Strategic Management Report: Aldi's Performance in British Retail

This report presents a comprehensive strategic management analysis of Aldi, a German retail company, focusing on its performance in the British retail sector. The report examines the balance between deliberate and emergent strategies, including Aldi's investments in digitization and the introduction of loyalty applications. It analyzes the impact of macro-environmental factors using PESTEL analysis and assesses Aldi's responses to these factors. The strategic capabilities are evaluated using Porter's value chain and VRIO frameworks. Furthermore, the report critically analyzes Aldi's past strategies through Porter's generic strategy framework and Ansoff matrix, providing recommendations for future strategies, such as diversification, to enhance its competitive advantage and navigate the evolving retail landscape.

Strategic management

EXECUTIVE SUMMARY
It is important for business firm to construct an effective strategy for future development of
the company. The present investigation is based on the German retail company Aldi and the
progress of the company in the British retail sector. This report looks at transformation in the
British retail sector caused by introduction of Aldi. Balance between emergent and deliberate
strategies of Aldi is critically analysed in this report. Introduction of loyalty application and in
store digitisation are some of the strategies which are provided in this report in order to
understand the suitability of balance between emergent and deliberate strategies. Macro
environmental factors which affect the firm and their response are analysed in this report. The
effectiveness of response of Aldi on macro environmental factors and competitive forces is
provided in this report. In addition to this effectiveness of current strategies of Aldi are
determined and future strategies such as diversification is recommended for the company.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Critical analysis of the balance of deliberate and emergent approaches to strategy formulation
that has been adopted by Aldi in the past and its effectiveness for future.............................1
TASK 2............................................................................................................................................4
Analysis of Past and current macro-environmental impact on organization and their response
towards that. ........................................................................................................................4
TASK 3............................................................................................................................................8
Strategic capability and suitability analysis of the organization with the application of Porters
value chain model and VRIO framework...............................................................................8
TASK 4..........................................................................................................................................11
Critical analysis of the previous organization strategies and its effectiveness for future, with
the application of porters generic strategy framework and Ansoff matrix. .........................11
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Strategic management is the process or important management system which involves the
continuous analysis and monitoring of the business environment in order to make effective
business plans for the success according to the market requirement which can help to sustain in
the changing environment. So the strategic management is constant assessment of business
strategy in context to the market force's (Dvorský, , and et. al., 2020). This involves the
development of effective organization goals, with beneficial planing which can better fit with the
related business environment and customers needs. This process is covering overall process of
market study, plan development, implementation, guidelines and polices development along with
the allocation of resources (Dzwigol, 2020). Aldi is the Germany discount super market chain,
over 10,000 stores in 20 countries. This is commonly owned brand by two German family. This
supermarket chain was founded by brothers Karl and Theo Albrecht in 1946. In this report
deliberate and emergent approaches are going to be asses in context to the Aldi and
recommendation related to that. Impact of the major macro environment is going to be evaluate
in context to the selected organization along with analysis of their response on those factors.
Porters value chain framework is going to be use along with the VRIO framework in order assess
the organization strategic capability. Previous strategies of Aldis is going to be critically
analyse by the aid of porters generic strategies and effectiveness of this strategies for future is
going to be asses within the application of specific model.
TASK 1
Critical analysis of the balance of deliberate and emergent approaches to strategy formulation
that has been adopted by Aldi in the past and its effectiveness for future
For an effective business organization function and success strategies are the plan for
systematic performance in order to achieve future objectives. This is the way of establishing the
long term goals and activity or task plans for implication (Haleem, and Jehangir, 2017). There
is two major type of the strategic approaches such as the deliberate and emergent. Balance of
these to strategies in context to the selected organization is given below.
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Deliberate strategy- This is the type of strategy which is realised and followed by the
organization with clear expectation of result's and selected vision of achievements from that.
This strategy is the product of intended strategy which planed by the organization to conduct.
This constantly pursue over time (Lehrer, and Schmid, 2019).
