Analysis of Business Strategy for ALDI: A Strategic Report

This report provides a comprehensive analysis of ALDI's business strategy, examining its mission, vision, goals, and core competencies. It delves into the factors crucial for strategic planning, including external influences, impact on managers, and customer needs. The report explores various strategic planning techniques, such as BCG and PIMS, and their relevance to ALDI's operations. It also covers organizational and environmental audits, stakeholder analysis, and the formulation of a business strategy for ALDI. Furthermore, the report discusses alternative strategies related to market entry, growth, and resource requirements, along with the role of strategic personnel and SMART targets in strategy implementation. The analysis highlights ALDI's 'No Frill' strategy and its impact on market penetration and customer satisfaction.

UNIT 7
Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
1.1 Mission, Vision, goals, objectives and core competencies of an organisation.....................3
1.2 Analysis of the factors that have to be considered while formulating strategic plan............5
2.1 Organisational Audit.............................................................................................................7
2.2 Environment Audit for ALDI................................................................................................8
2.3 Significance of stakeholder analysis.....................................................................................9
2.4 Business strategy for ALDI.................................................................................................10
PART 2..........................................................................................................................................11
3.1 Alternative strategies relating to market entry, substantive growth, limited growth..........11
3.2 Justification of selected strategy.........................................................................................12
PART 3..........................................................................................................................................13
4.1 Assessment of the role and responsibilities of strategic personnel.....................................13
4.2 Analyzing Resource requirement........................................................................................13
4.3 Role of SMART targets in Strategy Implementation..........................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
In every business organisation, management makes use of various types of strategies that
provides help to them in growing in market or in facing any kind of situation in the market.
Strategies can be defined as plans and policies that are formed by the managers of the companies
so as to complete all the activities in an effective and efficient manner. So, in every business
strategies are very important as they act as a guideline which is to be followed by every member
of the company. But having a business strategy does not guarantee success but it definitely helps
them in facing the unforeseen circumstances that may arise in company in future (Acquaah,
2013). All these strategies are made by top level management and followed by middle level
management so as to achieve the goals and objectives of the company.
The case study that has been referred here is of Aldi. It is a global discount supermarket
chain having around 10000 stores in almost 18 countries. This report will discuss about the
strategic evaluation of ALDI and the factors that will be used by them for such evaluation. Along
with this making a strategic choice and implementation of strategy in the company will also be
discussed in detail.
PART 1
1.1 Mission, Vision, goals, objectives and core competencies of an organisation
Strategies are considered as a very important part of a business plan. So, basically
business strategy is a type of long term planing that is done by company so as to achieve their
goals and objectives. They are helpful in achieving the vision, mission, goals and objectives of
the company by making using the core competencies, strategic thinking and planning system in
an effective manner (Blackburn, Hart and Wainwright, 2013).
STRATEGIC PLANNING: It is a process that is being conducted in the company so as to define
its strategy or taking any kind of decision related to allocation of resources so as to conduct the
operations of the company. It is considered as a very important part of strategic management and
are being created by strategists of the company. The activities that are involved in strategic
planning consists of meetings where communication between organisation's leaders takes place
so to discuss about their response towards the environment.
It is required that responsibility of designing the strategies should be in good hands
because then only companies will be able to achieve its aims and objectives. ALDI is known to
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work on a policy on 'everyday low prices' and does not work on any such policies like buy one
get one etc. so, they are having some of their visions and missions of their (Ferreira and et al.,
2014). It is specified as:-
 STRATEGY – It is a type of method that is chosen by company so as to conduct all of its
activities in an appropriate manner. ALDI is using a “No Frill” strategy which is a cost
saving method and is providing various benefits to company as well as customers.
 MISSION – It is a type of statement that is prepared for maintaining the positive growth
in the business and to aware the customers about the products and services they are
offering. The mission of ALDI is to satisfy the needs of the customers and supplying
goods and low prices as well.
 VISION – A vision is something that drives the company in achieving their goals and
objectives. It can be hypothetical as well as realistic. ALDI is following a vision
statement which says, “Top quality at incredibly low prices- guaranteed”.
 GOAL – These are classified as a tangible objective that is set up by the company for
shorter period. ALDI's goal is to increase its sale in the market which will help them in
increasing their profit level as well.
 OBJECTIVES – It is basically prepared for long term and is likely to be achieved by the
company after the time span of 1 year. The main objective of ALDI is to become the no.
one retailer of the country.
 CORE-COMPETENCIES – It is a kind of values that is set up by the company for
themselves to differentiate them from its competitors. The core competency of ALDI is
its low-priced products. They are selling goods at a very low price which other retailers
cannot think of selling.
