Aldi Supermarket: Strategic Planning and Business Strategy Report

This report provides a comprehensive analysis of Aldi's business strategy, evaluating its mission, vision, objectives, and core competencies. It examines various factors influencing Aldi's strategic planning, including people, resources, culture, structure, and systems. The report utilizes techniques such as the BCG matrix and SWOT analysis to assess Aldi's current strategic position and competitive environment. It explores market entry strategies, resource requirements, and the implementation of strategic choices, concluding with a discussion of substantive growth opportunities. The report also includes an environmental audit using Porter's Five Forces model, providing a detailed overview of Aldi's strengths, weaknesses, opportunities, and threats.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1: EVALUATING THE STRATEGY .................................................................................1
a) Impact of mission, vision, objectives, goals and core competencies on Aldi's strategic
planning..................................................................................................................................1
b) Various factors for formulating strategic plans for Aldi....................................................2
c) Techniques used to evaluate Aldi's strategic plans and procedures...................................4
d) Organizational Audit and Analysis of current strategic position of Aldi...........................5
e) Environmental Audit of Aldi..............................................................................................7
f) Stakeholders analysis for Aldi while formulating strategy.................................................8
g) New strategy for Aldi.........................................................................................................9
PART 2 – MAKING A STRATEGIC CHOICE...........................................................................10
a) Identifying a suitable market in relation to substantive growth of Aldi...........................10
b) Justifying substantive growth and market entry undertaken at Aldi................................12
PART 3 – IMPLEMENTING THE STRATEGY.........................................................................12
a) Roles and responsibilities of personnel involved in implementing strategy at Aldi........12
b) Resources requirement for the Implementation of the strategy.......................................13
c) SMART Technique..........................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

ILLUSTRATION INDEX
Illustration 1: ALDI Supermarket Logo..........................................................................................2
Illustration 2: BCG Matrix of Aldi..................................................................................................4
Illustration 3: SWOT Analysis of Aldi ...........................................................................................6
Illustration 4: Porter's five forces model for McDonald's................................................................7
Illustration 5: Growth analysis.......................................................................................................11
Illustration 6: SMART Technique.................................................................................................15

INTRODUCTION
The term business strategy refers to plans and procedures of firms to achieve its
objectives in a sustainable manner thereby making profits and enhancing scale of operations.
Strategic planning is a concept of business which is related with those activities which strengthen
business operations and help in controlling its activities. It includes planning for strategies for the
organisation and involves continuous process done by managers. Every organization thus needs
to plan strategies in order to attain competitive advantage.
Aldi is one of the leading discount supermarket chains based in Germany, founded by
two brothers, Karl and Theo Albrecht with around 10000 stores globally. The company earned a
revenue of €53 billion in the year 2010. Such a big supermarket store needs to plan its strategies
so as to perform well in the long run making profits for their shareholders. Thus, Aldi needs to
manage its stores thereby planning and formulating business strategies which will be covered in
the report.
PART 1: EVALUATING THE STRATEGY
a) Impact of mission, vision, objectives, goals and core competencies on Aldi's strategic
planning
Strategic planning is an essential part of an organization which involves formulating
plans so as to achieve organizational objectives and goals (Schot and Geels, 2008). It involves
strategic decisions as well as resources required to formulate plans to achieve competitive
advantage. Aldi uses a variety of strategic programs so as to compete with others and thereby
making profits. These incorporates its mission, vision, goals and core strategies.
Mission - A mission statement of Aldi reflects its main purpose of operations which
gives people an insight about its existence. It helps in meeting the ends with set standards and
analysing market size (Malhotra, 2015). Company focuses on success and the growth by
building efficiency at each step whether construction or distribution.
Vision - It is something which provides a long term aspect about an organization. Aldi's
vision about future motivated its employees and stakeholders by maintaining cordial relations
and through working in harmony. Aldi being a discounted supermarket has a vision of providing
great quality products at lower prices (Huang, 2009).
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Goals - This refers to the end perspective of any organization which directs towards
generation of profits (Luan and Sudhir, 2010). Aldi has set goals for both short and long time
periods which everyone needs to fulfil thereby meeting standards and correcting deviations. This
not only accomplishes tasks but improves enhances the performance of stores as well.
Core Competencies - These are the objectives which organizations set up to achieve
competitive advantage over competitors. These strategies make a distinction in between two
homogeneous companies. Aldi has many competitors serving grocery products all over the globe
but it has a distinct competency of selling discounted quality products which makes it different
from others (Huang, 2009).
(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
All these processes help in planning strategy for business and thus, helps in achieving
targets for company. Aldi has a set of business mission and vision for its stakeholders to view
and follow the same and thereby undertaking operations. The goals and objectives of the
company help employees to move in a particular direction for enhancing performance.
b) Various factors for formulating strategic plans for Aldi
The proper management of financial, human and technological resources is based on
strategic plans developed at initial stage. Strategic business plans are essential to forecast the
future and take actions according to that (Jenyo and Soyoye, 2015). Aldi incorporates various
factors so as to enhance strategic planning which is essential to attain the set targets. Factors to
be kept in mind while formulating strategies are:
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Illustration 1:
ALDI Supermarket Logo

