Strategic Management: Aldi Case Study

This report provides an analysis of strategic management tools and practices in the context of Aldi, a German family-owned discount supermarket chain. It includes a company profile, industry analysis using Porter's Five Forces, business environment analysis using PESTLE framework, and resource analysis using VRIO model.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
COMPANY PROFILE....................................................................................................................3
Introduction to the organisation..............................................................................................3
INDUSTRY ANALYSIS................................................................................................................4
Porter’s Five Forces Analysis.................................................................................................4
BUSINESS ENVIRONMENT ANALYSIS...................................................................................6
PESTLE Analysis...................................................................................................................6
RESOURCE AND CAPABILITIES...............................................................................................9
VRIO Analysis.......................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic management is a systematic approach and formative phenomena that a company
adopts for keeping it operations in a line and run them according to the plans made. Strategic
management is known to be an ongoing planning, monitoring, analysing and assessment
technique which is focused on all the organisational requirements in order to attain the ultimate
objectives and goals in the prescribed manner (Carlos and Lewis, 2018). Any changes taking
place in the business environment will be directly or indirectly affecting the business and thus it
is important for the company to constantly assess the strategies in order to maintain its success
and growing model. The present report is developed on Aldi retail organisation which is owned
bye to German families and a chain of discount supermarket with around 10000 stores in 20
countries of the world. The company was founded in in 1946 by Karl and Theo Albrecht and it is
headquartered in Germany. The assignment is inclusive of analysis of strategic management
tools and practices being in context of Aldi. In the first part of the report at thorough company
profile is provided. Moving along industry analysis is conducted with the help of porter's five
forces model. Moreover business environment analysis is conducted as well by using PESTLE
framework. And lastly in the report resource analysis is conducted by applying VRIO model or
framework.
MAIN BODY
COMPANY PROFILE
Introduction to the organisation
Aldi is a German family owned discount supermarket chain which was founded in 1946 by to
German families and it is located in Essen and Mulheim, Germany. Aldi is retail organisation
which deals in grocery as well as household essential products making sales through 10000
stores off the brand in around 20 countries of the world.
Aldi is a international organisation which operates around the globe by their two divisions that
are Aldi Nord and Aldi Sud. Aldi Nord is responsible for managing operations and stores present
in Belgium, the Netherlands, France, Poland, Spain, Denmark and Portugal (Baggio and
Scaglione, 2018). Also the Aldo Nord is responsible for managing and operating the trader Joe’s
market in the United States. The other company that is Aldi Sue is responsible for operations and

functions of all the stores present in the United States, Australia, Solvenia, Italy, Ireland, Great
Britain, Austria and Switzerland.
Aldi was launched in Great Britain in 1990 with its first store be opened in Stechford,
Birmingham. The company entered the market by using a wholly owned English registered
company. In present scenario Aldi it has around 300 retail supermarket stories of IT in Grew
Britain and according to several research it is determined that Aldi has around 875 outlets in the
United Kingdom and even plan to expand its operations in the area by changing the the numbers
of store into 1200 by the end of the year 2025.
INDUSTRY ANALYSIS
Porter’s Five Forces Analysis
Industry analysis is a fundamental business function that is conducted and completed by business
organisation and owners with in of assessing the current business environment and the
competitive surroundings in which the entity is operating (Liu and et. al., 2020). The industry
analysis is aimed at helping the business and the organisation for understanding and examining
various economic pieces of factors that are existing in the market and can be used by the
company for gaining a competitive edge and developing effective actions accordingly. Basically
it is analysis conducted for studying the competitiveness of the business in comparison to other
rivals present in the market place and are known to be strong competitors of the firm.
The competitive analysis can be conducted by several means and resources. in order to conduct a
potential industry analysis for Aldi porter's five forces model is utilised. The porter’s five forces
model was established by Porter that enables the management and researchers of business to
make effective evaluation of the current competitive environment in which the company is
dealing and will be facing future consequences or opportunities due to it by way of competitive
edge or risks due to rivals (Effiong and et. al., 2018). The porters five forces have five factors or
components on which it is focused that are existing rivalry, threat of substitutes, threat of new
entrant, bargaining power of customers and bargaining power of suppliers. The analysis in
regards to Aldi is presented underneath in the table by using all the five forces as a common
basis.
FIVE
FORCES
DESCRIPTION

