Strategic Management Analysis of Aldi: Porter Five Forces, Value Chain and SWOT Analysis

This paper analyzes the internal and external environment of Aldi using Porter Five Forces, Value Chain and SWOT analysis. It discusses the opportunities and threats faced by the company. The paper also includes a table of contents, competitive environment, primary and secondary activities, and resources and capabilities. The subject is strategic management and the course code is not mentioned. The company name is Aldi.

Running head: Strategic Management
Strategic Management

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Table of Contents
Introduction.................................................................................................................................................1
External environment analysis....................................................................................................................1
Porter Five force model...........................................................................................................................1
Competitive environment...........................................................................................................................2
Opportunities..........................................................................................................................................2
Threats.....................................................................................................................................................2
Value chain analysis.....................................................................................................................................2
Primary activities.....................................................................................................................................3
Secondary activities.................................................................................................................................4
Competitive environment...........................................................................................................................5
Strength...................................................................................................................................................5
Weakness................................................................................................................................................5
Conclusion...................................................................................................................................................5
References...................................................................................................................................................6
Introduction
Aldi is one of the largest companies which offer daily products and alcoholic products.
The layout of the store is simple and the products are offered to the customers at a low price. In

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this paper, the discussion will be made on the internal and external analysis of the business in
which porter five forces, value chain analysis, and SWOT analysis.
External environment
Porter Five force model
Rivalry against the competitors
It is analyzed that there is a high level of competition in the grocery industry. The large
market share is grabbed by the company like Coles and Woolworth. There are various vendors in
the marketplace who provide comparable products to the customers.
The threat of substitute products
By considering the present scenario, the consumers can easily substitute the products that
are purchased from the grocery stores. The threat of substitute products is high as it is analyzed
that consumers are attracted towards the products that are easily available to the customers.
There is low cost of switching if the consumers are not fulfilled with the switching product.
Bargaining power of Suppliers
There are various products for examples biscuits which have several dealers to provide
products in the stores. The Bargaining power of Suppliers is low as it is analyzed that there are
many online websites like Ozsale. It is analyzed that suppliers are attaining more avenues so that
distribution of the products can be done properly. There are many services which are similar to
the suppliers and also they try to offer the products at low cost (Berman, 2015).
Bargaining power of customers
In the recent scenario, the customer taste and preferences towards the products are
changing drastically. Buyers have a chance to shift from one specific seller to any other retailer
due of the comparisons of the products.
Threats of new entrants

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There are various challengers like Tesco and Asda. It is analyzed that the companies who
want to enter the market have to face a high level of competition. The threat of entrants is high in
this industry. For instance: the company has to face many legal requirements to enter the
Australian market.
Competitive environment
Opportunities
The company has more opportunities to enhance the market share. The company can
invest in advertising so that the competition level can be minimized. Aldi has the potential to
outperform the big supermarket like Coles and Woolworths. The company can also expand in
the growing economies like Asia and Africa. It can help to achieve a large market share in an
effective manner (Grundy, 2017).
Threats
The company has to face a high level of competition from the other companies like Coles
and Woolworth. These two companies have established in the Australian market and now it is
important to compete in a proper manner by introducing effective strategies so that goals and
objectives can be accomplished. Also, the company has a major risk from the suppliers (Kew &
Stredwick, 2017).
Internal environment
Value chain analysis
Aldi focuses on a leadership strategy. It is analyzed that to enhance the value the
company reduces the cost so that quality can be improved (D. Banker, Mashruwala & Tripathy,
2014).

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(Source: human resource, 2018).
Primary activities
Inbound logistics
It is analyzed that organization buys a large amount of materials to produce its products
with own name. The cost is saved so that competitive advantage can be achieved. Also, the
company takes into consideration centralized warehousing so that products can be secured.
Operations
It is analyzed that company has its own brand name. The products are offered to the
customers that induce them to buy product. It is evaluated that product cycle of the organization
is in the development stage as it is famous in the marketplace if a comparative analysis is done
with the competitors (Mortimer, 2016).
Outbound logistics
It is analyzed that organization has its own logistics outbound. Aldi has acquired own
transport for delivering the products to the customers (Chatterjee, 2017).
Service

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The organization provides effective services like provide products on time so that the
level of satisfaction can be enhanced.
Marketing and sales
The company considers effective marketing strategy like reducing the cost so that
activities can be conducted effectively.
Secondary activities
Human resource management
There are efficient employees who are conducting the routine activities. Efficient
employees are recruited so that satisfaction level can be enhanced.
Technology development
The latest technology is used by the organization like billing machines so that the
services can be done in less time.
Firm infrastructure
It is concerned with the quality and scheduling so that the activities can be conducted in a
right way.
Resources and capabilities
By focusing on the competitive implications of resources it is seen that there are various
resources and capabilities that are considered as a strategic requirement. The strategic strength is
one of the main capabilities that are seen in the business and it has a sustainable benefit so that
large market share can be achieved. Good quality services are offered at a low price and also
there should be sufficient size to conduct the activities smoothly. Strategic weakness of the
company can be the opening hours and differentiation in a product (De Haas, Herold & Schaefer,
2017).

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Competitive environment
Strength
The major strength of the company is that it focuses on serving high-quality products at
reasonable price. The prices edge over the different retailers present in the market. The company
also focuses on keeping the operating cost low. The company also has a market presence in more
than 15 countries globally.
Weakness
The company is relatively small if a comparison is made with the competitors prevailing
in the market. The major weakness is that the company has a low level of advertising and has a
limited range of products that are available for the customers. There are many brands connected
with the store for low and cheap quality items (Steenkamp, 2017).
Conclusion
By analyzing the paper it is concluded that the company should focus on considering
effective marketing strategies like advertising so that goals and objectives can be accomplished.
This paper also takes into consideration the resources and capabilities of the company.

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References
Berman, B. (2015). How to compete effectively against low-cost competitors. Business
Horizons, 58(1), 87-97.
Chatterjee, S. (2017). Two efficiency-driven networks on a collision course: ALDI’s innovative
grocery business model vs Walmart. Strategy & Leadership, 45(5), 18-25.
D. Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to
more sustainable financial performance than a cost leadership strategy?. Management
Decision, 52(5), 872-896.
De Haas, S., Herold, D., & Schaefer, J. T. (2017). Shopping hours and entry: An empirical
anlysis of Aldi's opening hours(No. 51-2017). Joint Discussion Paper Series in Economics.
Grundy, T. D. (2017). Dynamic Competitive Strategy: Turning Strategy Upside Down.
Routledge.
Kew, J., & Stredwick, J. (2017). Business environment: managing in a strategic context. Kogan
Page Publishers.
Mortimer, G. (2016). ALDI gives suppliers, as well as shoppers, greater choice: Retail
expert. Journal of the Home Economics Institute of Australia, 23(2), 39.
Steenkamp, J. B. (2017). Global Brand Strategy: World-wise Marketing in the Age of Branding.
Springer.

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