Strategic Management of ALDI: Analysis and Recommendations

This report provides an analysis of the strategic management of ALDI, including SWOT and PESTLE analysis. It also discusses the impact of strategy on organizational culture and structure. Recommendations are provided for improving business operations and achieving market growth.

Strategic management

Table of Contents
EXECUTIVE SUMMARY........................................................................................................3
INTRODUCTION......................................................................................................................4
MAIN BODY.............................................................................................................................4
About the company................................................................................................................4
About the industry..................................................................................................................4
SWOT analysis.......................................................................................................................4
PESTLE analysis....................................................................................................................7
Porter generic strategy............................................................................................................9
Impact of strategy on organisational culture........................................................................10
Impact of strategy in organisational structure......................................................................10
Conclusion and recommendations...........................................................................................11
REFERENCES.........................................................................................................................12

EXECUTIVE SUMMARY
The report includes analysis of strategic management of ALDI, which is the fifth
largest multi chain retail store in UK. The company is having headquarter in Essen, Germany.
The company is having their chain in more than 20 countries and having more than 10000
retail store over there. This is a family owned business so whole the control is hold by family
members only. The report includes PESTLE analysis of ALDI so as to make the company
aware about those extrinsic factors which may have impact on their business operations.
PESTLE analysis helps the business to formulate strategies in such a manner that these
factors may provide positive impact on the business due to which higher output can be
obtained with these factors. Furthermore the report includes SWOT analysis so as to get to
know about strength of the company and to use those over eliminating business weaknesses
and to examine market opportunities so as to avoid coming threat in the business and to
tackle those with strengths and opportunities. Moreover porter generic strategies are analysed
so as to decide over the best suitable strategy which is to be adopted by the company to
capture huge customers and to satisfy them by their offerings. At last the relation between
strategies over culture and structure of organisation is enlightened which makes the business
more capable to implement the strategies in the most effective way within business. In the
last part of report, recommendations are provided so as to improvise business operations and
to make the business highly effective to attain business success and market growth.

INTRODUCTION
Strategic management includes goal setting, analysing competitive environment so
that to examine business opportunities. Strategic management is all about putting clear
understanding about vision of the company so that future can be decided and accordingly
strategies can be adopted. This report is thoroughly based on discussion upon the strategy
which can be adopted by companies so as to attain success in marketplace. For this purpose
the company which is taken to understand all these concepts is ALDI. ALDI is a German
family owned supermarket chain. They are having headquarter in Essen, Germany and having
almost 10000 stores in near about 20 countries. The company was founded in 1946 and they
are operating their business in retail industry(Anitha, 2016).
MAIN BODY
About the company
ALDI is a multichain retail store which was established by two brothers named Karl
and Theo Albercht in 1946. It is a family owned business which is having headquarter in
Essen, Germany. The company is having more than 10000 stores and covering more than 20
countries. The company was divided into two parts in 1960 by name Aldi Nord and Aldi sud.
Aldi Nord is having 2500 stores in western, northern and eastern Germany and Aldi Sud is
having 1600 stores in western and southern Germany.
About the industry
The retail industry in UK is one of the largest industry sectors which has employed
near about three millions employees. Retail industry deals with selling and buying of goods
in which huge diversification in seen. In 2019 UK had overall retail sales £394 Billion in
which 2.9 million people were given employment. It has been seen in 2019 that this industry
grew at the rate of 3.4%. In the year 2020 the monthly growth rate has declined by 0.3%
which is due to COVID-19 pandemic.
SWOT analysis
SWOT Analysis is one of the most prominent tools for ALDI to level managers for
analysing the Existing Strengths and Weakness and upcoming opportunities and threats.
Below given are some points for SWOT Analysis:-