There are a number of core competencies of ALDI, for instance price and quality. The low
pricing strategy is one of the core concepts of Aldi, because of low pricing strategy the company
has increased their sells over 6% in Christmas in 2017, Many customers liked their quality, for
example, Aldi has opened a store in Chelsea which is one of the richest borough in the UK, the
company has been successful in term of selling the products.
1.2 Analysis of the factors that have to be considered while formulating strategic plan
Every organisation is required to make strategic plans for themselves. These strategies
are created very carefully by having the vision of company in mind. But it is not necessary that
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the strategies that are prepared by the companies gets successful every time and deliver expected
strategic results (Boons and Lüdeke-Freund, 2013). These are also called as planning issues
which creates hurdle for the company in achieving their goals and objectives. Strategic issues is
considered as fundamental to the process of corporate strategic planning.
There are various factors which is required to be present in the company so that the
management can do effective planning (Campbell, Edgar and Stonehouse, 2011). The mangers
have to make sure that they are making strategies as per the goals and objectives of the company
only so that it gets fit in the work environment of company and help in formulating the work in
an effective manner. Managers of ALDI should consider the following factors before making
strategy for the company. They are as follows: -
 OUTSIDE INFLUENCES – There are various factors that are present in outside
environment that are having a strong effect on the work done in companies these factors
include economic fluctuations, technological advancements etc. So, ALDI is required to
take care of all these environmental factors and then design their strategies.
 IMPACT ON MANAGERS – It is to be noticed that the strategies that will be
implemented in the company will have a positive impact on managers or negative. This is
important because these strategies should suit the managers otherwise they will not be
able to work properly and the goals of the company.
 TARGETS – Management should make sure that the strategy they will design should be
as per the targets which the company has to achieve in its short period of time. Then only
they will be able to fulfil the goals set by the company.
 ROLE OF PLANNING – It is a very important factor that is necessary to be considered
while designing strategies. Through proper planning, company will be able to consider all
the factors that they have to consider making strategies. This will help in making
effective strategies for the company.
 LIMITATION OF THINKING OUT OF THE BOX- There should not be any kind of
limitation towards thinking while making strategies because if there will be any kind of
limits then the strategists will not be able to work in their best manner and could not
achieve good results as well (Grant, 2016).
 PLANNING SYSTEM AND CUSTOMER NEEDS – It is a very essential factor for
every company because if they will not use correct system of planning and consider the
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needs of the customers then they will not be able to satisfy the customers which will
break their mission as well.
Ansoff growth model divided into four strategy which stated below:
 Market penetration strategy- this stage emphasis on current products and current market
conditions so it is vital for company to formulate their action plans by scanning present
market scenario.
 Product development strategy: this model is used by company at the time of introduction
of new product in current market conditions. Therefore it is important for strategic level
to prepare strategic plans according to this model. Further it is used at the time of
replacing products with something better and at the time of complementary product that
customer need to buy.
 Market development strategy:- this strategy used at the time of opening up previously
excluded market segments through pricing policies. The strength of this option is put the
pressure on marketing and sales functions of business.
 Diversification: this stage used by company at the time of introducing new product to
new customer. If company uses this strategy then it involves high risk but if it is
successful when organisation products are adopted purely by customers.
1.3 Evaluating effectiveness of techniques used in developing business strategy
Strategic planning can be described as a process which is taking place inside an
organisation for planning, allocating, formulating and implementing resources in an effective
manner. Planning techniques can be defined as the methods that are used by the management for
developing a successful business strategy (Khalili Shavarini and et al., 2013). So, for developing
and bringing changes in the plans made for developing the business, ALDI will make use of
following strategies which will help them in increasing their productivity and growth in market
as well. The major tools and techniques that can be adopted by companies are:
 BCG
 SPACE
 PIMS
 DIRECTIONAL POLICY MATRIX
Out of these, the strategies that are required to be implemented in ALDI are: -
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 BCG: - This model is also known as growth share model which has been evolved from
the product life cycle. If ALDI will apply this technique, then they can easily set the
priorities for them and develop good products for the customers. Since it is very
important for the management of ALDI to know their market share, so they will use this
approach to analyse the same. This technique is also very effective in recognizing the
specific knowledge and the facts that are related to overall performance of products in the
market. This method depicts a straightforward relationship between cash eaters and cash
generators of the market share. It is divided into four parts namely: -
◦ STARS – It is the segment that shows high growth rate which is attached with high
value of market share. Here, ALDI has more chances to generate cash and they
require large investment as well to increase their share in market (Klatt, Schlaefke
and Moeller, 2011).
