Strategic Management: Analysis of Aldi's Approaches and Strategies

This document provides a detailed analysis of Aldi's strategic management approaches and strategies, including a balance of deliberate and emergent approaches, major macro-environmental and industry issues faced, and responses to those issues. It also discusses recommendations for future transformation and the support required for organizational strategies and plans.

Strategic management

EXECUTIVE SUMMARY
This is a summarised document of a company named as Aldi and the tools and techniques
that are used by it in context of the strategic management.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is one of the most important as well as crucial aspect since it helps
the company that is currently operating in the market to manage its critical factors with full
accuracy and preciseness so that it can add value to the firm in the long run (Alnoukari, Razouk
and Hanano, 2016). Also strategic management helps a business firm to adapt to the changing
environment so that it can sustain and survive in the current market scenario which is highly
competitive as well as dynamic in nature and also prove beneficial for the enterprise in standing
well ahead of all its rivals that are prevailing in the present time so that the organisation can
remain profitable in the long term and can accomplish the goals and objectives that are set up at
the starting of the firm. Aldi is a company that is geographically located in the Great Britain and
it deals in the industry of grocery supermarkets. It was a small firm at the very beginning and
there were many big names in the industry as similar as the company and the ones were Tesco,
Sainsbury, etc. and they only captured a larger share of the market but as the time progressed
Aldi gave special and attractive discounts to its customers that resulted in the slow and gradual
capture of a larger share in the market by the company. Thus it can be said that the enterprise is
performing with utmost effectiveness and efficiency in the current market that resulted in its
increased performance and sales which subsequently resulted in improved profitability in the
market too. In this report there is a detailed evaluation and analysis done of the above mentioned
company and the strategies that it used in the past to gain advantage over other companies that
are also operating in the similar market and the report also includes the things that is to be done
in the future so that it can help the company to grow and prosper in the long run scenario. Apart
from that the report also includes various macro-environmental issues that hampers and impacts
the overall performance of the firm and the things that the firm does so as to overall all the
challenges that are faced by the company. Further this report also includes examination of
various types of frameworks that possess a lot of importance in the present time with context to
the firm that is Aldi and the major frameworks that are explained in this report are Porter’s Value
Chain framework, VRIO framework, Porter’s Generic Strategy framework, and Ansoff Matrix
respectively in detail.

MAIN BODY
Critically analyse the balance of deliberate and emergent approaches to strategy formulation that
has been adopted by Aldi in the past.
The approaches that are used above are both very important in nature and thus possess a lot
of value in the current market scenario and thus it is very crucial to examine all the aspects in
detail so that it can add value to the firm in the long run. The deliberate approach suggest that it
is very essential to plan for the future since the company that is Aldi is working is a very
dynamic industry that has a wide scope to change in the near future and thus the approach says
that a firm can plan in a precise manner for the future so that it can help the enterprise to survive
and sustain in the market for a much longer time period as compared to its competitors that are
prevailing in the similar industry (Alzhrani, 2020). While the other strategy that is emergent
approach suggest that it is not possible to make exact plans for the future since the future is very
unpredictable so it is impossible to make accurate plans for the near future that can carter the
needs, requirements, and demands of the organisation in the long run. Thus it can be said that it
is very crucial to analyse and evaluate both the above explained concepts in detail so that the one
that is beneficial for the company can be chosen which can provide full accuracy and
effectiveness to the enterprise in the market in which it is operational.
Discuss the extent to which that balance has been appropriate and explain why?
Aldi is a company that is originally based in Germany but with the help of the two
approaches that is examined above it is currently one of the most successful as well as profitable
company in the present time and this can only become possible with the sheer dedication and
effective and efficient level of performance that the firm gives in the industry (Voynarenko,
Dumanska and Ponomaryova, 2019). The company used different aspects like it did plan for the
future so that necessary and appropriate adjustments and measures can be taken which can prove
useful for the organisation and can help it to grow and be profitable in the industry that is highly
competitive in nature. Also it did keep the factor in mind that it is not possible to predict the
future and thus plans can be made by only analysing the present situation and then guessing that
it might happen in the future but it always does not prove right and hence Aldi focused more and
more on the present conditions of the company and tends to improve that so that it can increase
its sales as compared to the past sales. Thus it can be said that the firm has done exceptionally
well in this regard as it has managed both the aspects and applied the one that was necessary at