Strengths: - ALDI is one of the leading organizations in its industry, which is the
result of its Strengths. Below given are some of strengths of ALDI:-
1) Strong Distribution Network- ALDI carries on its operations in 20 different
countries with over 10000 stores smoothly, which is only possible with strong
procurement and distribution network (Sarsby, 2016).
2) Strong Brand Value- ALDI is a known brand having strong brand value, which
makes it preference priority for customers as compared to its competitors and
makes its existence long stable (Bagheri, 2016)(Boyer and et. al., 2018)(Channon
and Jalland, 2016).
3) Process Automation- ALDI has invested large share of resources in making the
day-to-day business processes automated and decreasing manual intervention this
makes it capable of meeting any demands and timelines.
4) Strong Diversification Performance- ALDI has always continued to diversify its
business to new streams and have been successful in reaching the desired goals.
Therefore, this strength makes it capable of entering new lines of business.
Weakness: - Strengths always comes up with some weaknesses being part of it, there
are some areas where ALDI needs to improve in order to achieve the desired goals more
smoothly and mitigating itself from exploitation of those vulnerabilities:-
1) High Attrition Rate- Compare to other organizations ALDI has higher attrition
rate of employees, which increased the training costs and decreases the output
efficiency.
2) Higher Inventory Days- Inventory days of ALDI is somewhat higher as compared
to other competitors so which needs to improve from long term perspective.
3) Lack of New technologies- Although ALDI has automated its various processes
but still it needs to increases its investments in new technologies to increase its
market foothold.
4) Lack of Financial Planning- Various ratios as if current ratio and liquid ratio
suggests that more efficient usage of cash is possible then how it is being used
now.
Opportunities: - Opportunities are the positive events or signs, which enables
organization to either, improve their existing line of business or achieve growth through new

line of business. Below given are the upcoming opportunities noticed in favor of ALDI
(Chatterjee, 2017).
1) Organization’s Core competencies- ALDI can increase its success in similar
products other than its core competencies. For ex. GE healthcare research, assisted
ALDI in developing better Oil drilling machines so to decrease cost and increase
margins this is an investment option and opportunity.
2) Lower Inflation rate- Inflation rate has marginally went down and estimations
are being made to be further decreased which provides better market stability to
the organization and enables to raise funds at lower rate of interest so that new
investments can be made with lower cost of capital.
3) Opening of new markets based on Government agreement- New technology
standards and government free trade agreement has provided ALDI an opportunity
to enter into new emerging markets to expand its business.
4) New Environmental policies- these new policies will create level playing field
for all the organizations in the industry. It will create a new opportunity for ALDI
to increase its advantages from new technologies and increase the market share in
the new stream (David and David, 2016).
Threats: - Every opportunity comes along with a hidden or visible threat. To make
most out of all the opportunities existing ALDI should mitigate every threat such that its
harms could be either removed or diminished to minimum extent possible.
1) Intense Competition- Due to stable profitability nature of ALDI’s industry line
the number of players are increasing rapidly and which is leading the threat of
intense completion for the organization. They can mitigate this threat by
diversifying line of business regularly.
2) New Technologies by Competitors- It might be a possibility that competitor
might explore and invest in better technologies earlier as compared to ALDI, so it
may cause a threat to lose market advantage to them. Therefore, ALDI have to
mitigate this threat by regularly updated and investing in upcoming technologies
in market.
3) Different laws of different countries- As ALDI operates in multiple number of
countries it is being exposed to various laws. Therefore, any major change in laws

