Strategic Management: Analysis of Approaches and Environmental Issues

This report analyzes the deliberate and emergent approaches related to strategy formulation in strategic management. It also identifies and explains the impact of major macro and competitive environmental issues. The report includes a discussion on Porter's value chain and VRIO analysis.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analyse of deliberate and emergent approaches related with strategy formulation...................1
TASK 2............................................................................................................................................3
Identify and explain the impact of major macro and competitive environmental issues............3
TASK 3............................................................................................................................................6
Porter’s value chain and VRIO analysis.....................................................................................6
TASK 4............................................................................................................................................8
Porter’s Generic and Ansoff matrix............................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic marketing is a method through which an organisation differentiates itself from
the other competitors in the market. It makes business able to focus on the strengths and increase
the level of effectiveness of the business in the market. Business provide effective product and
services to the customers and increase the level of customer base in the market. Strategic
marketing is long term planning for the product and services in the market. The main objective
of strategic market planning is to achieve goals and objectives in the future and enhance the level
sustainability in the market. This report is based on the Aldi, company is the chain of
supermarket, its common brand of two German family owned supermarket. Headquarter of
company is in Essen and Aldi Sud headquartered in Mulheim. Company has revenues of $ 91.9
billion, company has 2,500 strores in western, northern, eastern Germany. This reprot include
information about various strategic approaches used by the company, also Macro environment
and industry issues that Aldi face, also in the end it adds Porter's five force model, and value
chain framework that helps in understanding the business environment.
TASK 1
Analyse of deliberate and emergent approaches related with strategy formulation.
In present scenario, there are various operation functions performed by the company and
Aldi analyse use different functions in the business for the better growth and effectiveness of the
business in retail sector. Aldi use various strategic approaches that helps its business become one
of the largest supermarket chain in the United Kingdom. With the basic analysis of macro
environment of the UK it can be understand the strategic decision making of the company and
how it enhance market share of the business. Aldi start its business of supermarket chain with
only 600 items in the basic supermarket chain. In order to increase market share in the new retail
market Aldi used the strategy of being a low price leader in the supermarket chain. It assist
business of respective company to gain better growth and increase the level of competitive
market chain in new market.
By analysis of low price strategy company enhance its market share and growth in the
new market. It play vital role to attract the customer base in the market and growth of the
business. Various items of the Aldi used by the local residential of UK, also company use
various price policy in the market to manage and perform the strategic approach in the new
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market. The main reason of company to become low price leader is to gain competitive edges
from pre existing organisation such as Sainsbury's and TESCO. This generate various problems
because of local dominate market organisations of grocery store items. The managers of Aldi
allow lower price product to buy in bulk. This helps in better growth of the business and
increase market share so that business can achieve goals and objectives in the market.
Future aspect of Aldi:
In the context of ALDI there are various problems that company face in the market of UK
due the high range of market and huge range of product and services available in the market.
Also there are competitors in the retail market of UK that may have an impact on the growth and
effectiveness of business of respective organisation. ALDI has various stores that managed in
most appropriate manner to complete goals and objectives of the business. ALDI perfom various
task that helps in better growth and management of various stores in most effective manner.
They offer product at lower cost and managing work at lower prices so that it can enhance the
customer base in the market. Moreover, due to new trends in the market of UK there are various
challenges in the retail market of the ALDI it increase the level of competition in the market.
Management of ALDI retain to the same lower cost strategy, so within the future innovative
marketing strategy is implemented by the management of respective company to managed in
most effective manner. This help the business of respective company to offer their items in wider
context so that it can enhance the level of effectiveness in the market.
Balance of organisation strategy plans:
Organisational strategy is an effective planning that helps the business to enhance the
level of effectiveness and growth in the market. In the context of ALDI, organisational strategy
helps the business of respective organisation to get effective growth in the market and increase
the level of financial performance in the market. Below are some recommendation for the
company to manage effective strategic plan:
Ability to measure progress: there are various problems of the business that needs to be
measure in effective manner so that effective solution can be performed. Management of all the
activities in the organisation helps to perform task and its requirement so that problems can be
analysed and gain effective growth in the market. It can help ALDI to work in most effective
manner and increase the level of business growth in the market.
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Clear understanding of priorities: This refer to understand all the goals and objectives
of the business so that company can make effective organisational strategy. Various function of
the organisation have different issues and problems that can impact the level of productivity in
the business. Clear understanding about the various priorities of the business can helps in
achievement of effective strategy so that business can achieve its goals and objectives in the
market. In the context of ALDI effective understanding about the various product and services in
the market helps in better growth and achievement of goals and objectives.
