Comprehensive Analysis of ALDI's Business Strategy and Operations

This report provides a comprehensive analysis of ALDI's business strategy, encompassing its mission, vision, objectives, and core competencies. It explores the factors ALDI considers when formulating strategic plans, including organizational culture, competition, and technological advancements. The report examines the worth of techniques like the BCG matrix and PIMS for strategic development, and conducts an organizational and environmental audit using SWOT and Porter's Five Forces analysis, respectively. Stakeholder analysis and the formulation of a new strategy for ALDI are also discussed. Furthermore, the report identifies the target market, justifies the chosen strategy, and details the roles and responsibilities of personnel involved in implementation, the resources required, and the use of SMART targets. The analysis concludes with an overview of ALDI's current strategic position and recommendations for future growth and competitive advantage within the retail industry.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
(a) Contribution of ALDI mission, vision, objectives and core competencies to inform
strategic planning........................................................................................................................1
(b) Factors to be considered by Aldi when formulating their strategic plans.............................2
(c) Worth or usefulness of techniques used when businesses develop their strategic plans.......3
(d) Organisational audit of Aldi to analyse current strategic position........................................4
(e) Environmental audit for ALDI showing both micro and macro environment......................5
(f) Significance of stakeholder analysis for ALDI in formulation of new strategy....................6
(g) New strategy for Aldi............................................................................................................7
PART 2............................................................................................................................................8
(a) Identification of market and appropriateness of strategy......................................................8
(b) Justification of adoption of strategy......................................................................................8
PART 3............................................................................................................................................8
(a) Roles and responsibilities of personnel involved in implementation of strategy..................8
(b) Resources required for implementation of strategy...............................................................9
(c) SMART targets contribute to achieve strategic objectives.................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
.......................................................................................................................................................13

INTRODUCTION
Business strategy is the process of making policies which helps to perform their business
functions effectively. Strategy development is an art which includes the process of formulation
and implementation of cross functional decisions which contributes to the organisation in
accomplishment of their long term objectives. Such strategies helps in providence of
organisation mission, vision, objectives, business plans etc. which guide employees in
performance of their tasks. Such strategic evolution helps to understand about internal strength of
company to gather opportunities effectively in future. To make such strategies more effective
needs to analyse macro environment factors (Akter and et. al., 2016). This provides opportunity
regarding satisfaction of demand of customers and attain competitive advantage. ALDI is global
brand which has large number of supermarket chains. This organisation deals in food, beverages,
sanitary articles, household goods etc.
In the present report explain about, mission, vision and objectives of ALDI, factors
considered while formulating strategic plans, techniques used to develop business plans,
Organisational audit of ALDI to ascertain current strategic position, significance of stakeholder
analysis. Also describe about, roles and responsibilities of personnel in implementation of
strategy, evaluation of resource requirement and use of SMART targets in achievement of
strategic objectives.
PART 1
(a) Contribution of ALDI mission, vision, objectives and core competencies to inform strategic
planning
Strategic planning: Planning is the process of making policies for future actions.
Strategic planning includes about taking various decisions regarding allocation of resources,
roles and responsibilities to employees to provide adequate direction in performance of their
different function an organisation to achieve common targets (Alsudiri, Al-Karaghouli and
Eldabi, 2013). It is the duty of the manager of Aldi, to make effective strategies. While making
strategies various issues are considered in this process like stakeholders, environmental audit,
strategic positioning, organisation audit etc. Consideration of such factors helps to understand
about their internal strengths and weaknesses which contributes to grab opportunities effectively.
The mission, vision and objectives also plays an important role regarding preparation of
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strategies. The manger of Aldi also consider all such points in formulation of strategies which are
define below:
 Mission: This includes about ascertain effectiveness in future course of actions which are
required to accomplish by organisation. It provides the information about the segments in
which organisation deals and provides their services. The mission of Aldi is to attain
growth and success in market by achieving the level of efficiency at every level of
organisation from store construction to distribution networks. Working as grocery stores
they wants to provides high quality of products and more savings for our customers(Azar,
2011).