In context of Aldi the company has invested in digitisation of the company as a deliberate
strategy to enhance their profitability and gain competitive advantage in their industry. Aldi has
made medium term investment in digitisation of their in store experience. The company has
collaborated with Interacted which is a well known online grocery delivery service organisation
in order to increase efficiency of their physical stores and ensure smooth delivery of products to
their consumers. This deliberate strategy has helped the company enter the online retail market in
a cost effective way. The digitisation of physical sores has also been highly beneficial for the
respective organisation. Renovation and digitisation of their stores includes utilisation of shelf
stacking and floor cleaning robots (Brandes, and Brandes, 2019). This is a part of the deliberate
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strategy of the company to provide effective services to the digitally developed consumer. This
deliberate strategy is a step towards long term cost improvement with the aim of improving
services given to the new age digital consumer. The organisation has been able to gain
competitive advantage with the help of this deliberate strategy. In addition to this the respective
company is considering the introduction of loyalty application as a part of their digitisation
strategy. This strategy will help the company provide effective consumer services in the future as
the company will be able to attract digital consumers and expand their presence in British retail
market. Despite making various digital improvements in the supply chain, Aldi is not able to
compete with other digital innovators such as Amazon which is the main barrier faced by the
company in gaining desired results from their digitisation efforts.
Emergent strategy- This strategy is actually sudden and reaction of the manager towards
the expected challenges and opportunity's. This can be effective helpful or disaster. Basically
organization always be pre planned about all identified factors and challenges of the business
functions. But in the case of unexpected problems and opportunity organization take sudden
strategic actions without any prof of the positive result's with just their interpretation so this can
be good or bad.
The emergent strategy taken by Aldi in context of digitisation of their organisation includes
utilisation of in store data and the plan to collect consumer data in order to enhance effectiveness
of their digitised physical stores. Training employees of the physical stores in order to ensure
positive consumer experience for every consumer is a part of emergent strategy adopted by the
respective company for effective completion of their deliberate strategy. The company faced the
barrier of lack of internal innovation through supply chain which stopped the company from
competing with disruptive and innovative organisation such as Amazon. Emergent strategy used
by various the respective company to address this barrier is to adopt social media and email
marketing. This has helped the company connect with large number of consumers in a cost
effective way. This emergent strategy focuses on creating loyal consumer base of the company
so that that the company can compete with large organisations which have strong digital
presence along with innovative digital technology. This emergent strategy will help the company
in gaining success in the future as the company will gain loyal consumers which utilise services
of the company for long time period. The company will be able to maintain high organisational
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growth in their future with the help of this strategy and gain success in their efforts of digitisation
(Ivanov, 2021).
TASK 2
Analysis of Past and current macro-environmental impact on organization and their response
towards that.
PESTEL analysis
This is the most effective and helpful analytical tool or farmworker which help the
business organization to effectively analyse the past and percent macro environmental factors
along with analysis of some future environmental (Kopmann, and et. al., 2017). This helps to
analyse all key factors of the market which impact the business and business activity's. Such key
factors are (political, economical, sociological, technological, legal and environmental). Aldi
past and percent environmental challenges and their response are illustrated below within the
application of PESTEL analysis.
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Political factor
This is the first most essential element of the external environment involves various
political factor's which influence organisation business strategies. Such as the government
stability and tax policy's related to the business activities and business impacting asset's. In
context to the Aldi political regulation of the foreign policies, pressure of the international
sponsorship new government polices and rules are impacting their business strategies (Power,
and Gruner, 2017).
Advantages
Business organisation faces both positive and negative impact if the political factors such
as after the establishment of the Brexit ALDI achieved higher advantages because price of the
products, (Fresh goodes) rise. Due to which other supermarkets further increased their price and
force their customers to move towards the discounting organisation like ALDI.
Disadvantages
Aldi have faced various issues in product trading due to the Brixit.
Organisation response- In context to the Brixit ALDI spend extra £3.5billion within the
year in UK as a support for the facilitating the constant selling of the products at relevant price.
They boost for food and drink production by British farmers. This response by Aldi is effective
as it enables the company to maintain smooth functioning of the supply change despite changes
caused by implementation of Brexit.
Economical- This is another important external environmental factor which impact the
organisation planing and strategies. This involves the factors like employment rate, cost of the
resources in market, and financial stability of the market (Onodera, and Sengoku, 2018). Such
as the customers financial stability. All these factors possess the higher impact on organisation
product supply chain by impacting the customers demand. Current economical condition of the
UK is lower as compare to the past due to the adverse impact of the COVID-19. There is the
higher unemployment, lake of the people financial stability due to which product demand is
getting effected. This is effecting ALDI supply chain but they are managing it effectively by
provide the lower price products.
