Strategic Management Report: Aldi's Performance in British Retail

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Strategic management
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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.
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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
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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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Threat of substitute product: The threat of substitute product for Aldi is high as
grocery products can be directly purchased from farmers and other local supermarkets.
The impact of this factor is that Aldi has to give lucrative offers to consumers to attract.
Aldi is providing loyalty application as response to high threat of substitute products.
This is an effective response as it will help the firm gain loyal consumers for the firm to
reduced threat of substitutes.
Competitive rivalry: The threat of rivalry is high as Aldi faces competition from online
and offline retailors.
The Impacts the profitability of Aldi and market share of the company negatively.
The response of Aldi is to build digital capabilities and enter the online retail space. This
is an appropriate firm as it will increase sale from online channels and help the firm stay
profitable in high competition.
TASK 3
Strategic capability and suitability analysis of the organization with the application of Porters
value chain model and VRIO framework.
Strategic capability of the organization is consider as the skills and capabilities of the
company resources and function planing in context to the achievement of competitive
advantages. Explanation and evaluation of the Aldi strategic capabilities and suitability are given
below with in the application of two different analytical models (Pan, and et. al., 2019).
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Porter's value chain model- This farmworker is most important for the organization as
it helps in the effective planing of organization functional and structural strategies and also helps
to effectively monitor or manage all those specific goal oriented activity's. This helps to manage
the business strategies easily according to the changing environment. Each and every business
organization develop their value due to which they get enough profit is achieve by the effective
management of the value chain model of the organization. Which involves the management of
each and every operation activity's in context to the effective customer service. This porters
value chain model is focusing of the inputs of organization from which company get outputs.
This describe the chain of common business activity's, and divided them into the primary and
supportive activity's. Explain below in context to the Aldi.
Primary activity's – This Chain involves the main and essential activity's through which
customers is can be satisfy and goals is can be achieve. This is related to the production of the
product's or collection of selective products from suppliers and manufactures, sale, maintenance
etc. primary activity's are illustrated below in context to the Aldi.
Inbound logistic- This is the initial step which involve the management of process
related to the receiving products, storing of the resources and resources, internal allocation of the
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resource's and suppliers relationship. ALDI is having their own suppliers and manufacturers of
the products which provide then good quality products on lass price. They use to store minimum
amount of the products, and use lass place for the storage. This is vest and valuable activity's
with in the organization as it helps in the management of their lower cost business strategies.
Operations- This involves main activity's of the business such as for the manufacturing
business it involves product development and for retail company this include input activity's
which change into the output when product soled to the customers. Aldi is having best quality
product lines sufficient for their customers and soled these products to their customers with the
help of their lower price strategy and effective staff behaviour (Koc, and Bozdag, 2017).
Outbound logistic- This activity is basically involving the delivery of product to the
customers with different approach. Aldi conduct effective handling and shipping of the products
to the customers timely, by reducing the chances of products damage. They use their high
quality technical assistance.
marketing and sale- This is the main and most important process which is use to inform
and make awareness in the customers mind related to the new products and offers in order to
attract them for purchasing. Aldi use this market and sales activity's to introduce and inform their
customers that Aldi products are of equal quality as compare to the other well known brand.
Service – This is the another most important activity's as it helps in the management of
organisation value in customers point of view. This involves the customers support services in
context the customers issues after purchasing. Aldi effectively manage this activity by providing
the product return and refund option in case of damage product.
Supportive activity's- This is involving the most essential group of the activity's which
support accomplishment of the primary activity's.
Procurement- In context to the Aldi this activity is related to the purchasing of business
resources which support primary activity's.
Human resource management – This is another important supportive activity which
involves the recruitment and management of he employees for operational activity's
accomplishment. Aldi is having higher skilled employees at each store.
Technology development- This involves the management of effective information
technology within the organisation in-order to protect data and improve performance efficiency.
Aldi is planning for the free retail technology.
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Infrastructure- This involves the effective structuring of the different organisation
system which helps to manage the primary activity's. Such as the Aldi infrastructure is effective
and smaller with the facility of accounting, administrative and general management.
VRIO framework- This is another most important organization analytical and
management framework, helps in the effective management of organization resources, this helps
to analyse the organization resources capability and opportunity's related to that. This analyse
that who much resources organization is having with competitive advantages and disadvantages
in order to asses their strategic sustainability, so that this can be effectively manage with right
decision (Bedeley,and et. al., 2018).
Valuable- This factor involves the analysis of the organisation resources value and there
competitive advantages. Such as in context to the ALDI their financial resource's are highly
valuable, due to which they are using this for external opportunity. Their product resources are
highly valuable as they offer best lower price products. Employees are highly skilled and loyal
for the organisation. Some product patents of organisation help them to sale their product
without any competition.
Rare- This is another factor of the framework covers the analysis and management of
the rare competitive resource's. Organisation is using common local product which is highly
available, but organisation is having best employees which is rare in the case of other retail
organisation. Patent right is rare in the case of retail company's. Distribution network of the
ALDI is rare resources, because in context to reaching this much of the strong network
competitor have to invest more time and money.
Imitable- This involve the some important sates of the resources which are limited,
effective, competitive and can not be achieve by the competitors easily. Such as in case of the
ALDI they are having financial resources more them the other competitors this is effective but
temporary. Another Imitable resources of ALDI are their patent products.