◦ CASHCOWS – In this segment the market growth rate is low, but they are having
high market value. Here only little investment is required by the company and the
cash that is generated here is again invested into another business.
◦ QUESTION MARK – Here, the market growth rate is high, but the market share
value is low. If proper attention is given to this segment, then it will make a form of
Stars as well.
◦ DOGS – Their market growth rate as well as market value both are down.
ALDI can make use of this strategy for allocating resources among different business
units. In this technique all the management can participate but the main role is of top level
management only (Li and Tan, 2013).
 PIMS – It is expanded as Profit Impact of marketing strategies which is a comprehensive
study of performance of strategic business units. It helps the company in understanding
what kind if strateg8iesw will be best for which type of work environment so that right
strategy is applied by the company. Its main aim is check and highlight the relationship
between the decisions taken by the company and the results derived from these decisions.
If ALDI will apply this strategy, then they will be able to understand the business
environment in a more better manner.
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2.1 Organisational Audit
Strategic positioning can be defined as a process that is used to perform various kinds of
activities inside the company that is different from its competitors. This is very effective as it
helps the company in getting higher position in market. So, to understand ALDI in a better
manner, its SWOT analysis is conducted which is described below: -
STRENGTHS WEAKNESSES
 ALDI has raised increased its sale by
19.8% in comparison with the other
supermarket chain situated in UK like
ASDA, TESCO, SAINSBURY and
MORRISONS.
 ALDI has made a reputation in the
market about providing products of
good quality at prices which is lower
than the product price of any other
supermarket chain.
 In 2017, ALDI was chosen as the best
supermarket of the year consequently
fourth time.
 It is operating in more than 18 countries
but has now become more capable of
doing its operations in more companies
as well.
 ALDI is having the image of a discount
retailer, but they are still increasing the
prices of few of its products like milk,
fruits which is completely opposite to
their reputation.
 In 2017, ALDI has experienced highest
growth, but it is still behind the big four
British supermarkets.
 It is not able to show their impact
globally as there are few other chain
stores present there which is impacting
globally.
 ALDI has also been charged of
providing low quality products at cheap
prices.
OPPORTUNITIES THREATS
 There are few products of ALDI that
has been considered as best in the
world, so it is a very good factor that
has been added in company.
 They are required to do more
investment in advertising so that they
 After the takeover of American grocer
whole foods, ALDI is also having a
threat of being taken over by some
other company.
 The private labels of ALDI have a
threat to be used by the famous
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can attract large no. of customers.
 ALDI is making plans for increasing
their sales as well as expanding in
market so for this they are planning to
develop more than 4000 jobs in UK.
established brands.
2.2 Environment Audit for ALDI
It is very important for the management of company to know the effect of external
environment on their business so that they can handle the environment in a better manner. For
this, they are required to conduct environment audit with the help of which they are going to
evaluate all the factors of society (Mukerjee, 2013). So, for this ALDI will take help of porter's
five force model. It is explained as under: -
 BARRIERS TO ENTRY – It is considered as a roadblock that is faced by every company
whenever they try to enter a new market. The barriers are related to the factors like start-
up costs, licensing etc. ALDI has been accused of supplying bad quality products and
that is why their prices is low from other company's products.
 POWER OF SUPPLIERS - ALDI is providing services that is different from that of its
competitors like they are having an innovative car rental system with the help of which
they are keeping their prices low and removes the time that is wasted on retrieving carts.
 POWER OF BUYERS – The bargaining power of buyers here is high as they are selling
products at the lowest cost with each participant trying to reduce cost of its production.
Customers who are coming from shopping there is bringing their own shopping bag
(Onetti and et al., 2012).
 AVAILABILITY OF SUBSTITUTES – They are having high threat of substitutes as
most of the products that are sold by ALDI are not unique as similar products are
available with other companies as well.
 COMPETITIVE RIVALRY – They are having high level of competitive rivalry as
similar products are being available at all the stores of the country, so customers can buy
the products availability at ALDI from some other store as well.
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2.3 Significance of stakeholder analysis
Stakeholders
Stakeholders are the group of people who have interest in company. These stakeholders
can be individual or organisations or their groups. They get affected with the dealings of
organisations, as they are associated with it and have interest. Creditors, debtors, customers,
government, employees, directors are examples of stake holders. It is not mandatory that all
stakeholders carry can interest in the firm.
