equipments, building and lands, management. The activities can be classified and

converting inputs to outputs. In this there are two types of activities such as primary and secondary
that all commercial enterprise must undertaken are:
Inbound logistics: Here included are all the activities that a Aldi has to perform in order to
collect the resources and raw materials required which are to be converted and supplied to the
customers. These activities include contacting the dealer and suppliers of the raw material and all
the translation that take place with them.
Operations: in this step are the actives requires to transform the input into output that is the
preparation of the product and services to be provided to the customer.
Outbound Logistics: At this level of activities the finished and transformed products are
distributed or taken away from the place of transformation in order to be pitched or offered to the
customers.
Marketing Sales: Marketing is considered to be one of the most important activities is the
business function, this functions involves the pitching and promotion of the product and services.
The efficiency of this business function is directly proportional to the revenue of the company.
Service: At this step the Aldi makes efforts and provide services after the sales of the
product. This is one of the major activity that contributes in the satisfaction of the customer.
Identify competitive advantage source, by the value chain analysis of aldi during the
planning process, possible source of competitive advantage can be identified. The organization is a
collection of various activities that share relatedness to few extent. Aldi cannot trade all act ivies in
the external market. The value chain can approach suggest that a organization can consider these
activities as economic rent sources. Activity can also act as a barrier in terms of new entrants or
cause disadvantage to competitors (Annie, 2020). It identify the inter relationship and
interdependencies, the concern organization are responsible to identify the various factors such as
internal or external linkages are between commercial enterprise unit of same or various companies.
To study this interrelationship that can assist a organization take benefit from coordination and joint
optimization. It work on flow of materials, information and finances, it can be optimize the
finances products and information flow. The effective implementation of value chain analysis of
Aldi that can improve the material and product flow due to changed demand and sales forecasting.
In the prospective inventory management that also change as aldi can minimise the delays through
tracking activities by the supply chain. Lets move forward to sophisticated consumers, they place
high importance to fast feedback and convenient access to the important goods related information.
The unexpected interruption in the information flow can affect the consumer supply relationship. In
the addition aldi value chain analysis and its implementation can highlight and remove the

constriction to the information flow (Pettinger, 2020). This value chain analysis can be used in
competitive strategic decision making process, choosing the right strategy( cost leadership,
differentiation and focus that need the ability and knowledge of monetary value structure. In the
context of challenges associated with value chain analysis, the organization may lose its vision and
overall strategy through dividing operation into various activities, it divided the operations into
primary and support functions that not be separable due to increased complexity. This procedure can
be time consuming and finding the required information can also be complicated. Effective value
chain implementation does not only require familiarity detailed expertise. The concern brand find it
difficult to get required information of its commercial enterprise information system is not
structured sequences.
Viro analysis will look each internal resources to access, it provide sustained competitive
advantage, it also mention at particular stage weather these resources could be improved to give a
higher competitive benefits. in the prospective of concern brand aldis, the resources analysed and
summarised to weather they offer sustained competitive advantage that has unused temporary
competitive advantage, party and disadvantage. It show the financial resources are highly valuable
these thing assist in investing into internal opportunities that arise. On the prospective of
organization, the financial resource of Aldi are able to organized to attain the value through viro
analysis.
4. Evaluating previous strategies using Porter's Generic strategy framework and Ansoff matrix and
Analyse the approach to internationalisation that Aldi has adopted and assess the extent to
which that approach has been appropriate.
Porter's Generic Strategies
Porter's Generic Strategies are those strategic areas through which can attain best
competitive advantages in market. The generic strategies discusses four methods or can derived as
four main domain areas, by the adoption of which can best attain competitive advantage in market.
The strategies talks about not only achieving competitive advantage in market but also deals with
the strategy through which an organisation become leader in market (Masten, 2018). Aldi, one of
the most popular grocery store in the world, have a varied range of business and deals in the range
of business products, generic strategies can be utilised by company in the best way possible. All
which is required is the willpower and intelligence of company management. The report have made
analysis of the manner in which Porter's generic strategies can be utilised by Aldi in grocery market.
Cost Leadership- Cost leadership is that strategies through which Aldi can become leader in market
by reduced cost. Reducing cost of providing services and products to its consumers can help Aldi in
securing larger consumer base. Also, Aldi can help itself in snatching the consumer base of its