Commitment: This one of the best way that can help organisation to gain effective
growth in the market and gain better insight in the business. Commitment towards the
achievement of goals and objectives enhance the level of effectiveness in the market and growth
of the business. Business can achieve it objectives of the business so that business can achieve
growth in the market.
Thus, from the above information it can be understand that there are various approaches
that business can use for the growth and development of its market in the retail industry.
Enhancement of various strategies assist business towards better growth and effective level of
profitability.
TASK 2
Identify and explain the impact of major macro and competitive environmental issues
PESTLE Analysis
Pestle analysis of Aldi is useful in analysing the external macro environment of the
organisation to analyse the opportunities and threats to the Aldi in the future. Pestle annalysis
includes the various factors such as political, social, legal, environmental, social, economic and
technological factor that will help the organisation in analysing the impact of dynamic
competitive environment on the business productivity and profitability.
Political factors: Aldi is the supermarket chain has operated globally in approx 20 countries.
The political factors like Brexit affects the business of Aldi in countries like UK and Europe.
Any conflict between the political conditions of the different countries can highly affect the
productivity and sustainability of the Aldi. The Brexit has majorly affected the price of the
products.
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Economic factors: The economic instability in the countries drops the economy of the Aldi
due to price fluctuation in various countries. The price drop in grocery markets of the countries
in which the Aldi operates downfalls the revenue of the Aldi and thereby reduce the overall
profitability.
Social factors: Currently the Aldi is the largest supermarket chain of the world with high
payment options. The increase in healthy eating trends of the society of the countries in which
Aldi operates has been affecting the products sales and diversification as larger scale. Hence, the
regular change in the society trends has impacted the services and products of the aldi in its
various supermarket stores. Some of the social trends like vegan eating, also helped the Aldi in
diversification of the products which has increased the revenue of the organisation.
Technological factors: technology keeps on changing in this dynamic technological
adaptive environment. And the changing technology highly affect the business processes of the
Aldi. With changing technology the the Supermarkets of the Aldi has converted themselves into
the digital payment mode and also the supply chain and production systems are also updated
with the latest technologies this has boost the companies productivity and profitability as a
whole. There4fore technological factors create the boon in the business of Aldi by speeding up
the functions of Aldi.
Legal factors: Aldi has faced the various legal rights challenges due to the intellectual
rights. The company recently faced the issue of copyright in its products and also in the brand
campaign” like brands. Only cheaper”. It is very important for the organisation to maintain all
the leagal policies and rights delivered by the government in order to sustain in market with good
reputation, with copyright issues company has declined its reputation and brand image.
Environmental factors: environmental safety and security is now becoming the most
important in the business environment. The various environmental factors like, no use of plastic,
carbon emission has been important for the Aldi. The company has organised various
programmes and initiates in its organisation to reduce the carbon emission by improving its
production process. the firm has also utilized the no use plastic strategy in its organisation by
improving its packaging. Therefore environmental factors helps in increasing sustainability of
the organisation from other competitors.
Porter 5 forces
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This model is used to analyse competitive strategies and competitors of market that how
they impact upon a business. Porter 5 forces of Aldi are explained below- Threat of new entrance- It describe that how new entered companies can impact upon
existing companies. In context of Aldi, they are retailing sector which has great impact by
new entered supermarkets. In case new entrance entered with stronger strategies then it
will give negative impact upon business. Hence, Aldi is required to make their strategies
stronger. Bargaining power of suppliers- It covers number of suppliers and their behaviour toward
a company. In context of Aldi, their suppliers are loyal and have good number of
suppliers which means they have the advantage that their suppliers will supply them raw
material on time. Hence, Aldi are free from this treat. To gain trust of suppliers Aldi can
offer better prices for raw material which is supplied by them. Bargaining power of customers- It covers number of customers and their behaviour
toward a company. In context of Aldi, they have large number of customers which is
loyal toward their brand and they purchase their products because Aldi offer affordable
prices. Hence, to win this segment of porters 5 forces Aldi is required to reduce their cost
of qualitative product. They have to reduce their cost less than their competitors. Availability of Substitute goods- This are those goods which has same characteristics and
features of another product. In context of Aldi, they have many substitutes in market but
their services are different from others. Products can be copied but services are not
copied. Hence, to overcome with this issue of availability of substitute goods they are
required to offer better services to their customers so their customers can identify the
features and benefits of shopping with Aldi.
 Competitive rivalry- It means total number of competitors and their strategies in market.
For Aldi, they have many competitors like Morrison, Sainsbury and etc. which has many
tough strategies. So, it is suggested for Aldi to make some better competitive strategies to
beat their competitors and win competitive advantage. This factor of porter 5 forces is
very sensitive as a little mistake in making strategies will lead a big failure for company’s
operations. Hence, it is compulsory to identify which strategy is opted by competitor,
then to study that strategy and at last make modification in Aldi's strategy which help to
attract more customers.