People - They play a key role in determining strategies as well as its implementation.
Right number of people are necessary to achieve the targets (Luan and Sudhir, 2010). Aldi has a
critical setup for determining right people for the right post and fill in the vacant position either
internally or externally so as to enhance operations thereby providing training and development
facilities.
Resources - Allocation of resources in a sustainable manner is an essential strategy that
every organization needs to design. Aldi undergoes a statistical financial planning for procuring
resources and its allocation to various departments in order to attain the end goals. Time being an
essential resource at Aldi is planned and managed in a strategic way (Jenyo and Soyoye, 2015).
Culture - Aldi constitutes a culture of harmony where everyone with diverse group or
society work towards attaining common objective. This helps in making employees feel
comfortable thereby bringing necessary changes and implementing business strategy seemingly.
Such a culture at Aldi helps workers to take up actions and accountability for their work to
increase productivity.
Structure - Aldi has clear and concise structure with defined lines of authority and
responsibility. Each person has a stipulated supervisor which he or she needs to report in a
formal manner (Huang, 2009). Such a hierarchical structure is followed at Aldi so as to carry out
operations in a defined way. Managers at Aldi are ensuring clear lines of communication so that
strategies will be formulated and implemented in a correct way.
Systems - Aldi has predefined systems and processes to manage work and obtain output.
Each project is completed on the priority basis thereby ensuring commitment and involvement of
employees (Luan and Sudhir, 2010).
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c) Techniques used to evaluate Aldi's strategic plans and procedures.
(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
The Boston Consultancy Growth Share Matrix is a tool for analysing business strategy in
order to achieve sustainable competitive advantage. It assesses a product or business in two
categories mainly the relative market share which the new product or business firm will have in
compliance with others and market growth potential that they would grab with time (Huang,
2009). Aldi uses BCG matrix technique to assess and evaluate its position in the market. The
four components of BCG matrix are:
Question mark - It implies the way in which business will perform in the market. It is
also known as problem child with high growth and low market share. Aldi since its inception
was a part of Question mark category as it is building its operations and basis of performance in
the market amongst competitors. It is the growing stage which takes a lot of liquidity and
thereby, capturing cash resources of firm (Malhotra, 2015).
Star – Today, with the growing demand and structure, Aldi is a part of the star box
category of the BCG matrix. This part of matrix has a high growth rate as well as high market
share which helps business firms to enhance their operations and productions as this stage will
generate profits (Schot and Geels, 2008). This stage provided Aldi a competitive advantage as
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Illustration 2: BCG Matrix of Aldi

people are recognizing the brand and more innovation of products was incorporated. Aldi in the
long run may take the position of Cash cows (Huang, 2009).
Cash Cows - The cash cows represent high market share thereby generating profits but a
relative low growth. At this stage, Aldi generates ample amount of funds which could be used to
invest in new projects or rebuilding and renovating older projects.
Dogs - These are the projects that business needs to disinvest in as they generate low
profits with low market share and growth (Malhotra, 2015). Aldi has to look into the segment of
its products and quickly takes an action on stopping its production so as to give proper assistance
to other products and services thereby maintaining competitive advantage.
d) Organizational Audit and Analysis of current strategic position of Aldi.
The internal strengths and weaknesses of Aldi provides a means to formulate strategies
accordingly which will enhance its scale of operations (Jenyo and Soyoye, 2015). The external
environment is changing continuously providing various opportunities and posing threats to
operate strategically which needs to be considered while formulating business strategy. The
SWOT analysis of Aldi will identify different perspectives the company should focus on.
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(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
Strengths - Aldi has a strong USP which turns to be its strength is its quality products
and services at reasonable and affordable prices. Being a German based company has a strong
base with 2500 stores which helps in keeping its overall cost of operations minimum. The rapid
growth of Aldi has seen its market share rising to approx 12% with an increase in its online and
store customers ton a huge number (Malhotra, 2015).
Weaknesses - The company has to face restrictions which affects its overall operations.
Despite being a discounted supermarket store, Aldi has to raise its essential grocery item prices
with the depreciation inn the value of pound becoming its major weakness. Aldi has enhanced its
market growth but still lagging behind the four most leading grocery stores of British such as
Tesco, Sainsbury, Asda and Morrisons (Jenyo and Soyoye, 2015).
Opportunities - Certain Aldi products have the capacity to become the best selling items
which provides Aldi a competitive advantage over other rivalry firms. Aldi has a strategic plan to
employ more than 4000 people in the UK thereby expanding its operations and increasing its
stores. It has an opportunity to invest in advertising through various channels and forms which
will enhance its overall image.
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Illustration 3: SWOT Analysis of Aldi