Organisation- This part of the framework is involving organisation resource's which is
unused and which help to get competitive advantages. ALDI is having there brand value
customers loyalty which help them to meet competitive advantages.
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TASK 4
Critical analysis of the previous organization strategies and its effectiveness for future, with the
application of porters generic strategy framework and Ansoff matrix.
porters generic strategy- This is the business strategic tool which can be understand
and use in the matrix form. This is involving some set of the strategies which helps the
organization to meet competitive advantages. Such as the cost leadership strategy,
differentiation strategy and focus strategy (Miethlich, and Oldenburg, 2019).
Aldi is managing their business strategies according to the internal and external
environment by the aid of Michel porter three generic strategies. Such as cost leadership,
differentiation and focus. Which use or implemented by the organization on the basis of their
market type and preference to create competitive advantages. right selection of the generic
strategy helps the organization to leverage their strength and compete in competitive market.
Cost leadership- This strategy involves the cost effective business plan under which
organization can meet competitive advantages by offering the lowest cost products to the
customers in comparison to their customers. But quality of product can not be compromised.
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ALDI is the organization which using this cost leadership strategy, they are using this strategy to
offer the lowest price products to their customers due to which they garb the attention of
customers. Organization use to manage there operations and management functions at lower
price due to which they are successful to offer product in cheaper price. Such as organization
use to manage the stoke of 1000 product's lines, 7 to 8 employees at one store and small size
store due to which they successfully manage the lower price product strategies.
Differentiation- This is another effective business strategy which involves the, creative
plan of being unique from the competitor in terms of product quality and facility's. According to
this strategy organization can offer the unique quality product and select their own price strategy
for each and every products it can be premium. Along with the cost leadership strategy Aldi
organization is using this differentiation strategy in order to be unique from others and satisfy the
customers with lower price and good quality products. Such as they are unique from other due to
their effective employees payment, as they offer $19.30/hour and bonuses to their store
assistance better then the competitors. They use to sale product in lower price compare to others.
Loyalty of customers is build due to the unique strategy of lower price and good quality
products. Due to which they get the competitive advantages over their competitors.
Focus strategy- This involves the planing and performance of organization in context to
the specific focused segment of market. Through which organization can use their cost
leadership and differentiation strategy in context to the specific market segment and customers
(Heischmidt, and Gordon, 2020).
Ansoff matrix- This is another most important strategic management tool which helps to
identify the future opportunity for growth, which help to select the right way of market
expansion and growth with in the application of existing and new products at existing or in new
market. This involves the product marketing strategy in context to the market expansion by
focusing on the existing and new products and existing market. There are the four major
approaches developed by this model is market penetration, market development, product
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development and diversification. This is the type of communicable tool help to identify the
different growth strategies.
Market penetration- This is the first element of matrix, common and lass risky. This
involves the action for existing market penetration with higher product sale (Hales, and
Mclarney, 2017). Organization can use this strategy to increase their market shares and vale, by
increasing the sale and customers. Organization can use different different customers interaction
strategies in-order to attract more customers from the existing market by existing products. Such
as Aldi can expend their business in existing market by increasing promotion and distribution
support.
Market development- This is another market expansion and growth strategy through
which organization can grow in new market segment with their existing product's such as Aldi
has adopted this approach for internationalisation if their business, for example they have been
used this approached for penetrating in the UK grocery market with their existing products. This
approaches is can be more effectively use by ALDI for penetrating into other nation. Within the
application of focusing on the industrial buyers of products, target new customers segment and
so on.
Product development – This is another most important part of the matrix which involves
the strategic plan for the organization according to which, company can grow their business. If
organization is getting higher value in the existing market along with the higher market share
then they have to develop new product lines in order to sustain in the market with effectiveness
of the business activity's and strategies. Aldi has used this approach for constant growth in the
existing market by offering organic products. They increased product product innovation by
making variation of the cookies, marshmallow and dessert food products.
Diversification- This another most effective strategy of market penetration and growth
with the application of which organization can increase their customers and business size. This
involves the penetration of organization into the new market with new product line. Aldi
portfolio is diversified with the support of cost leadership strategy. Such as are developing their
organic product international market. It can be more effective with application innovation in the
satisfaction of different area customers with different product line (Abdolshah, and et. al.,
2018).
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CONCLUSION
From the above analysis and evaluation it has been concluded that strategic management
is the collective application and implementation of the different analytical and strategic
management tools. In order to develop effective business plan and strategies according to the
external and eternal business environment, along with the resources and task allocation.
Strategies are basically divided into two major group such as the deliberate and emergent.
Deliberate strategy is the pre planned result oriented continuous form of activity's. In other hand
emergent strategy is the response to the unknown challenge and opportunity of the business
activity's. In order to analyse and manage macro-environment factors PESETEL analysis is best.
Response of the organization towards the changing external factors should be effective and
updated strategy, function, assets and actions. That is important to effectively manage the
organization strategies by properly analysis and modifying strategies capability and suitability
which can be done by the help of Porter's value chain model and VRIO framework. In order to
meet competitive advantages and to expend business organization have to select right strategies
with in the application of porters generic strategy and Ansoff matrix.
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Your All-in-One AI-Powered Toolkit for Academic Success.

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