Strategic Analysis of ALDI: A Comprehensive Business Strategy Report

This report provides a detailed analysis of ALDI's business strategy, beginning with its mission and vision, and exploring the factors considered in strategy formulation. It delves into ALDI's current strategic position using SWOT and PESTEL analyses, examining how environmental factors and stakeholders influence strategy development. The report evaluates business strategies using tools like the BCG and SPACE matrices, and identifies an effective strategy for ALDI. It outlines the roles and responsibilities of personnel, resource requirements for implementation, and the importance of SMART targets in achieving strategic objectives. The report covers the retail sector and the importance of effective business strategies for a global company like ALDI.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................1
PART 1............................................................................................................................................1
1.1 Defining ALDI mission and vision..................................................................................1
1.2 Factors considered while formulating strategies..............................................................2
1.3 Evaluating business strategies..........................................................................................2
PART 2............................................................................................................................................5
2.1 Current strategic position of ALDI...................................................................................5
2.2 How environmental factors affect ALDI..........................................................................6
2.3 How stakeholder participate in formulating strategies.....................................................7
2.4 New strategy followed by ALDI......................................................................................8
PART 3............................................................................................................................................9
3.1 Effective strategy chosen by ADLI..................................................................................9
3.2 Justification of strategy chosen........................................................................................9
PART 4..........................................................................................................................................10
4.1 Roles and responsibilities of personnel in ALDI...........................................................10
4.2 Resource required in implementing strategy..................................................................11
4.3 How SMART targets contribute in strategic objectives.................................................12
CONCLUSION:.............................................................................................................................13
REFERENCES:.............................................................................................................................14

INTRODUCTION:
Every organisation has its own strategies of doing business. These strategies decide its
growth in the market for long run. Strategies are developed by assessing the internal and external
factors because it affects the business operations. Business implements it by analysing the
resources available (Burlton, 2015). Therefore, it is important that strategies are developed and
implemented by analysing the overall business growth. This report throws light on mission,
vision and different strategies followed by ALDI. In this assignment, it is shown that what are
the factors taken into consideration while formulating strategies. This essay gives a brief about
what resources are needed in making an effective strategy . What is the significance of
stakeholders in strategy formulation and the role and responsibilities of personnel. What are the
various resource requirements for new strategy implementation is shown.
For undertaking this, the organisation selected is ALDI. The cited firm belongs to retail
sector and is having its operations all over the world. The existence of the company on global
level requires effective business strategies. Thus, this report will help in developing a relevant
one for the cited establishment (Chen., Eshleman,. and Soileau,, 2016).
PART 1
1.1 Defining ALDI mission and vision
The strategic planning involves various elements that define the overall business
operations. It shows what business goals and objectives are and how it is made. This includes
mission and vision of company.
Goals- These are the objectives which business wants to achieve in a specific period. It is
generally defined in a business plan.
Objectives- It is an aim that decides where the business wants to be in the future. Goals are
developed by analysing the objectives (Halpern, 2018).
Mission- It is a short statement that consists of business functions, markets and goals. It
determines why an organisation exits and what it is. To provide high quality food to poor who
could not afford to shop anywhere.
Vision- It provides a road map about what a business wants to become.
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Core competencies- This make the business different from their competitors. It includes
resource and skills that business implements in their strategies.
Strategy- It is a statement that contains the methods through which the business will achieve its
goals and objectives.
Mission of ALDI- We focus on comfort and safety of our customers.
Value of ALDI- Simplicity, responsibility and reliability.
Vision of ADLI- provide excellent services to users by maintaining their brand.
Goal – become grocery leader by providing products at low cost.
Objectives- to increase brand campaign from 2.3% to 2.5%.
competencies- Provide services at low cost and to increase customer satisfaction.
1.2 Factors considered while formulating strategies
This is important for a business to consider various factors while formulating strategies. It
is because these factors affect the overall functioning of organisation in several ways. Also, the
strategies developed depend upon the market condition and business ability to implement.
Therefore, both internal and external factors must be considered in this:- (.Drucker, 2014).
Internal factors- These are factors that exist within the organisation and are known as micro
factors. It defines the business culture, ethics and policies. Moreover, it shows that strength and
weakness of business along with opportunities and threats.
Outside influences- It is also known as external factors that exits outside the organisation. This
cannot be controlled. It contains political, legal, etc. that are changed and developed by
government. Moreover, it directly affects strategy formulation as business is closely related to it
and operates within this environment.
Market position – It shows that what is the position of rim in the market. Then accordingly
strategies are developed to strengthen the position. It helps in identifying areas where growth can
be possible and needs of customer are not fulfilled.
Customer demand- It is important to know what are the needs of customers in different market
so that products can be produced. Moreover, by identifying customer needs marketing strategies
are developed to attract them.
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1.3 Evaluating business strategies
Business plans are formulated by using various techniques. This is because it helps in
providing clear view of goals and objectives to be achieved. It enables business to develop plans
by analysing the market situations. Each technique is having its own pros and cons. So business
can select it on the basis of its nature and size In this BCG and SPACE matrix are used
(Yuliansyah,., Rammal,. and Rose, 2016).
BCG matrix- It was developed by Bruce Henderson in 1970. It is a growth share portfolio
matrix that divides business in four categories according to its market growth and share. It is
based on two assumptions of profits. First is increase in market share will generate more cash
and growing market share requires investing in assets thus resulting in consumption of cash. The
four categories defined are:-
 Dogs- This category is having low market share and growth therefore, it requires low
cash. It is generally a cash trap because there is no return on investment to business.
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Illustration 1: BCG Growth Matrix
(Source : Strategic management, 2010)