Response
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Such as due to the direct and indirect gross domestic product ALDI made there effective
contribution in the UK economical growth . This was possible due to the higher employment rate
and customers stability. This response is effective for small time period and the firm has to focus
on cost reduction in order to maintain profitability during economic downturn in UK.
Advantages-
Higher employment and stable economy of the target market helps to manage the
productive supply chain within the organisation.
Disadvantages-
Lower customers demand due to the lack of employment and financial stability helps
reduce the organisation profitability.
Social-
This is the most essential element of the external environmental factor. Because that is
the customers ans society for satisfaction of which organisation perform their effective
operational and management activity's. This involves the customers demand related to the culture
and new trend's.
Advantages-
Such as the customers demand for the organic products have provided the opportunity for
organisation, in context to which they can increase their product line and grow in the market.
Lower price demand of the customers is very supportive for the organisation as it help them to
sustain in the market with the competitive advantages of the cost leadership strategy (Sudarto,
and Inggriantara, 2020).
Disadvantages-
Current COVID-19 situation is highly impacting the customers needs and demands for
the healthy and safe products, is beneficial for organisation, but this is difficult to face customers
possessiveness for the sanitization as this is not possible to manage those needs with that time.
Response
In context to the Australasians social and cultural demand for the eco-friendly products
and organization. Company is following the Ethical practices. In context to the customers online
services demand ALDI have updated themself with online shopping platform. This is an
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effective response as it will not only help the company tackle social macro-environmental factors
but compete with online retailers.
Technological- This is involving the most important factors such as the improvement in
the business operational and functional techniques. Such as development in new marketing
techniques, customers management technology, online business technology and effective product
management technology.
Advantages-
In context to the business organisation these technology increase the opportunity for
performance effective improvement, time saving, resources saving and such as the online
platform is helping the ALDI organisation to make higher sale.
Disadvantages-
Ineffective management of the technological development and in-updated business plan
lead towards the competitive loss of the business. Such as due to the higher technological
facility's of the TESCO some customers prefer tesco rather then ALDI.
Response
Organisation is working on the technological implementation along with the
improvement of inline services. This is an effective response as it enables the company to
develop technological competencies in digital world.
Environmental – This is the another most impotent macro factor which involves the different
environmental changes such as the seasonal impact on the product availability, health care issues
due to the changing environment impact the business activity's.
Advantages- Such as the environment safety legislation is supporting the higher sale of
the eco-friendly products.
Disadvantages- some environmental factors like COVID-19 possess very bad impact on
business activity's, because due to this all other macro factors get complicated.
Response
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Organisation have adapted the changing guidelines of the government in context to the
health management. The effectiveness of this response is depicted by the fact that effective
health management will help the firm ensure health and safety of their company.
Legal
This involves the legal sets of rules and regulation of government for the business
organisation such as the employment law, work health and safety law and quality assurance law.
Such as the COVID-19 risk assessment law is increasing the organisation operational activity's.
Response – ALDI has accepted all the legal sets of COVID-19 risk management
guidelines (Gilinsky Jr, Mallon, and Santana, 2019). This will help the firm avoid legal
troubles so it is an effective response.
Porter’s five forces model
 Bargaining Power of the consumers: This competitive force high in case of Aldi as
price sensitive consumers shift to competitors at slight change off price.
The impact of this competitive force is that the profitability of the firm is dependent on
disloyal consumer base.
The response of the firm is to offer various products at discount prices. This is an
effective response as it makes the company most affordable option.
 Bargaining Power of the suppliers: Aldi faces low bargaining power of suppliers. The
impact of this factor is that Aldi exerts influence over their suppliers and is able to gain
high quality products at low prices.
The response of Aldi is to ensure that each of their supplier uses sustainable practice due
to high power over them.
 Threat of new entrants: There is moderate threat of new entrants for Aldi as small
players are not able to establish name in the market while international firms can easily
enter the industry.
The impact of this factor on Aldi is that the firm has to compete with industry incumbents
and small firms to gain profits.
The response of Aldi is to create brand identity of quality discount retailor which is not
easily affected by new firms.
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