particular time and hence it is the reason behind its huge and enormous level of success not only
in the domestic market but also in the international industry as well and thus it made the
enterprise one of the most valuable company that is currently operating in the market (Bandarian,
2018).
Recommend and justify how you believe that balance should be transformed for the future.
It can be further recommended that the balance can be transformed for the future since it is
very stable in the industry in context of its operation and thus it can be said that if the company
maintains its good performance like that only in the market it can help it to achieve new heights
of success that can improve its market value as well as positioning and conditioning in the
prospective industry.
What support is required to promote the development of the recommended balance of
organisational strategies and plans?
The things that can be done to accomplish a more wider area is only possible if Aldi can
get proper support from its workforce that is working for the company since they are performing
with the best of their abilities but still something is missing. The company can provide
appropriate training and development programs and sessions to its staff so that they can work
with more effectiveness and accuracy as compared to the present circumstances. If the workers
of the company work with the best of their abilities then it can subsequently help in the growth
and prosperity of the firm and can also support the organisation taking as a whole (Sugahara,
Daidj and Ushio, 2017).
Critically assess the major macro environmental and industry issues that Aldi has faced in the
past.
Macro-environmental issues are those issues that impacts the overall working of the firm in
both direct as well as indirect manner and thus it is very crucial and critical at the same time to
analyse and evaluate all those factors in detail so that appropriate and necessary changes can be
made in the working of the firm so that it can help in improving the overall position of the
company in the long run (Brovko and Petruk, 2017). External environmental factors are those
that hampers the performance of the company and since Aldi is working is a dynamic
environment so it becomes even much more important for it to examine all the aspects in detail

so that it can sustain in the market for a longer time period as compared to its rivals that are
operating in similar conditions.
Evaluate Aldi’s responses to the major macro environmental and industry issues.
To understand this concept in detail below are some aspects explained in detail with
reference to the above taken firm that is Aldi-
PESTLE analysis- It is a technique that helps in analysing different factors that impacts the
working and operation of a company and since Aldi performs at a wide scale it becomes very
crucial for it to examine all the factors in a well detailed way and below are all those aspects
explained in an elaborate manner-
 Political factors- These are aspects that are related with the political factors of a country
like its government’s stability in the nation, tax rates and policies that are made for the
activities that are performed by the companies, corruption, laws made for the security of
the children’s that are below a certain age limit are all the things that are included in it.
Since Aldi is working in the UK and thus it is very crucial to analyse the working pattern
of the government of the UK so that it can adopt different procedures and policies to
operate in its business firm so that it can abide by all the laws that are made by the
political parties that are in power in the county (David and David, 2017).
 Economic Factors- This factor is related with the economic aspect of a country like its
rate of unemployment, inflation, foreign exchange and reserves, etc. and the company
that is Aldi must ensure that it does a detailed research of all the aspects so that it can
help in the growth of the organisation in the long run so that economic factors does not
become a barrier in its operations.
 Technological Factor- These are factors that are related with the advancement and
improvement in the technology that is used by companies to produce goods and services.
It is very important for Aldi to use upgraded and advanced version of technologies in its
production so that it can help in reducing the overall cost and thus increasing the
profitability in the market (Shehadeh and Mansour, 2019).
 Social Factors- These factors are related with the societal issue that is the change in taste
and preference of the customers and thus evaluating the appropriate cycle of change so
that necessary adjustments can be made with that regard so that it can help the enterprise
to gain long term advantage over its rivals. Since Aldi company is working in an

environment that can be changes with respect to the preferences of its buyers and hence it
must change its procedure and policies from time to time so that it can carter the needs of
the prospective buyers that are prevailing in the current market circumstances.
 Environmental Factor- These factors are related with ensuring that the environmental
issues are taken care of like reducing the carbon footprints, level of pollution, etc. so that
it can give long run advantages to the company as well as the nation. Aldi uses
sustainable sources and renewable sources of energy so that it can result in minimum
pollution and also reduced its volume of carbon footprints that resulted in its increased
market value in the industry (Haghighi and Jalali, 2018).
 Legal Factors- These are issues that are related with the legal terms and conditions
according to which a company must perform in order to sustain in the market for a longer
time frame. Aldi abides by all the legal terms and conditions and also performs its
activities within the boundaries of laws that are made so that it does not hamper its
performance in the long run.
How effective have those responses been?
Porter five forces- It is an approach that came into existence in the year 1979 and was given
by a professor Michael Porter of a university and thus it is one of the most used tool for
evaluating the external environment due to its high success rate and usefulness in each and every
industry. There are five forces that are included in it and thus all of them are explained in an
elaborated and detailed manner below with context to the firm that is Aldi-
 Rivalry- It is a force that is related with the number of competitor that are prevailing in
the current market scenario and it can be seen as if there are few competitors then the
company have low risk but if there are a lot of rivals in the market then the risk is very
high. Aldi operates in a market that has a large number of rivals already present in the
market and thus it can be said that rivalry aspect of the organisation is too high and thus
appropriate measures must be taken that can help the company to overcome that
challenge.
 Supplier power- It is a force that describes the power that the suppliers possess and thus
if a industry has low suppliers then they can fluctuate the prices of the commodity
according to their benefit but if there are large number of suppliers present then
fluctuation of prices cannot be done at that extent. The industry in which Aldi works it