Existing
rivalry
The first and the key factor which involves a huge influence over the industry
analysis and future strategy development for an organisation is existing rivalry
or the already existing competition in the industry. The retail industry is
already very competitive and saturated which is leading to increasing
aggressiveness of business partners and other competitive forms to sustain in
the Market by making and gaining higher competitive advantages and leaving
The other business partners behind with the motive of getting hold of a larger
customer base and market area. Tesco and Walmart are the example of
aggressively increasing competitive groups who are the big players of the
industry and can easily swipe out other businesses from the picture bye by
using their resources in the most potential manner and inclining their focus on
capturing the whole market.
Threat of
substitutes
The threat of substitutes is referring to the similar product offerings as well as
services being available in the market and in the retail sector. Aldi deals in a
very common product offering industry that is retail where it is difficult for
the organisation to gain a competitive h through its product offerings because
of the common nature of those offerings as people lead such products in their
day-to-day lies for surviving up to their standards. Hence the threat of
substitute for a retail organisation like Aldi is high in all respective
marketplaces where they have their operations setup (Hu and et. al., 2018).
Threat of new
entrant
The threat related to entry of new companies your competitors in the industry
is a huge concern for businesses. In regards with Aldi the threat of new
entrants for the organisation is medium or moderate because of two major
reasons. One is the Retail industry is highly competitive and saturated, new
company’s needs huge amount of investment money to enter the market as
well as number of capabilities are required. Thus, the force do not imposes
huge influence over Aldi and it operations.
Bargaining
power of
suppliers
The bargaining power of suppliers identifies and States the influence imposed
by the third parties that are involved in the operations and the whole
transaction of sales and purchase being made by the customers (Augier and
Dew, 2018). In accordance to Aldi the bargaining power of suppliers is low as

the number of suppliers present in the Retail industry are huge. This allows
the company to be independent it and diversify their supplier portfolio rather
than depending upon a single supplier and rendering them higher power over
companies decision making.
Bargaining
power of
customers
The Component of bargaining power of customers is concentrated and highly
make evaluations in context of the buyers and target audience of the
organisation. The element focuses on the influence imposed by customers
power over companies decision making. In context of Aldi the bargaining
power of consumers is high due to lowering switching cost day by day as
competition is increasing and the costs of goods are reducing because of the
competitive market and the use of competitive pricing strategies by the rivals
(Nankervis and et. al., 2019).
BUSINESS ENVIRONMENT ANALYSIS
PESTLE Analysis
Business environment is comprises of or known as a combination of all the internal and external
factors that affect the company's functioning and its regulation. Under the functions of an
organisation the included components are employees, customers, management, demand and
supply (Zaragoza-Sáez and et. al., 2020). Business environment is an essential source for an
organisation to conduct strong analysis and accordingly make their strategies for future by
having appropriate information of those components that can affect the business in negative or
positive manner. Business environmental factors that can affect the organisation in negative
manner will be mitigated or extra efforts will be made by the management to reduce their
impacts. On the other hand the positive aspects of the business environment can be used to
explore and identify new opportunities for the organisation and effectively working on them
before others which will be enabling the business to gain a competitive edge in the market.
Therefore the major aim behind organisations conducting analysis of their business environment
is to know and seek and understanding about the attractive factors and components which are
potential enough to bring a competitive edge towards the business. Along with it the negative

factors studied can be worked upon by the management to reduce and decline their influences on
companies effectiveness as well as growth.
For completing the business environment analysis of Aldi, PESTLE analysis framework is used.
The tool is a mixture of six elements that are specifically and significantly focused on the
external environment that is surrounded by the company. The framework's factors are political,
economic, social, technological, legal and environmental. The elaboration of all the components
in context of Aldi is presented in the table below.
PESTLE DESCRIPTION
Political The first element of the model is political factor which is all about how and to
what extent a government of a particular country or location intervenes in the
economy and in the certain industry. In simple words all the influences that a
government has on the business and the whole industry are classified as
political factors. Aldi is a multinational organisation which is been operating
in 20 countries with more than 10000 stores that are being operated under the
brand name of Aldi. Thus, the political environment plays a major role in the
organisations decision making and future development. The company have to
work according to the political policies and regulation established by the
governments in respective areas for being collaborative and cooperative to the
regulative system of the government of all the respective places (de Lautour,
2019).
Economic The next factor is economic that are referred as those determinants of a certain
country’s economy's performances. Factors such as economic growth,
inflation rate, interest rates, disposable income etc. are studied under
economic segment. In context of Aldi the economic factor do not imposes a
positive influence on the firm according to the current scenario because of the
recession being faced by the world economy due to closure of businesses and
stopping of all the economic activities as serious steps were taken to take
control over the fast spreading virus which caused a whole pandemic for the
world. Thus, Aldi have to keep up with the economic factor as currently
company have to face severe impacts due to it (Shilbury and et. al., 2020).