 Vision: It provides about the philosophies and principles required to adhere by
employees in achievement of mission which are provided by organisation. The vision of
Aldi is categories into five ideologies which are huge savings, excellent quality,
outstanding value, superb special buy and generation of confidence.
 Objectives: Objectives are short and long term goals which are required to achieve
success in specified period of time. Main objective of Aldi is to become leading grocery
brand which has large market share. Their aim is to achieve trust of customers by
providence of high quality products (Barberá and et. al., 2012).
 Core competencies: This provides about such activities in which organisation has good
and full control. This has large impact on strategic planning. Large number of specialist
employees is the biggest strength of Aldi. It helps in achievement of their mission and
predetermined goals.
(b) Factors to be considered by Aldi when formulating their strategic plans
Strategic planning is the process of formulation of future course of actions and principles.
Large number of factors affects to make effective plans. Such factors are categorised into parts
called internal and external. Internal factors are such which are present within organisation and
external factors are which present in business environment. Manager of Aldi is required to
consider such factors while formulate plans which are mentioned below:
 Organisation culture: It is internal factor which present within the organisation. Aldi is
multinational organisation consist large number of employees from different culture. This
creates difference among their views and behaviour. Manager is required to consider such
factor to provide values and norms adhere by all employees.
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 Competition: It is an external factor which is analysed through market research. Existing
high competition in market in front of Aldi, requires to adopt robust policies and
strategies. This helps to remove their competitors out of market. It also helps in
identification of their strengths and weaknesses. It provides opportunity to improve their
market share (Chang and Graham, 2012).
 Technological factor: It is important factor which helps in improvement of production
capacity and profitability of organisation. Manager of Aldi requires to identify about the
capacity of their technologies. This helps to make effective decisions regarding
acceptance of new technology and benefits derived by Aldi.
 Strengths and weaknesses: SWOT analysis by Aldi helps in identification of their
strengths, weaknesses, opportunities and threat. It is considered as internal part of
strategic planning as it helps in determination of their actual capacity and position in
market. It helps to make effective plans (Chu, KrishnaKumar and Khosla, 2014).
(c) Worth or usefulness of techniques used when businesses develop their strategic plans
In development of strategic plans large number of techniques and models are used by
organisation as per their requirements. All such models have their own advantages and
disadvantages. Management of Aldi, uses two techniques which are BCG matrix and PIMS to
optimally utilise their given resources. Both these techniques are define below:
BCG matrix: This matrix is designed in such way which contributes in long term
strategic planning. It helps to consider growth opportunities. It is divided into 4 quadrants which
is used by Aldi is mentioned below:
 Stars: This quadrant provides about such products of Aldi which have high growth rate
and market share. To ascertain sustainability in their performances requires huge amount
of funds.
 Cash cows: This segment provides the information about the such products of Aldi,
having high market share but low growth rate. High profit opportunities are available due
to high market share.
 Dogs: It is important aspect which provides information about such products of Aldi,
having low growth rate and market share. This situation indicates the management of
Aldi that need to reduce their costs and optimum utilisation of resources.
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 Question marks: This part of matrix indicates about such products of Aldi which have
low market share but high growth rate. It provides information regarding opportunities
are available to expends their market share to cover their losses (Elhamma and Zhang,
2013).
