Aldi's Strategic Management and Marketing Analysis

The provided text is a compilation of references to academic papers and articles related to strategic management research. It also includes information about Aldi's sales figures, employee numbers, revenue, and market position in the UK. The assignment appears to be a case study or analysis of Aldi's business strategies and performance.

Strategic Management
Table of Contents

EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of the company...........................................................................................................1
Porter's five forces.......................................................................................................................2
Porter's generic model.................................................................................................................4
CONCLUSIONS..............................................................................................................................6
RECOMMENDATIONS.................................................................................................................7
REFERENCES................................................................................................................................8

EXECUTIVE SUMMARY
This report briefs about different topics that will give the reader the analysis of strategic
management. The organisation must implement these tools so as to perform the functions of the
organisation effectively. Different strategies are used by the company to achieve the pre set goals
as defined by the managers. The different strategies which are applied are Porter's five force and
his Generic models. Finally the recommendations would be given to the company so as to
achieve the competitive advantage.

INTRODUCTION
Strategic management is defined as the process that runs in the organisation on the
continuous basis. It is the process that involves monitoring, analysis and assessment of all the
activities of the organisation so that it can achieve the goals and the objectives efficiently. As the
customers preferences and taste changes from time to time the organisation should follow the
steps that provide them the way to cope up with these changes (Hitt, Ireland, and Hoskisson,
2012). This will help the company in taking effective and proper decision which will enhance
their profitability. This reports lays the emphasis on ALDI which is a German multinational
retailer company who deals in food, beverages, and sanitary articles. It is head quartered in
Essen, Germany. The company is working in different continents across the world. The report
emphasis on the strategic management of ALDI.
MAIN BODY
Overview of the company
Aldi is one of the largest supermarket chain operated in UK with having more than
10,000 stores in around 20 nations. It is engaged in selling wide range of products and services
such as food products, beverages, sanitary articles, household products etc. It came into existence
in the year 1946 by Brothers Karl and Theo Albercht after taking over their mother's store in
Essen which had been operated since 1913 (Barney, 2012). Its headquartered is located in Essen,
Germany and primary served Australia, Austria, Belgium, china, UK etc. Aldi mainly focusses
on low cost economic model due to which they serves customers with huge savings without
compromising with quality. In the year 2015, Aldi has seen a growth in UK sales with profit
increasing by 11.8% with an annual turnover of 7.71 Billion in the 2015. It is well established
brand which has attained strong brand image in UK market. Winning the “Supermarket of the
Year 2015 prove the same statement. The other important information about Aldi is determined
as under:
Mission: The mission statement of Aldi states “to serve customers with the products they
purchase regularly and ensure that such products are having best quality at guaranteed low
prices.
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Vision: The vision statement of Aldi states “Top quality at incredibly low prices-
guaranteed with having five main ideologies which includes high savings, excellent quality,
outstanding value, superb special buys and buy with confidence:.
Size: Aldi has attained more than 30000 employees in the year 2017 which are
contributing more efforts in achievement of mission and vision of company within limited period
of time (Number of employees in Aldi, 2018). The company has generated revenue of 10.2
billion pound in the year 2017 which increases their size and position among their rivals in
supermarket chain sector (Aldi UK Revenue, 2018). According to the BBC reports, (2016) Aldi
has announced to recruit 5000 more employees in UK and plan to open new 80 stores with the
purpose of capturing huge market share.
Scope: Aldi is engaged in operating supermarket chain where huge number of brands
products with discounted prices which can easily attracts the buying behaviour of maximum
number of people across worldwide (Bettis, et. Al., 2016). It deals in providing food products,
beverages, sanitary articles, household products etc. which increases the scope of sustaining into
market for longer period of time.
Competitors: Due to engaging in supermarket retail chain industry, Aldi has facing tough
competition among their rivals such as LIDL, Wallmart, Marks and Spencer, Netto etc. Instead
of huge competition, Aldi is become UK's fifth largest grocer as the discounted supermarket
stepped up the pace of growth (Aldi becomes UK's fifth largest supermarket, 2018).