Social The third factor is social dimension that represents the demographic
characteristics, norms, customs and trends that are being flourishing in the
environment and are being established by considering the value of the
population which satisfies them and that connects with the organisational
offerings. Aldi deals in a dynamic social environment as company do not just
work in one or two market places rather it worked in more than 20 countries
with their stores being placed in all different areas and small districts of the
region. The social environment do brings up numerous opportunities and
possibilities for businesses to expand explore their capabilities by using the
preferences and needs of people to innovate and change the world by offering
then something entirely new and updated.
Technological The technological factors pertains to innovation and creativity taking place in
technologies and digital tools that are imposing positive as well as a negative
influences on the operations of the industries and in present report context on
the retail sector. The technological initiatives that have been taken by all the
different governments and respective people in the countries are very strong
and beneficial for the growth and development of the whole region. Therefore,
in similar context technological environment imposes positive influence on
Aldi's operations and service providing as with the help of different resources
the company is able to perform its work practices in more productive manner
by using digital tools to make sales and even market their offerings in front of
larger population (Aguinis and Solarino, 2019).
Legal The factor of environmental analysis overlaps with political factor of the
model but it includes more specific laws and regulations being established by
respective governments in order to seek control over the business environment
and keep the management of different industries and businesses operating in
the location. The legal laws developed by each government for their countries
are unique and different from one another due to the nature and social
environment of the country or the region. Therefore the organisation that is
Aldi have to be very specific and concerned over these legal laws. the
company have to make prior research and market analysis in order to gain

knowledge about the specific laws and regulations being flourishing so that
the store present in the respective area can integrate and incorporate their
regulation sectors accordingly and stay free from any legal charges and
penalties. Currently the legal laws in separate countries are very strict and
uncertain due to the pandemic and sudden changes being introduced in the
market that is then being supported by lowering economic status of different
countries in the world.
Environmental The last but not the least is environmental factor that is recently being added
in the portfolio or the model of business environmental study. The addition of
environmental factor was made after huge concerns are raised against the
unethical and environmental farming practices being used by businesses that
are not healthy for supportive to the atmosphere and the natural resources
which are soon to be ended. In order to compile and stay a integrated with the
environmental factor each and every organisation have to be e focused
towards their CSR services and operations. Aldi is an ethical form who have
taken number of initiatives to provide back what it has taken from the society
does when the global pandemic arises and the businesses were closed for
certain reasons the company supported the government it and kept its
operations closed until and unless the next statement was issued by the
government experts and democrats. Therefore the environmental factor as
well do imposes a positive influence on organisation as the company keep its
focus on rendering and contributing back to the society from which it has
gained a huge numbers and units of profits (Xu, Wei and Lu, 2019).
RESOURCE AND CAPABILITIES
VRIO Analysis
This is probably the last stage of strategic management and industry analysis being conducted in
order to develop effective and strong productive plants on behalf of the organisation. At this
stage of resource and capability analysis the potentials of the business are identified in context to
their future plans in current competencies. For completing the analysis of resources and

capabilities that are part of Aldi's operations and which can bring in future advantage for the
company the VRIO analysis model is used.
The VRIO analysis is basically revolving around 4 critical factors that brings in competitive
advantage and positive implications for business organisations. These four factors are valuable,
rare, imitable and organized.
RESOURCE
S
VALUABL
E
RAR
E
IMITABILIT
Y
RESOURCE
S
IMPLICATION
S
Employees Yes Yes No Yes Improve brand
image
Customers’
loyalty
Yes Yes Yes Yes Help in increasing
sales
Global
presence
Yes Yes Yes Yes Help in
competitive
advantages
Brand image Yes Yes Yes Yes Help in
competitive
advantages
Supply chain Yes Yes No No Sustained
competitive
advantage
Culture Yes Yes No Yes Retain employees
or improving
image
The about table showcases and kept its focus on six major resources an organisation can hold and
which are present with Aldi. These six resources are our employees, customer loyalty, global
presence, brand image, supply chain and culture of the organisation. These factors are considered
as company’s resources because they bring in certain level of competitiveness and a unique
advantage towards e business organisation (Konovalova and et. al., 2018).
Aldi do have a valuable, rare and in imitable workforce that allows the company to gain a
competitive advantage of having a effective brand image which is being improved day by day as

the staff services being provided to the customers are potential enough to bring a unique set of
skills to the business. The next three sources that are customer loyalty, global presence and brand
image are matching with all the four criteria’s having a loyal customer base is very important for
a service sector organisation who of the model and brings in separate competitiveness towards
the entity. Having a strong customer base which is loyal to the brand is very important for any
business organisation that is being flourishing in the industry and marketplace.
Aldi is a strong brand with a very effective Mal brand image amongst the target audience and
even among the general public does it is a competitive edge which brings higher sales units
towards the entity at the end of the year and enable the company to girl and maintain its unique
market image that is the firm’s goodwill (Hayter and Cahoy, 2018).
CONCLUSION
in context of the discussion and analysis conducted above in the report that is developed on
strategic management it is summarised that every organisation have to undergo a critical and
value adding process that involves a continuous planning monitoring and measurement of the
external as well as internal environment that exist in the organisation and surrounds it. It is
important for the business to conduct strategic management study for gaining an understanding
about its competitive edge and how it can be maintained it for the long period by rendering huge
competition to the external existing rivals. in order to complete the strategic management report
on the business porter's five forces model, PESTLE analysis and VRIO models are used which
provided a tactical information to the management of the business and enabled them to make
appropriate decisions in order to be effectively running the operations and gaining future
advantages by leading the form towards growth and success.

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