Advantages of BCG matrix to Aldi
 It helps the manager of Aldi to determine balance in organisation current portfolio
 It provides opportunity to understand and formulate future actions
 It helps to sell their new market products at low price to capture large market share
 Identification of right time to focus on business operations
Disadvantages of BCG matrix to Aldi
 This matrix not provides emphasis on synergies effect
 High market share is used only to show the success of Aldi in market
Profit impact of market strategy: It is effective strategy which helps to attain
competitive advantage in market. It is made regarding identification of such business strategy
which leads towards success. Data from such strategy is further used to make important
marketing strategies (García‐Rodríguez and et. al., 2013). Six principle areas of information
which is considered while formulating this strategy are:
 Strategic movement
 budget allocation
 Structure of production processing features of business environment
 competitive position of business
 Operating results
 Characteristics of business environment
(d) Organisational audit of Aldi to analyse current strategic position
To evaluate current position of Aldi needs to conduct SWOT analysis which helps in
determination of their strengths, weaknesses, opportunities and threats. This helps to understand
about current position of Aldi in market and future opportunities available in front of them to
accomplish their targets (Gold, Seuring and Beske, 2010).
Strengths: This provides about such specialities possess by Aldi which becomes their
strength in future course of actions. Such different strengths are define below:
 Serve top quality products
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 offers at affordable price
 Deals in diversified products like food, home products, beverages and sanitary articles
 Having more than 8000 stores in Europe and other foreign countries
 Having their business operation in more then 15 countries
Weaknesses: Some of the major weaknesses of Aldi are define below:
 Still small in size as compare to other brands
 Having few chain of stores, this reduces their impact globally
 Sometimes, it is identifies that the stores of Aldi has low and cheap quality products
Opportunities
 Expand their business operations in growing economies like Africa, Asia etc.
 Needs to invest more in their marketing tools to advertise about their existing products
top attain competitive advantage
Threats
 Large number of competitors like sans bury, M&S etc.
 Low trust of customers over quality of products
 change in prices and government regulations
(e) Environmental audit for ALDI showing both micro and macro environment
To make audit about their both micro and macro environment, Aldi needs to use porters
five force analysis. It is effective model which helps in determination of the competition present
in business environment (Haley, Haley and Tan, 2011). This helps in preparation of effective
strategies which contributes to achieve competitive advantage and large market share. It provides
opportunity to the management of Aldi to maximise their profitability to understand about their
competitors and forces which are present in market. Porters five force analysis is define below:
 Competitive rivalry: This step includes about identification current competitors of Aldi
in market. M&S and Sans Bury are two big competitors which affects their position in
market. To improve their market share Aldi needs to reduce prices of their products and
provide high quality products. It is also needed to adopt current marketing tools to build
effective relation with customers.
 Suppliers power: Aldi is retail organisation where suppliers are available in large
number. They have the power to sell the products in more number of quantities. Aldi has
large number of suppliers to provide their products to end customers. In this situation
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suppliers don't have much power to influence market and business operation of Aldi
because cost of appointing new supplier is very low (Melville, 2010).
 Buyer power: Aldi is multinational organisation which provides their services in more
then 15 countries. As large number of buyer are using their products. Due to having large
number of buyers their power to influence the price of their products in low.
 Threat of substitution: This includes about threat of using unique techniques by their
competitors to capture large market of share. M&S and Sans bury is big organisation
which are also using online platform to sell their products worldwide. It is biggest threat
for the products of Aldi to be substituted by them as they easily available in market.
 Threat of new entry: Aldi is working in retail industry, where there is no regulation are
provide by government regarding entries. So, it is easy for new companies to easily enter
into new market and capture market by providing products at low price. This will creates
difficulties in front of Aldi to retain their position in market an increase their profitability
(Pohl and Tolhurst, 2010).
(f) Significance of stakeholder analysis for ALDI in formulation of new strategy
Stakeholder analysis: It is the process of determination of the views of different
stakeholders regarding their existing products and services. It helps to make their new strategies
more effective which provides opportunity to achieve their targets effectively. Different
stakeholders of Aldi are employees, investors, shareholders, customers etc.