Threats - Aldi has a limited variety and substitutes of products which forces customers to
take up other stores such as Lidl and Tesco which enhances their shopping experience. A huge
risk is associated with the suppliers of Aldi in the UK market (Malhotra, 2015).
e) Environmental Audit of Aldi.
Analysing the environment, external and internal elements provides an overview about
the firm’s strengths and weaknesses and its operational performance.
Porters five forces Model
The porter's five forces concept is used to evaluate the Aldi competitive environment and
its position in the industry (Jenyo and Soyoye, 2015). This analysis focuses on sustaining profits
in the company by negotiating prices from suppliers, demanding more prices from customers,
creating barriers for new firms and producing differentiated products to create competitive
advantage in the long run.
(Source: The Impact Of Micro and Macro Environment Factors on Marketing, 2014)
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Illustration 4: Porter's five forces model for McDonald's

Bargaining power of suppliers - Aldi is a big retail chain has a low impact of suppliers
power as there are many suppliers who wants to sell raw materials at low prices. Thus Aldi has
bargaining power over suppliers to ask for discounted prices thereby negotiating with them. The
switching cost is also low providing Aldi a comprehensive power over suppliers of raw materials
(Bryson, 2018).
Bargaining power of customers - Aldi faces a huge competition in the UK market by
four leading grocery stores such as Tesco, Sainsbury, Asda and Morrisons serving customers and
providing identical products (Jenyo and Soyoye, 2015). Thus Aldi faces a huge bargaining power
of buyers as competition is high. Aldi cannot exercise or attempt to rise prices as switching cost
of buyers is low.
Threat on new entrants - Aldi faces a low to medium threat of new entrants as to
establish a big multinational grocery store the new firm will require huge capital and
infrastructure to compete. Thus, opening a new firm/brand requires a lot of time and it is seen
that they often end up being a victim of mergers or acquisitions by others.
Threat of substitutes - Aldi faces a huge threat of substitutes and innovative products in
the market of UK as various retailers and supermarket stores posses variety of homogeneous
products with distinct features. Thus, products sold by Aldi could be easily available at other
stores with better features or packaging which attracts customers to switch to those products or
brands affecting Aldi's overall sales (Huang, 2009).
Competitive rivalry - Aldi has a high degree of rivalry amongst firms as there are many
leading grocery stores in the British market providing identical products and rendering similar
services. Woolworth, Coles and Wal-mart are the competitors of Aldi who focuses on cost
minimizing thereby providing quality items.
f) Stakeholders analysis for Aldi while formulating strategy.
A stakeholder is any person or group that has an interest in the success of a business.
Aldi’s focus on its stakeholders and focuses on fulfilling their individual needs which is main
reason of success for the organization (Bryson, 2018). Stakeholders comprises of investors,
customers, suppliers, shareholders, employees and government as well as community
surrounding the company. They are vital to an organization and ensures smooth functioning in a
sustainable manner.
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Aldi has developed strong and long term relationship with its suppliers of raw materials
and other intermediaries as trust and belief are important for achieving heights in the long run.
Employees are supported throughout their time at Aldi and the business is always keen to be at
the forefront of recruitment and training systems (Huang, 2009). Aldi also takes a responsible
attitude to the communities in which it works, with all activities framed by its Corporate
Responsibility policy.
Aldi has a keen interest in technology and uses it to review its products and operations.
With the help of internet and social media sites Aldi takes in feedback of customers and improve
products thereby maintaining good relationship with its consumers (Bolton and et.al., 2009). Aldi
invests huge amount in the research and development as well as training programs to enhance its
image and increase its scale of operations so as top obtain competitive advantage.
Thus, stakeholders plays an important role at Aldi while formulating and implementing
strategies for successful business operations. And its is crucial to maintain good relationship with
stakeholders which will enhance brand image and reputation at Aldi.
g) New strategy for Aldi.
(i) Current position in the UK market
The current strategy of the company focusses on the higher quality of the products which
have been provided at a lower price. Aldi is on the fifth position in the UK market competing
with four important and leading brands of British.
Names of Supermarkets Market Share (in percentage)
Tesco 28.1
Sainsbury 16.5
Asda 15.6
Morrison 16.9
ALDI 6.2
Lidl 4.5
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