in any country might create liability claims. Therefore, they should take proper
legal consistency to mitigate this exposure threats (Jackson and Mushtaq, 2018).
4) Seasonal Nature of high Profitability products- The demand of highly
profitable goods is seasonal in nature and any unexpected event during that
seasonal phase peak may lead to threat of losing that profit opportunity.
PESTLE analysis
PESTLE analysis which involves examination of key external factors which may
affect the business of an organisation. This analysis provides various scenarios to the
company so that company may deals with outer environment in order to attain business
growth. PESTLE analysis for ALDI is explained as under:
Political factors: These factors include those political interventions which may have
huge impact on the business. In the context of ALDI, the company is having high impact of
this factor as due to Brexit uncertainty value of pound sterling has decreased due to which
inflation rate is on its peak. As population of UK has stopped to invest their money on non-
essential items which is providing lesser market expansion opportunities to retail sector such
as ALDI. On the other hand ALDI is having opportunity to grow in the market by lowering
their product prices so that to capture huge customers (Perera, 2017). The country is
connected to various organisations such as G20 and Commonwealth of Nations which
encourages the business environment in the Australia and helps to make stable political
conditions so as to provide low cost location to the businesses in Australia. Further ALDI has
made foreign direct investment in UK which is creating difficulties as in operations of their
business.
Economic factors: These factors includes GDP rate of the country, inflation rate,
currency transition, tax rates and tax policies, rules of FDI and employment rate in the
country etc. In context of ALDI due to Brexit the value of pound has decreased due to which
unemployment rate has been increased by which company is having lesser skilled employees
in their business. On the other side the fluctuating exchange rates are the major factor which
is affecting the growth of company. Furthermore ALDI imports most of their goods from
abroad which may increase their overall costs. Due to increased discounts in products it is
difficult for ALDI to deal with Australian reserve bank as the bank is continuously putting
efforts to deal with inflation (Jajja and et. al., 2017).

Social factors: These factors include taste and preferences of consumer and impact of
society on the business and the belief and attitude of the population over the business. These
factors influence the marketing structure of the business of ALDI. In the current scenario
preference of customer is towards healthy foods and healthy habits which are providing
opportunity to ALDI so as to deal with attitudes of customers. Furthermore customers want to
have one roof solution to their needs and wants for which it is required by ALDI to satisfy
their needs so as to give them high value benefits. For this ALDI may start to deliver their
products online so as to enhance their customer base and to meet their expectations.
Technological factors: These factors include the advancements in technology which
may have a significant impact on the business. For businesses it is required to introduce new
innovations so as to stay updated to the technology and to adapt new technology feature so as
to boost their market image and customer base as well. For ALDI, the innovations can be in
their billings system or product keeping system by which customer may enhance their
experience so that to enhance customer footfall. Furthermore ALDI may adapt AI so that to
enhance ease of their customers as they can initiate some display TV so that to mention place
of the products in the store so it will be easier to locate products for the customer that will
helps them to enhance customer satisfaction (Lafore, 2016).
Legal factors: These factors include all the legislative laws and governmental
interventions within the business which may have high impact on the business. Legal laws
are required to be followed by all the businesses so that to avoid any law suits. In the context
of ALDI Australia is the country which is having rigid laws when it comes to their employees
and citizens. ALDI is the company where they are having huge employees who are working
in their business so as to deal with needs of their customers. On the other hand ALDI is
required to follow all the employment laws and food and safety act so as to safeguard rights
and interest of their employees and other stakeholders including customers and government.
Furthermore the company highly believes in providing equal opportunities to their employees
irrespective of their gender or religion so that to boost morale of their employees and to
enhance employee engagements.
Environmental factors: These factors include the impact of business over
ecosystems and various environmental laws which are enforced by government of a nation. In
case of ALDI, Australia is the country which is highly proactive for their nature and
environment so for this ALDI is working to reduce their carbon wastages so as to minimise