Process of Stakeholder analysis
Step 1: Identification of stakeholders which are having interest in business operation of Aldi
Step 2: This step includes about differentiate their stakeholders on the basis of their interest and
power of influence. First, Such stakeholder having high interest and power. They have large
influence upon business strategies and products. Secondly, Such stakeholders having low interest
but high power of influence. Thirdly, such stakeholders having high interest but low power. They
are having large number of information. Lastly, Such stakeholders having low power and
interest. They don't have much influential power.
Step 3: The information is gathered from large influential stakeholders and interpret important
conclusions which helps to make important strategies (Smith, 2013).
Significance of stakeholder analysis
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 Customers are important stakeholders and analysis of their opinions helps in
determination of their preferences and demand. It provides opportunity to make changes
in their products and quality to satisfy them. This will increase their sales and
profitability.
 This analysis helps in getting the high support of stakeholders as their demands are
fulfilled
 It provides opportunity to make good relation with their stakeholders ascertain their
confidence and trust
 Employees are important assets and satisfaction of their demands helps to ascertain their
support which increases their productivity.
(g) New strategy for Aldi
A new strategy which is prepared by the management of Aldi helps in achievement of
their future goals and mission. Such strategies are working as guiding factor for employees
regarding performance of their activities. In preparation of new strategy for Aldi, they use
Porters generic model which includes four parts which is define below:
 Cost leadership: The main emphasis should be provides regarding reduction of cost of
production and become most cost efficient producer in market. This situation provides
large number of advantages. The major advantage gather by Aldi are increased
profitability, large market share.
 Cost differentiation: This includes about use of innovation and creation to make their
products different from others products. Such innovation helps in getting unique features
in their product. It provides opportunity to make reliable products which gains the trust of
customers upon their quality.
 Cost focus: This includes about providence of more emphasis on particular markets by
examination of special needs of customers which prevails there. This helps to make their
market separate from competitors where they have no control.
 Differentiation: This includes about provides more emphasis on their such segment of
customers which relay on their different products and services.
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PART 2
(a) Identification of market and appropriateness of strategy
Aldi is multinational organisation but not having good market share in Europe and Asia.
The management of Aldi decided to expand their business operations in Asia to improve their
profitability and brand image. This helps to increase their customer base by satisfaction of their
large number of expectations.
To expand their business operation in Asia, Aldi decided to adopt substantive growth
strategy. This strategy helps to enhance their market share in Asia. This strategy works in two
ways. First, collaboration with other clients which are working in such area and having good
market share. Another one is to adopt new technology which provides platform to expand their
business operations.
Both these methods provides opportunity regarding makes their products popular in such
market and attain sustainability in their performances (Stiakakis and Georgiadis, 2011).
(b) Justification of adoption of strategy
Substantive growth strategy is adopt by the management of Aldi. The main aim behind
adoption of this strategy is to effectively collaborate with business agents in Asia to provides
their products and services. This helps to effectively penetrate in the market of Asia. By using
this strategy, Aldi also provides their products through online software. This helps to expand
their reach towards their end customers. Use of this platform, also works as marketing factor
which improves sales and profitability.
This contributes effectively to grab opportunities available in front of them and attain
sustainability. Online method has wide range in comparison to all other methods which has large
influential power upon the behaviours of customers. This helps to make effective relation with
suppliers and clients and attain their loyalty towards their business functions.
PART 3
(a) Roles and responsibilities of personnel involved in implementation of strategy
Preparation of the strategies is important process but its effective implementation is much
more important to attain success in their future operations. In effective implementation of
strategies, large number of personnel support is required such are managers, employees and
engineers. Large number of advantages are gathered by Aldi like competitive advantage,
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improved profitability, large market share, good brand image etc. All such personnel have their
different functions in Aldi. They are required to understand their roles which they have to
perform to make such policies successful. Roles and responsibilities of different personnel are
define below:
 Managers: Managers have the main role in implementation procedure of the strategies in
Aldi. Manager of organisation is responsible for collection of sensitive informations from
different areas which is effectively further used while implement strategies in real
manner. This includes about their duties regarding collection of appropriate resources and
funds to complete their business functions on time. Managers has monitoring and
controlling role in implementation process (Tsamenyi, Sahadev and Qiao, 2011).