Stakeholders analysis
Stakeholders analysis is the study of stakeholder’s behaviour that how they react on
specific task taken. There is important to analyse this because as they are associated with the
company's operations. Company has to take care that while achieving objective of one
stakeholder there should not be nullification of other's interest. It makes stakeholders motivated
that management of company thinks about them (Peng, 2013). This analysis is effective tool in
essential stage of project starting, as through this is company can apply best plans in projects.
Importance of stakeholder’s analysis
 Getting project into shape – Stakeholder is important part in company ALDI. While
framing any task to make it successful it is important that views of stakeholders is
important. It helps in knowing pros and cons of policies framed.
 Winning resources: To make task completed there is requirement of different resources.
It is duty of management of company that there should be optimum utilisation of
resources. It not only increases goodwill, but employees also get knowledge how to
utilize resources at its best.
 Building Understanding: Stakeholders have different expectations from organisation. It is
important for company to keep stakeholders satisfied. It builds good relations between
company and stakeholders. Stakeholders are important for company's growth and updates
as they provide funds for the operations (Pretorius and Maritz, 2011).
Customer:- In order to sustain in competitive market company always make strategies to make
improvement in existing products. In case if competitors come with new varieties of products
then top management plan to bring unique features in their goods so customers attracted towards
and get utmost satisfaction from their products.
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Stakeholders: These considered as investors of company who raised the capital for company.
Giving appropriate return in the form of dividend increase their trust and loyalty. Therefore
increase market share and goodwill.
Getting ahead and satisfaction from project: ALDI has many objectives to perform it is important
that any project undertaken by company has to provided long term benefits. It helps in knowing
predictions of different stakeholders.
2.4 Business strategy for ALDI
It is very important for every company to make business strategies as it helps in giving
direction to employees so that they can do their work in an effective manner. A new strategy will
be designed for ALDI which will help them in gaining more customer base. The strategy will be
designed in three steps are:-
CURRENT STRATEGIC POSITIONING – In order to determine the current strategic
position of ALDI, it is very necessary for them to review its goals and objectives. They are:
Goals: They are considered as the targets that are required to be achieved by the
company within in short span of time. One of the main goal of company is to grasp more market
share by increasing their sales so that their profit is also increased. Along with this, their major
goal is to maximise profit margin with 25%.
Objectives: Essentially, it is formed for the longer time frame so as to attain goals
effectively. Some objectives are:
 Determine BCG properly and start operating in a new market
 Becoming the largest supermarket chain of UK.
 Launch new technologies to make the work environment more efficient (Saunders, 2011).
COMPETITIVE ADVANTAGE OF ALDI:
 ALDI is making use of “Lean production technique” so as to make their organisation
more efficient. They are achieving this by reducing waste, labour and raw material as
well. They are also making use of time-based management so as to complete all of its
production activities on time and this strategy is making them stand out in the whole food
industry.
 Another factor that is bringing them competitive advantage is the way they are investing
in their staff. The employees are going through high quality training programmes which
are helping them to become more skilled and developed (Scullion and Collings, 2011).
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Under this after considering the whole perspective of company it is clearly reflect that ALDI
become one of the top most organisation in future. Although company has to face the challenges
from their competitors so top level need to designed road map that define where company
standing now and where they want to go and it described as below:-
 Set standard objectives:- under this step organisation need to formulate standard
objective for whole department so that all the employee put their efforts at one directions
only which facilitate accomplishment of objectives.
 Research analysis:- after setting up objectives company member prepare plan at what
factors they need to research I.e. they want primary or secondary data. Therefore
designed timetable in which discussion regarding the authenticity of all such books
journals where information collected and utilised for future growth.
 Evaluation and implementation:- After completing research process gather relevant data
which act as useful means to beat competitors challenges. Therefore whatever strategies
made should be properly evaluated and implemented.
 Follow up:- This is the last step where all the team leader induce their employees to
adopt all the possible changes made in working culture so that objective achieved and
productivity enhanced.
PART 2
3.1 Alternative strategies relating to market entry, substantive growth, limited growth
This can be a crucial factor for the business to determine and adopt effective marketing
techniques so that business can be established within marketplace. Therefore, it is highly
essential for business to adopt alternative strategies in order to conduct the operations in smooth
manner and issues can be resolved in better manner so that objectives of business can be attained
in effective manner. Managers of ALDI has determined that it so highly essential to implement
the best suitable alternative strategy within business operations:
Market entry: ALDI can give their introduction in marketplace as new company in which
manufacturing of products and services can be done along with high quality so that large number
of customers can be attracted and thus sustainability can be attained within marketplace. Market
entry can be said as process which can enable a business to enhance their goodwill and thus
uplifting the standard of business process.
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