Financial condition:
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Picture 1: Aldi sales figures

Source: ALDI sales figure, 2018
Strategic management for Aldi is more important as any wrong decisions or strategies
may brings their brand image into danger due to which it is important for the management to
analyse the results after execution of their decisions and plans so that further improvements can
be identified (Keupp, et. al., 2012). It requires management of Aldi to understand the
competitiveness of market which enables them to prepare an effective plans and strategies in
advance so as to grab competitive opportunities and tackle threats in more effective and efficient
way. As from the above picture it is analysed that the financial condition of the company is very
good and is performing in a better way. The sales of the company is increasing in the positive
direction and following the trend of upward movement. The company has opened around 500
stores in the decade providing their customer's convenience in purchasing the goods. The current
sales of the company is around 11 Bn and is expected to go to 15 bn in the coming years. The
company has around 762 stores in UK and also have the plan to open around 1000 stores by
2022 within UK. The companies operating profit grew up by 26% in the recent past. Turnover
grew up to 16.4% and the customer base increased from 1.1 million to 15.8 million. The
financial ratios of the company are in best condition. Company is providing better returns to their
investors. Identification and analysis of competitiveness of market can be properly done with the
help of application of Porter Five Forces and Generic model. These are further explained as
under:
Porter's five forces
Porter's five forces model: It was presented and created by Michael Porter to dissect
engaging attractiveness of the segment that may decide gainfulness. It is utilized by
organizations as a vital strategic analytical tool that may manage the associations to assess the
outside market with the goal that competitive edge can be gained. It help to decide the opposition
which is accessible in the market. It controls the organizations to recognize those variables that
are identified with industry and affecting organizations whether adverse or positive manner.
Associations may execute core capabilities at their working environment so as to gain maximum
advantage (Boyd, et. al., 2012). Every one of these forces may help the management of Aldi to
examine every one of the powers that may influence the business and its activities. Direction for
the formulation of effective strategies can be gained by this model in which advertisers, leaders
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and managers of the association may decide to overcome market issues. Every one of the powers
are depicted underneath:
Threat of substitute products or services: There are huge number of convenience stores
are increasing in almost all the nations which can bring threat to the large supermarket chains
like Aldi. Due to having large number of convenience stores from which the buyers can easily
buy their required products, the sales and revenue of big companies may get affected. Therefore,
Aldi under threat as the chances of shifting buying behaviour of customers are more. In the
supermarket industry, there are number of products which can easily find substituted by the
customers to switch on. But instead of this, small retailers can never be a complete alternatives
for superstores because of having wide range of products they offered in the market. Therefore,
Aldi is facing moderate threat of substitutes.
Bargaining power of suppliers: There are strong market leaders in the supermarket
industry having strong brand image and goodwill due to which it may difficult for suppliers to
shift their supplying behaviour towards another organisation due to having fear of losing out on
these big supermarkets (Hitt and Duane Ireland, 2017). For this, they put maximum efforts in
maintaining healthy relationship with the huge brand name such as Aldi as it ensure them about
huge determinant for their sales. Therefore, the suppliers have low bargaining power in case of
Aldi.
Rivalry among existing firms: There are number of rivals exist in supermarket chain
industry which forces Aldi to lower the prices of their products and services in order to achieve
competitive advantage. Such competitors includes Tesco, Marks and Spencer, Asda etc. which
have given tough rivalry competition to Aldi by bringing new pricing policies towards the
targeted customers. Therefore, Aldi should focuses on lowering their advertising cost and invest
in developing its existing products so as to move ahead in the competition among their rivals in
competitive market. Aldi is become UK's fifth largest grocer as the discounted supermarket chain
which proves that they are working for progress in market. Therefore, the rivalry in supermarket
industry are very high due to which Aldi should bring innovative changes in their products and
services on regular basis so as to maintain their strong sustainability in market for longer period
of time. High competition among the rivals will result in inflation of cost of marketing and
promotional activities as ALDI has to use more suitable scheme that may help to grow more
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profits as compare to other organisation. It is essential for ALDI to hold its customers by
providing them best quality of products.