 Employees: Employees are the important assets of organisation. Completion of all the
objectives depends upon their skills. Employees have the role of following such strategies
in providence of their functions. On other hand, they have the responsibility to adhere all
such principles which are included in such strategies which helps to make strategies
successful. They also having the role of making the communication open during
implementation process. It provides opportunity to keep in touch with management and
provide information about the difficulties which are faced by them. This helps to resolve
their issues on continuous basis and makes the implementation process of new strategy
successful.
 Engineers: These are such persons whom are responsible to provide technical guidance
to employees of Aldi. Such engineers have the responsibility to provide knowledge and
skills to employee regarding use of new technologies and techniques. This helps to carry
on their activities on the basis of such new strategies and policies.
(b) Resources required for implementation of strategy
Large number of resources are required to successfully implement strategy in Aldi. Such
different resources which are required are physical resources, financial resources, human
resources etc. All such resources have their different roles in implementation process. If any of
the resource is not present then it is not possible for the management of Aldi to successfully
implement strategy in organisation. Effective adoption of policies helps to sustain their position
in market by improving their performances. So, effectiveness of all such major resources in
execution process of strategies in Aldi is mentioned below:
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 Physical resources: Sometimes to make their strategies implement successfully needs to
have physical resources. Physical resources includes about furniture, building, land,
technical equipments etc. For ex, Aldi needs to have advance technologies which helps to
increase their productivity and quality of their products. If this physical resource is not
established then it is not possible to implement strategy in organisation (Gold, Seuring
and Beske, 2010.).
 Human resources: This includes about the involvement of managers, employees and
engineers of Aldi in implementation process of strategies. It is always needed that the
managers should have effective monitor and control skills which motivates employees to
perform their functions effectively. Similarly, Employees are such resource which have
the ability to make any plan success or failure. They are required to adhere such
principles which are present in such strategies.
 Financial resources: Funds are more important resource which is required to implement
any strategy in organisation. Without funds not possible to make strategies successful.
For ex. Aldi needs to adopt new technologies to improve their productivity and achieve
their tasks. For this purpose, adequate amount of finance is much important resource to
adopt such new techniques. Lack of finance create large number of obstacles in front of
the management of Aldi.
(c) SMART targets contribute to achieve strategic objectives
There is huge contribution of SMART targets in achievement of strategic objectives of
Aldi. SMART target provides about, specific, measurable, acceptable, realistic and timely goals
which are required to adhere by the management of Aldi to accomplish their targets.
Contribution of SMART targets for Aldi is mentioned below:
 Specific: It provides about that the goals of Aldi should be specific and determined. It
helps the manger to take right decisions and provide proper guidance to their employees.
It provides opportunity to attain maximum benefits (García‐Rodríguez and et. al., 2013).
 Measurable: The goals fixed by Aldi should be measurable. It contributes in
measurement of effectiveness of their strategies. For ex. Aldi has the objective that in one
year their sales will increase by 10%.
 Acceptable: It represents that the goals of Aldi is acceptable by all the stakeholders. It
helps to ascertain their views and support their business functions.
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 Relevant: It manes the goals and objectives which are fixed by the management of Aldi
should provide positive results in end and adds value in their business performance. It
helps to improve position of company in market.
CONCLUSION
It has been concluded from the above report that, Business strategies plays an vital role in
success of organisation. Strategies are prepared on the basis of mission, vision and objectives of
organisation. As the large number of issues are faced during preparation of strategies such as
stakeholders, environmental auditing, strategic positioning etc. SWOT analysis is effective
criteria which helps in organisation audit of Aldi. On other hand, use of Porters five forces helps
in environmental audit of both micro and macro environment.
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