Strategic Management Analysis of Aldi

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Analysis of balance of deliberate and emergent approaches to strategy formulation.............3
2. Evaluation of the macro-environmental and industry issues faced by Aldi............................5
3. Impact of major macro and competitive environmental issues faced by Aldi........................7
4. Analysis of Aldi's strategic capabilities through Porter’s Value Chain framework...............8
5. VRIO Framework analysis....................................................................................................10
6. Porter's generic strategy framework analysis for Aldi..........................................................10
7. Ansoff matrix........................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
This report highlights the critical analysis and current business environment. Along with
its strategic capabilities. An analysis is made on the deliberate and emergent approaches to Aldi's
strategy formulation, major macro-environmental and industry issues faced by Aldi. Along with
the analysis through Porter's Value Chain framework and VRIO framework to asses the
sustainability of the company (chilling and Shankar, 2019). At the end the use of Porter's generic
strategy and Ansoff Matrix to evaluate Aldi's previous strategies and its future effects from
implications of those strategies are presented.
MAIN BODY
1. Analysis of balance of deliberate and emergent approaches to strategy formulation
The Aldi arrived in Britain in April 1990 and had stock of basic 600 items to offer. The
pricing was low and unfamiliar brands of the products were offered. There are no single
advertisement of the new arrival. Aldi at its initial days offers customers to borrow a trolley at £1
and only cash was accepted for payments. The quality of the receipts are not up to the
satisfaction. Aldi was recognised as the least attracted discount stores. Two decades later in the
UK the market share of Aldi in grocery chains was at 2%.
In 2017, Aldi takeover Co-op and become UK's number fifth grocery chain. Recently,
Aldi has 7.5% market share in UK. The grocery chain Morrison and Lidl are at 4th and 6th place
then. The german owned company giving competition to the four of the largest supermarket
chains in UK. Aldi also offers local culinary items that attracts customers that have previously
not prefer Aldi. The stores offers only single type of ketchup still today. The items range has
increased to near 2000 but most of the items are of private companies sold by the Aldi. Although
the appearance of the stores are of more rocky and not very appealing. Merchandise displayed by
the stores are on pallets, crates or in cardboard boxes that reduce the appeal of the discounted
stores. Aldi has introduce more comfortable and relaxing space like aisle, for the customers to
spent more time in stores. The Aldi stores has introduced barcode technology for the products
and products have more than one barcodes to quickly scan and read the code to provide
customers less time spent shopping experience (The Aldi effect: how one discount supermarket
transformed the way Britain shops, 2021). Which brings the customers a sense of satisfaction.
Aldi has no online grocery services and its low-tech. Aldi has use the strategy of narrow product

range and low price which makes it one of the successful discount supermarket stores. Aldi
owners offered selective range of cheap and fast selling goods that help to keep their cost down
and increase in cash-flow. The supermarket stores chain use just in time approach of inventory
management that helps the stores to cut-off holding costs of the products. The market of UK is
important for the Aldi as the country has wealth and the people did not compromise from the
food type they eat. The locally cheap produced products are important for the Aldi as most of the
people eat bread, cheese and cereals. Aldi has developed products of their own to rival the
established brands. UK's standard allows high wage rate to the labour that makes a large part of
any supermarket operating expenses. But for the Aldi it is seen as the competitive advantage as
they offer cheap, small range of products with low efficient workers and low labour costs. Aldi
offers good labour wage rate on comparison of the other supermarket chain companies in UK
around £9.10 per hour which helps in the increasing the reputation of the company (Wheelen and
et.al, 2017). The emerging approaches to the supermarket chains includes expansion of business
abroad, online shopping services, online services provide via mobile applications. Although,
Aldi is still operating in a local mainstream and and less technology adaptive. Aldi is hiring fresh
talents to bring new and fresh ideas to the business recently. The shops are upgrading providing
bright and more space for fresh and cold food, which attracts more customers. The customers
tend to purchase more Aldi products more because of the consumers tastes and preferences are
changed and Aldi are able to manage an equilibrium between costs and consumer demands. Aldi
stores have the range of products that only produce by private companies and had their labelled
pasted on the products that is not common practice in supermarket stores. Aldi's product supply
comes from the single manufactures that made its operations on product run which did not
changed. So in the past years from starting a shop in Birmingham to currently number of Aldi
supermarket stores all over UK the strategies of the supermarket store has not much changed.
Although Aldi has embedded new changes with the emerging new technological change. The use
of cheap pricing and limited product strategy has provided the Aldi stores an advantage over its
competitors in the long run as the preferences and tastes of the people shifted to low priced and
quality groceries products. The appearance of the supermarket stores has not much changed up to
recently as they started to hire new and fresh talents which brings in the idea to upgrade the
appeal of the supermarket stores which brings in new customers (Lasserre, P., 2017). The speed
checkout process made the customers feel a little uncomforted because the customers cannot