Bargaining power of customers: Customers have different options to purchase grocery
products and other necessities items due to having huge number of supermarket chains due to
which they prefer to buy products from those companies who provides more discounted offers
for their quality products and services (Doz, 2017). As nowadays the consumers preferred
quality over a price due to giving more preferences to their health. Therefore, the switching cost
for buyers are very low as the stores of Aldi and other supermarket chain are located in almost
every locations. The customers can easily shift its buying behaviour to other supermarket chain
due to having multiple number of options to choose from in this industry. Therefore, the
customer have high bargaining power over Aldi.
Threat of new entrants: There are huge number of established brand name are existing in
the supermarket industry which brings more challenges and difficulties towards the new
company to enter the market. Tesco, Aldi, Marks and Spencer etc. are such big brand name
which are operated its business operations from so many years due to which they have developed
their own customers and already achieved their loyalty so that it will quite tough for new entrants
to stable their position in market (Killen, et. al., 2012). Entering into supermarket requires huge
entry cost or capital in order to establish supermarket, access distribution chandler, capturing
huge market share and introducing differentiate products than their rivals. Therefore, the threat
of new entrants for Aldi is quite low. ALDI may gear these threats by the help of using advanced
techniques in supply chain and use new market ways to retain all its loyal and prospective
customers.
All the above described forces are much affecting the business on retail, food and
beverage and supermarket chain industry due to having huge competition in the market. For
Aldi, it is important to gain all information about the competitiveness of market which makes
easy for them to make an effective strategies to cope up with the challenges. Consumers and
supplier's power to bargain may effect upon the marketing activities of the company. Companies
are trying to catch the attention of customers and take higher market share with the help of
impressive policies.
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Porter's generic model
Generic model of porter: This model gives the company a brief information about the
position it has in the market. It also helps the company to identify its profitability index and
finally help them to compare it with industry average. This also helps the company to gain
competitive advantage so that it can achieve its future goals. ALDI's managers uses the idea of
Porters generic model to enhance the performance of the organisation and to build the global
brand image (Hahn, 2013). This model contains four types of strategies which helps the company
to identify that if the operations are being done efficiently or not. These four models are
discussed as below:
 Cost leadership strategy: This strategy aims at gaining the competitive advantage in the
market so that company can gain long term market sustainability. This is only possible if
the managers in the organisation does proper market research. This helps the company to
achieve the leadership in the market on the basis of its low cost. As in the case of ALDI
the company needs to become more customer centric so that they can manufacture the
products which are in their budget. If the company offers their product at a lower price
than the huge number of customer's can be attracted towards their product and will finally
increase their turnover. This can be achieved by managing the resources which are
indulged in the process of manufacturing the product. If the company produces its
product in masses than it will help them to achieve cost leadership in global market. This
way the company will be able to cope up with industries average and may also be able to
set benchmark for others.
 Differentiation: This is the strategy where the new product is launched by the company
which is different from their competitors. The company uses the technology and
innovation process so that it can make their product differentiate from those of their
rivals. This way company gains the attraction of the customer's towards them. If the
company develops the innovation and research department than it will lead them to
provide the differentiated products in the market and also help them to retain loyal
customer's (Hair, et. al., 2012). As ALDI is one of the leading retailer and supermarket
chain in UK they have to develop good research and innovation process and the ability to
deliver high quality products. The company should use the effective sales and marketing
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process so that market understands the benefits that are offered by their differentiated
product.
 Cost focus strategy: This is the process in which company analysis the demand of the
customer's for their low priced product. This analysis helps the company to make the
future decisions about their pricing technique. ALDI uses this strategy so that it gets the
idea of the customer reaction about their product. This strategy focuses on the cost of the
product which makes it leader in the market (Molina-Azorin, 2012). It is beneficial for
ALDI as it will help the company to increase the market share. The targeted market in
this strategy is Niche market. This strategy helps the company to make appropriate
decision regarding the launch of new product in the market.
 Differentiation focus strategy: This strategy mainly focuses on making the product more
effective in convincing the customer to buy it. It is the strategy that helps the company to
attract the customer's because of its uniqueness. ALDI should use this strategy to make
the product more effective and innovative. This will help the company to achieve the
competitive advantage over others (Hill, Jones and Schilling, 2014). It is important for
the companies like ALDI to use this strategy so that customer's base can be increased and
they can retain their loyal customer's because of their product innovation. The company
must keep in mind customer's preference while innovating new product. The skills of the
managers will helps the company to build the product that will attain the organisational
goals.