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TASK 3
Porter’s value chain and VRIO analysis
Porter’s value chain
It is the set of activities which involves carrying out the activities of company in order to
create the value for its customers. There are mainly two generic categories of activities which are
discussed below in relation to Aldi-
Primary activities
These include those activities which are related directly to physical creation,
maintenance, sales and supports the offering of company. It includes the following- Inbound logistic- The activities of Aldi is associated with storing, receiving and
disseminating the inputs of products. It includes the warehousing of the physical product,
architecture to store and receive customer information for the digital media organisation. Operations- the activities which help in transforming the input into output is operations
in relation to Aldi, it is using customer data for advertisement or moulding plastic to form
products, etc. Outbound logistics- Aldi uses activities to distribute finished good to the final buyer and
channel product which includes wholesaler, warehousing and retailers. Marketing and sales- Aldi uses activities such as pricing, channel selection, sales force
management, marketing, advertising and promotion so that buyer can purchase product of
company. Services- Aldi must provide after sales service and maintenance for its product. Service
activity of Aldi includes product forward, backened alignment of software, training,
installation service, etc.
Support activities
It includes the activities which support primary function of the company. They play an
important role in conducting the primary activities. These are discussed below- Firm infrastructure- It support the activities of company Aldi which consists of legal,
finance, quality management, planning and general management. For instance, the
planning and finance at Aldi is managed at the corporate level and the quality
management, accounting and legal issues are managed at business unit level as Aldi is a
diversified company.
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 Human resource management- It is the key to the success of company. It includes the
HRM activities such as recruitment, training, hiring, skill assessment, compensation, etc.
both at the business unit and corporate level. It affects the competitive advantage of firm
Aldi. Technology development- Technology mainly supports every activity in today's modern
day company. The technological development in Aldi includes the process engineering,
component design, field testing and technology selection.
 Procurement activities- It includes the activities which are undertaken in order to
purchase the inputs which are used by the company Aldi. Purchase inputs involves raw
materials, machinery, supplies, laboratory equipment, etc.
VRIO Analysis
The VRIO Analysis covers out all the internal reso0urces that use to sustain all the
competitive advantages. The VRIO for ALDI as in order to increase the resources and there
sustained competitive advancement is there y as follows:
Valuable
 All the financial resources that are being used in investment and all the external
opportunists carries an importance in ALDI.
 The local food products use to create the valuable resources and retain the value of there
products by increasing the market value of they product and generating the revenue. As there are being employee all the high skilled workers which helps out in maintaining
the value of the company and also all the products that helps in ranging the retention
levels.
Rare
 The strong financial resources are the rarest and the important fact5o which is being used
by less companies.
 All the employees being working in the ALDI are the rare as they are highly skilled and
use to maintain all the products and their variant s in an efficient manner. They ALDI provides their employees better working environment with heavy
compensation and this implies to maintain all the areas to generate the revenue.
Imitable
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 All the profit that is being maintained by the company and all the financial stability with
their further plan is ban important factors and all such methods implicates to perform in
the advancement and the betterment of the company. The financial resources that is being
used by the ALDI is variably so highly that all the rest companies will have to work for
years in order to gain such advancement. All the local food products that is being seen is not that costly and it implies that all such
areas and the methods through which the local food products is being maintained and
gain the temporary advancement.
Organisation
 As the patent that is being used by the organisation is not being properly generated and
used which makes the ALDI to sustain all the to competitive advancement in all the
varies areas and the nature. ALDI can only gain the advancement only when there has
been seen that all such methods and the sum can thereby be used before the patent tends
to expire.
 The distribution network of the ALDI use to last long as there has been seen all the areas
and the regions on which such products and the services are being maintained and lasted
can be governs in it.
All such methods and the area through which this is being imparts and creates and effect in
various mediums throughout all the segments and the allocation there by in.
TASK 4
Porter’s Generic and Ansoff matrix
Porter's generic strategy: -
In context with Aldi, it includes four type of generic strategies which are cost leadership
strategy, differentiation strategy, focus and it is further been explained as below:- Cost leadership:- It is used to decrease the overall cost of its operations while running its
grocery store. They always purchased low price land specifically on the outskirts of city
and displayed all their items on pallet rather than on shelves. They do not offer free
shopping bags to their customers and encourage all audiences to bring their own bags
rather than expecting from company. They also avoid all unnecessary costs.