consumers. This can be mainly done by company in the areas of Niche products, or the products
which are already in low cost in market but their consumption in market is high. Such as FMCG
goods. In these products company can reduce its cost. This is suggested because the cost of these
products is already low in market and lowering prices little bit will not be affecting profit of
company, as the larger attracted consumer base will balance that.
Differentiation strategy- Differentiation strategy talks about offering values in the product. Value is
the added quality in features and design of products, a strategy through which consumers can avail
extra benefits and ultimately recognising that commodity more productive than any other
commodity in market. Through this Aldi will be availing increased faith of the consumer. Since,
making additional benefits in product is a task that is cost oriented, Aldi is supposed to try this
strategy in the products which are already perceived as high value products in market and from
which consumers have higher expectations. Under this market Aldi will be targeting those
consumers for whom slight increase in prices does not matter as they are seeking quality in
products. Through this Aldi will also be securing long term faith of consumers.
Focus strategy- Focus Strategy is the one which requires Aldi to focus over all the areas and types
of products and services that it is offering in market. Aldi is required to give appropriation to all
range of products and services along with equitable distribution of resources which thhe company
have at its disposal (Gummesson, 2017). Here, company will be growing its market through
lowering down the prices in the Niche products and will also be offering quality in its advanced
products, as per the expectations of market and goals of company.
In consideration of market and variety of products that Aldi is already serving across the
world. Focus strategy seems to be the best one for it. Because, targeting development in one respect
will need to forego the other which is not at all strategic, as Aldi is having different sets of market in
different areas of world.

Ansoff Matrix
Ansoff Matrix is the strategic planning tool for an organisation through which an
organisation can help understanding how to diversify its market for assuring future growth as well.
There are four stages under this model which talks entirely about developing the market (Coe,
2021). The Report shall be discussing each of them separately and will be analysing how they can
be applied in context of Aldi.
Market penetration- Market penetration is that strategic element of the model where Aldi will be
requiruing to develop its market in the location where it already exists. The main business of
company is in the Germany and nearby country markets of Europe, such as United kingdom. The
market here serves a varied range of consumers (Bruijl, 2018). Aldi will not be facing difficulty in
securing consumer bases here, even in the presence of multiple competitors, because of the two
main reason. One, the products offered by all players in the grocery market are more or less similar,
so consumers will not be delaying in switching to other company. Second is the availability of huge
markets. Therefore, Aldi is only enquired to increase its distribution channels.
Product development- Under product development Aldi will be offering new products in the
existing market of company. Here, Aldi will be offering new products in the grocery itself. Under
product development new customers are motived to cater.
Market development- This is the strategy element of wider context, here Aldi will be entering new
markets (Greene, 2020). The markets beyond Europe. As per the nature of business that company
has, markets of developing countries. Like from South-East Asian markets, will be most productive.
Diversification- This is the most strategically advantageous tool for Aldi (Kubo, 2017). Under this
company is required to diversify the product it is offering, meaning to move away from only
grocery products and entering new domains, like Clothes and Medicines.
Diversification of the products is the most suggestive strategic tool because of the large scale
operations of Aldi. This will be helping company in long run and assuring markets and profits for
future.

CONCLUSION
From the above analysis of meta-analysis, it can be concluded that, various strategic
management approaches are being used by management department of the chosen firm in order to
enhance effective working of the business firm. In the presented report various theories and models
are being used and respective plans and strategies adopted by business firm for countering with
factors of dynamic business environment is being highlighted in this report. With addition to that,
company's strategic towards building effective strategy to counter competitors of workforce by
applying various analysis is being highlighted in this document.

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