These strategies can be used by the managers of the company to enhance their production and the
turnover. It can be used by the managers so as to expand their business in different location
across the globe (Hill, 2017). The managers of the company has to take into consideration the
market conditions and the trends so that the new product can be launched in different continent
smoothly. The company should use the differentiation strategy to expand its business. The
company already has the good market value so it should will help them to grab the target
customer's easily. If the company maintains the positive image in the market then it will help
them to expand business more efficiently.
CONCLUSIONS
From the report it has been concluded that strategic management helps the company to
analyse the results of the policies that has been implemented by the managers in past. It also
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helps them to determine the future requirement so that the company can gain competitive
advantage over their rivals (Priem, and Carr, 2012). ALDI should use various tools of strategic
management which includes Porter's five force model as well as its generic strategies. These two
strategies helps the company to analyse the factors which affects the organisation. The various
macro factors affects the operation of the business in negative as well as positive way. These
factors may be defined as rivals, needs of customer's and their preference.
RECOMMENDATIONS
The managers of ALDI are recommended that they should apply these factors so that they
can expand their business all around the globe (Vogel and Güttel 2013). The company should use
Porter's five force model so as to gain the competitive advantages. As the company has to face
different rivals in the market they have to use effective tools and techniques so that they are not
affected by the steps taken by them.
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REFERENCES
Books and Journals
Barney, J.B., 2012. Purchasing, supply chain management and sustained competitive advantage:
The relevance of resource‐based theory. Journal of supply chain management. 48(2).
pp.3-6.
Bettis, R.A., et. Al., 2016. Creating repeatable cumulative knowledge in strategic management:
A call for a broad and deep conversation among authors, referees, and editors. Strategic
Management Journal. 37(2). pp.257-261.
Boyd, B.K., et. al., 2012. Contingency hypotheses in strategic management research: Use, disuse,
or misuse?. Journal of Management. 38(1). pp.278-313.
Doz, Y.L., 2017. Strategic management in multinational companies. In International
Business (pp. 229-248). Routledge.
Hahn, R., 2013. ISO 26000 and the standardization of strategic management processes for
sustainability and corporate social responsibility. Business Strategy and the
Environment. 22(7). pp.442-455.
Hair, J.F., et. al., 2012. The use of partial least squares structural equation modeling in strategic
management research: a review of past practices and recommendations for future
applications. Long range planning. 45(5-6). pp.320-340.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Keupp, M.M.. et. al., 2012. The strategic management of innovation: A systematic review and
paths for future research. International Journal of Management Reviews. 14(4). pp.367-
390.
Killen, C.P., et. al., 2012. Advancing project and portfolio management research: Applying
strategic management theories. International Journal of Project Management. 30(5).
pp.525-538.
Molina-Azorin, J.F., 2012. Mixed methods research in strategic management: Impact and
applications. Organizational Research Methods. 15(1). pp.33-56.
Priem, R.L., Li, S. and Carr, J.C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management. 38(1). pp.346-374.
Vogel, R. and Güttel, W.H., 2013. The dynamic capability view in strategic management: A
bibliometric review. International Journal of Management Reviews. 15(4). pp.426-446.
Online
ALDI sales. 2018. [Online] Available through<https://thenewdaily.com.au/money/finance-
news/2016/05/31/wealthier-shoppers-flock-aldi/>./
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Number of employees in Aldi. 2018. [Online] Available through<https://www.aldi.co.uk/about-
aldi/corporate-responsibility/people>./
Aldi UK Revenue. 2018. [Online] Available through<https://craft.co/aldi-uk>./
Aldi to hire 5,000 staff this year. 2016. [Online] Available
through<https://www.bbc.com/news/business-35577900>./
Aldi becomes UK's fifth largest supermarket 2018. [Online] Available
through<https://www.theguardian.com/business/2017/feb/07/aldi-uk-fifth-largest-
supermarket>./
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