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 Differentiation strategy:- Aldi is famous for many reasons and the most effective one is
that they always provide good quality products and all workers get good salary. The
prices of their products are less in comparison with other Australian supermarkets. Their
main brand strategy of low price and high quality product helps in keeping all their
present consumers loyal as well as attracting more customers. There were also other
important traits and components been associated with it which are that it is the most
recognised brand and at the same point of it has a superior and most efficient product
quality. Focus strategy: This part of porter's generic strategy is play essential role in company
for focusing on specific business goals and objectives. Organisation that are use focus
strategies concentrate on specific niche different markets and understanding dynamic of
that potential market. The unique requirements of consumers within it. To develop
uniquely at lox cost and better goods for market. Company serve consumer in their
marketplace uniquely in well manner. They tend to crate a strong and attractive brand
values and loyalty among their users. This makes their specific market segment less
attractive to the competitors. In context to ALDI company, they focus on exploring
different marketplace in terms of selling their products and services, also find out
potential customers. They have different variety in products and services so they focus on
managing quality of goods and services, so that company can full fill customer's needs
and expectations to retain them for longer period of time.
 Cost focus:- It is defined as the strategy of organisations who is indulged into developing
their lower cost advantage but only within small market. So, with respect to Aldi, they
always assured that they are achieving success by adding something unique and extra in
order to serve market niche. They didn't focus on small market segment but also focused
on broader market. With the help of adding something extra they were contributing in
decrement of costs through which their differentiation was getting increased and all
customer needs are satisfied.
 Differentiation focus: In this company make different product and more attractive than
any other in industry. In this they focus on create some unique in goods and services. In
context to aldi company they focus on serving special goods and services to customers
so that they can explore more people and retain them.
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Ansoff Matrix:
Ansoff matrix is used by the each and every kind of business firms so as to understand
the risk factor associated with the business firms. Here in the context of Aldi, there are many
ways through which a company can grow and success in a competitive world. The four major
strategies suggested by Ansoff matrix are as follows:
 Market penetration: This strategy is regarded as the cost effective as this is focused on
increasing the sales revenue of Aldi by selling more to the existing customer base. Here
the company uses make the modification to the existing offering matching to the
demands and wants of an existing target market. This could be done in various ways such
as, reducing the price of an existing products and services so as to attract new customer
and retain existing one, or increasing promotion and distribution methods so to promote
sales, or acquiring new competitor in a market place which has a large customer base so
as to expand the market share.
 Product development: Another strategy suggested by Ansoff is through developing and
new products and services for the existing market. This strategy needs a huge amount of
investment in research and development so that recurring demands and wants of an
existing market are matched. Aldi can achieve this by the means of investing in research
and development programmes, or by merging with the another firm which has develop a
new and innovative products or by forming alliance.
 Market development: This is the most significant strategy suggest by Ansoff which is
based on the concept of developing a new market with the existing products and services.
Aldi can use this method when one market is not producing a desired result as predicted.
However, this strategy is involving a huge amount of risk. Aldi can achieve this by
expanding the market regionally which is expanding the local customer base, or Aldi can
enter into an international market when local market is already leveraged.
 Diversification: This strategy is concerned with entering into a new market with new
products and services. Aldi can go for the diversification when the company has already
gained a success and captured a large market share. This strategy can be successful only
when Aldi make a related diversification that is concerned with entering into a new
market with an innovative and creative approach.
Internationalisation approaches:
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The term international marketing is explained as a market and the competence factors which
orient an organisation to manage business in more than two countries. The main aim of ALDI to
adopt or induce international approaches is to increase their market area through performing their
work beyond national market. In the context of ALDI, Exporting and Foreign direct
investment are two main international approaches for entering into international market. Further,
with develop of aim and understand of market conditions this is easy to ensure that organisation
enter in foreign market by analysing their environment. Further, the in-depth information related
with both approaches are mention as follow:
 Exporting- This explain about the direct sale of products and services within other
country. In the context of ALDI, management operate there store in different regions and
it define about all those factors by which management invest their time in cost-effective
manner. This determine ALDI management export products so the operating cost to
formulate store in foreign market is reduced by engaging local supplier of country.
 Joint venture- It consists of two different organisations which establish a jointly-owned
organisation. From the perspective of ALDI, it is understanding that by emerge of local
business it is easy for ALDI to manage new business by managing and sharing control
with local company.
CONCLUSION
From the above stated report it is evident that the strategic management is essential for the
success and survival of a business. Strategies act as guidance and leader which directs the
activities of a business in a right direction with a clearly mentioned vision and mission. This
function helps in directing the efforts of an employees in a goal oriented direction so that the
business objectives are achieved within a stipulated period of time. Strategic management helps
the business in a predicting the future uncertainties and prepares them to address suitable
uncertainties.
unceruncertainties with the necessary measures.
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