has a large number of suppliers and thus there is low risk for the company that they can
fluctuate the prices in the market (Iagăru, Florescu and Iagăru, 2016).
 Buyer power- It is a force that is related with the power that is possessed by a buyer that
is if an industry has large number of buyers then they cannot fluctuate the prices of a
product as compared to the one which has low consumers in the market. Aldi works in a
market that has a large number of customers present and thus one single buyer cannot
hamper the sales of the firm and thus the risk factor is low in this regard (Basile,
Kaufmann and Savastano, 2018).
 Threat of substitution- It is a force that describes the threat that the similar products
possess and thus if a market has more similar natured products then the risk is high as
compared to an industry in which there are no or few similar product available. Aldi
operates in a market that renders similar natured products and thus the risk is too high for
the enterprise in this regard since customers can switch to other products if they find it
cheap there (Samba, Van Knippenberg and Miller, 2018).
 Threat of new entry- It is a force that is related with the entry and exit of the company
and if there are barriers and restrictions in the entry then the risk is pretty low as
compared to a situation in which there is free entry and exit. Aldi works in an industry
that has no set regulations for the firms that are entering in the market and thus the risk
factor is high for the company since it ultimately results in the increase in unnecessary
competition that further leads to decrease in the prices that causes heavy losses for the
firms.
Identify and explain the impact of major macro- and competitive environmental issues currently
facing Aldi that need to be reflected in the company’s future strategy?
Thus it can be said that there are advantages as well as limitations for the company that is
Aldi but it must operate in an effective and efficient manner so that the unfavourable situations
can turn to its advantage in the long run (Irawan and Mahmud, 2017).
3. Using Porter’s Value Chain framework, critically analyse Aldi’s strategic capability.
There are a number of different frameworks that are prevailing in the current market but
the most important ones are explained in detail below with context to the mentioned firm that is
Aldi-

Porter’s Value Chain Analysis- It is a tool that is very useful for the firms like Aldi since it
helps in evaluating and analysing the aspects that proved beneficial for the company in
outperforming its rivals in a highly competitive market environment. There are many things that
are included in it and all of them are explained in a systematic and sequential manner below-
 Primary Value Chain Activities- The foremost objective of it is to observe and examine
that the product is delivered to the prospective buyers within time and Aldi recruits
specialised teams in this regard so that the company can grow in the market (Janošková,
Csikósová and Čulková, 2018).
 Inbound Logistics- It is related with the storing and receiving of the material and
inventories so that it can be used in production in a smooth manner and Aldi keeps a tab
on these activities and makes it sure that all efforts are directed towards a similar goal
(Bryson, Edwards and Van Slyke, 2018).
 Operations- It is related with the activities that it performs in order to sustain and survive
in the industry and Aldi makes it clear in the very starting of the company about the goals
and objectives that has to be achieved within a stipulated time period so that it can result
in the improve condition of the firm.
 Outbound Logistics- This aspect is related with the product reaching the end consumers
and Aldi has its own chain of network that enables the company to send its goods and
services to the buyers within a short time frame (MacFarlane, 2017).
 Marketing and Sales- This is one of the most crucial factor as it is related with
promoting and selling the product in a systematic manner so that it can reach maximum
number of people and that too within a limited time frame and the company that is
mentioned above uses advertisement as its foremost tool of promoting its goods since it is
cheap and gives a wide reach and thus subsequently helps in improved sales volume.
What linkages in the Value Chain does Aldi manage particularly well? With the aid of the VRIO
framework, assess the sustainability of Aldi’s strategic capability.
VRIO analysis- It is one of the most important model that is very useful in evaluating the
internal environment of the business firm such as Aldi so that measures can be taken that can
help the company to grow in the long run (Katsioloudes and Abouhanian, 2016).