their cruel impact on the nature. On the other hand they are having stores which are high
ventilations so that to provide sufficient air inside the stores which may influence the
customer footfall. Furthermore ALDI is the company who is promoting ban of plastic carry
bags and plastic packaging material for this they are providing numerous options such as
paper bags and recyclable packing materials.
Porter generic strategy
Porter has propounded five generic strategies which are focused on enhancing market
competitive edge with the help of three major strategies which are cost leadership, cost
differentiation and focus. These strategies are explained as under:
Cost leadership:
1) Low cost strategy: This strategy offers wide range of products to the customer even
in lowest prices in the marketplace. So this helps the business to grow in the market
and to enhance their customer base which may lead them to earn high profits. This
strategy is based on targeting huge market so as to attract huge customer by offering
low prices and huge variety in products. In the background of ALDI, the company
may adopt this strategy for a segment of their offering as all type of products cannot
be sold at cheaper prices so this strategy can be adopted for a small segment of
products (Manyaeva, Piskunov and Fomin, 2016).
2) Best value strategy: Under this strategy the products are offered in the best prices to
large customer base which is the lowest price in the marketplace. This strategy may
help ALDI in dealing with their rivals in a considerable way.
Differentiation
Under this strategy company is focused to offer unique product to their customer that
is not offered by any other rivals. The main target of this strategy for ALDI is to capture
those customers who are not price sensitive and are prone to buy innovative products.
Focus
1) Low cost focus: Under this strategy the products are offered in niche market and
with the lowest price. With the help of this strategy ALDI is able to target small
market segment so as to establish monopoly over the market (Panwar and et. al.,
2016).

2) Best value focus: Under this strategy the products are offered to the customer of
small market segment and with the best price value. This strategy is helpful for
LADI as all type of product may be included in this strategy and customer base
can be enhanced.
From the above analysis it can be concluded that the appropriate strategy for ALDI is
best value focus as with the help of this strategy the company will be able to put their
attention on all range of products and for each product they will be providing the best price to
their customer. This will assist customers to get attracted towards the company and lead them
to earn profits.
Impact of strategy on organisational culture
The strategy of best value focus may have high impact on their organisational culture
as the by adopting new strategy this will influence corporate culture, beliefs and working
style so this will impact employee relations due to which operational activities may have
significant impact of this. The major factors which may have significant impact on
organisational culture are communication and strategies. So the strategy guides the company
in implementing plan of actions and guidelines to attain business growth whereas culture
helps the business to attain those targets with shared values and beliefs. The driving path of
strategy is through business culture which involves practices and values of the business. So
the strategy is having major role in the execution of organisational culture. As in context of
ALDI the company is changing their strategy and to properly implement that, it is suggested
to convey and prepare action plan in appropriate manner so that no confusion may arise and
employee will be able to execute the entire given task in most effective manner. Furthermore
appropriate reward policy should be introduced in the business which will boost morale of
employees and this will help the business to touch new heights in short time (Shepherd,
Mcmullen and Ocasio, 2017).
Impact of strategy in organisational structure
Organisations are required to make strategies so as compete in domestic and
international level. On the other hand organisational structure is the set of beliefs and
organisational culture. Organisational structure is focused on establishing relations with all
the strategies and working people in the organisation so that to communicate in an effective
manner and to establish strong relationship in between. Organisational structure helps the
business to align with strategic decision and goals of the business. So it can be said that

organisational structure is having implied relation with strategies so as to deal with strategy
the structure of the organisation is required to be efficient (Teller, Alexander and Floh, 2016).
Every organisation prefers to change their strategies so as to maintain familiarity with
organisational structure. Organisations are focused on three major dimensions which are
innovative strategy, cost minimisation and imitation. Every organisational structure is having
their own goal. As in context of ALDI the company is having matrix structure as they are
having target to minimise their cost and to work efficiently in the marketplace. In order to
implement strategy in an effective manner the company is required to focus on their structure
so that all the strategies can be conveyed to each and every person working in the
organisation.
Conclusion and recommendations
From the above discussion it can be concluded that strategy management is the key
factor in growth of the business. The report includes PESTLE analysis which is essential to
analyse external environment and to find out impact of those factors on business operations.
SWOT analysis is important to find out prevailing strengths of the business so that to use
their strength to cover up weaknesses and to use market opportunities. It is to be
recommended that ALDI is supposed to provide training to their employees so as to enhance
their skills. Furthermore ALDI is required to analyse all their resources so as to make
appropriate use of that. At last ALDI is required to set their prices so as to attract more
customers and to become market leader (Viltard, 2017).

REFERENCES
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