RESOURCES VALUABLE RARE INIMITABLE ORGANISABLE COMPETITIVE
ADVANTAGE
Brand
Image
Brand
image - - -
Temporary
Competitive
Advantage
Service
quality
Product
Quality
Product
Quality - -
Temporary
Competitive
Advantage
Innovation
Capabilities
Distribution
Network
Distribution
Network
Distribution
Network -
Sustainable
Competitive
Advantage
Human
Resources
Financial
Resources
Financial
Resources
Financial
Resources
Financial
Resources
Potential
Competitive
Advantage
Valuable resources- It includes resources that are currently available with the company
that possess a lot of importance as well as value at the same time and since Aldi is a huge firm
it’s most valuable resource is its quality of service that it renders to its buyers (Nikolaeva, 2018).
There are some sub parts of it that are explained below-
 Brand image- It is very valuable for Aldi since people come to buy products from it only
because of its brand image that it made in the market.
 Product Quality- Another most valuable aspect is the quality of the product for Aldi
 Distribution Network- The network of distribution is also very valuable for Aldi since it
enables the company to reach its customers on time.
 Financial Resources- Financial resources are very important for Aldi since they help
them to allocate appropriate funds according to the needs and requirements (Obydenov,
2016).
Rare resources- These are resources that are very precious and are also rare to find and
hence Aldi Company must take very good care of these so that they can add value to the firm in
the long term scenario (Valickas, Raišienė and Arimavičiūtė, 2017). Some sub parts of it are
explained below with context of Aldi-

 Product Quality- Aldi gives products to its customers that are in trend and hence stands
up to the expectations of the customers.
 Distribution Network- Aldi has a well balanced network that helps it to gain advantage
over other companies in a well sequential manner.
 Financial Resources- Since Aldi has invested a huge amount of R&D department that
helps in its expansion in various countries (Ocasio, Laamanen and Vaara, 2018).
Inimitable resources- These are resources that are very hard to copy and thus Aldi must
keep a tab on these resources so that it can help the company to grow. Sub parts of it are
elaborated below-
 Distribution Network- Aldi has a proper and well managed network of distribution and
thus helps it to improve its position in the market in which it is operating.
 Financial Resources- Aldi has financial resources that other companies lack and thus
giving it an upper hand in its operations.
Organisable resources- These are resources that are organised in a well prescribed
manner and Aldi gives a lot of importance to these resources. Its parts are explained in detail
below-
 Financial Resources- It is very well organised, inimitable, rare, and precious for Aldi.
Thus it can be said that there are a number of different benefits and disadvantages and thus
the firm must chose accordingly (Oppio and Bottero, 2018).
Critically analyse Aldi’s previous strategies using Porter’s Generic Strategy framework, and the
Ansoff Matrix.
Porter's generic strategies- It is a very critical aspect since it helps in formulating
appropriate strategies that include problem solving factor and thus Aldi used it in the past to gain
advantage over other rivals. There are some measures that are adopted by Aldi so that it can
prove beneficial for it and thus all of them are explained below-
 By adopting lowering pricing of business within market. For instance discounts, free
trails, coupons, psychological pricing.
 By concentrating on fulfilling dynamic needs and expectations of customers so as to earn
competitive advantages.
 Through focusing on making goods and products unique from competitors (Pellicano,
Perano and Casali, 2016).

Ansoff Matrix- It is a technique that helps the company such as Aldi to increase the volume
of sales by penetrating the market. It also results in increased sales with maximum efficiency
with the help of optimum utilization of resources and by reducing the wastages. It can be
understood as the company that is Aldi has a simple and organizational structure that is flat in
nature and hence it enables the managers of the floor to lead from the front that increasing the
overall performance in the long run. The company also does not overspend on useless activities
rather it invests in things that can result in increasing the overall value of the company in the
market (Plaček, Půček and Šilhánková, 2017).
To what extent are these strategies appropriate for the future?
These strategies are appropriate for the future because they assist the firm in performing
their operations and management in an effective and efficient manner so that it can easily be
analyses about the marketing strategies and how it can grow and develop the company in a
potential manner with enhanced goodwill and stability in the market place.
Analyze the approach to internationalization that Aldi has adopted and assess the extent to which
that approach has been appropriate, and explain why?
Both the approaches are suitable for the company at different levels as per the needs and
requirements of the current situation of the firm. Porter's generic model will help the firm to
analyze the innovation of products and services with cost saving method on a international level
and Ansoff growth matrix will support the firm to expand their business globally either in terms
of products and services. Reason behind choosing such approaches and strategies for the
company is that it can help the firm in generations of their sales and revenue and gaining stability
in the market place with good image and reputation in the market.
CONCLUSION
It can be concluded from the above that there are many advantages as well as disadvantages
of the firm that is mentioned above but still the company is very well placed in the market and
has the scope of further improvement in the market.

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