 Cash cow- It is having return on investment greater than market growth rate resulting in
more cash generated than consumed. In this, the business invests very low amount and
earns huge profits. Business is having a high market share but low growth prospects
(Torrent-Sellens,, 2015).
 Stars- They generate and consume large amount of cash due to strong market growth and
share. In this firms are usually monopolies who are considered as stars. If market share is
maintained, it will become a cash cow.
 Question mark- They consume a large amount of cash but bring little in return. In this
situation, business has potential to become a star by gaining large market share.
SPACE matrix- It is termed as strategic position and action evaluation matrix. This is a highly
used strategic techniques that is used to develop strategies. It focuses on four basic factors that
business must consider. These are internal and external factors (.Deans,, 2015).
Internal factors- It includes two factors: competitive advantage and financial strength.
 Competitive advantage- It consists of market share, quality, customer loyalty, etc. and
other factors that are related to competitors and market condition.
 Financial strength- It consists of return on sales, assets and cash flow. This is related to
business financial position in the market. (Hair. and Sarstedt,, 2014).
External factors- It includes industry attractiveness and environmental stability.
 Industry attractiveness – It includes growth potential, entry barrier, etc. and all other
factors related to the industry in which business operates.
 Environmental stability- Technology, political uncertainty, etc. and other factors are
considered in this.
By analysing all these factors, there are four strategies developed that a business can follow or
implement. It is explained below:-
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 Aggressive- It occurs when all dimensions are positive. This strategy is followed when
business is wants to grow (Zhu,. and Chertow, 2017).
 Competitive- It is used to improve the financial position of the firm in the market. This is
done to maintain the competition in the market.
 Defensive- It is followed when business is having poor performance in market. Also, the
environment factors are against them. In this business focuses on its strongest segments
to recover.
 Conservative- It is followed when business is financially weak and looks to diversify its
market. It is done to attract more customers in new market (Patel, and Chrisman, 2014).
There are various tools to evaluate business strategies. These tools are used to identify whether a
strategy is strong enough to achieve ADLI mission and vision.
Benchmarking- It can be used to evaluate it. Specific goals are set and then results of strategies
is measured . It helps in finding out the overall performance of strategy.
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Illustration 2: SPACE Diagram
(Source : Paul Simister, 2011)

Balanced scorecards- It is a strategic planning and management system that is used to monitor
progress towards strategy. In consists of key performance indicators that measures performance
on the basis of certain factors.
PART 2
2.1 Current strategic position of ALDI
The organisation strategic position is determined by doing SWOT and PESTEL analyses.
It shows how business is able to perform in various situations. Therefore, it helps in finding out
the position of company in the market. SWOT is described as under:-
Illustration 3: SWOT analysis
(Source : Jodie Shaw, 2017)
Strengths- ALDI is been named as the best supermarket of year for fourth time in 2017. Also, it
is providing goods at lower prices which has created a better brand image in the market. It has
opened its 70 new stores in UK that has attracted around 1.1 million new customers.
Weaknesses- ALDI is not as effective as Tesco and Sainsbury. They have increased prices on
certain items such as milk and bananas. This has reduced their growth in market share (Wagner,
and et..al, 2015).
Opportunity- In recent times some of ALDI products is been name as world best. So this
provided an opportunity for ALDI to keep developing and expanding such products. This will
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help them to grow in the market. Also, by opening its stores in different parts ALDI can increase
range of their goods. They can follow strategy of Tesco to grow in market and increase their
sales (Švárová, and Vrchota, , 2014).
Threats- The growth of company such as Amazon has been a major threat to ALDI. It is
restricting this company to grow and develop in the industry.
2.2 How environmental factors affect ALDI
ALDI is been highly affected by external environmental factors. This has reduced ALDI
growth and sales in the market. It is because various new competitors have entered in industry
and providing goods to customers at cheaper rate. They have created gap between high and lower
class segments. Thus, porter five force model is used to analyse business factors:-
Porter's five force- It is the most widely used model to analyse the affect of factors on business.
Threat of new entrants- It states that what are the possible chances of new business to enter in
the market. A new entry will highly affect the industry. So for this strong barriers must be
created to restrict new entrants.
Threat of substitute-It states that what other products can be used by customers to fulfil their
demands. This means substituting the product. With this the company power in market gets weak
(Dinwoodie,., Quinn. and McGuire, , 2014 ).
Bargaining power of customers- It shows that how many customers company is serving. Small
amount of customer will be having more power to force business to change its price.
Bargaining power of suppliers – It shows how many suppliers company is having. Company
depends more on supplier for distributing goods. Therefore, small supplier base will hold more
power forcing firm to depend upon them.
Competition- This shows how many competitors exists in the industry. More number of
competitors will be having less power to dominate.
2.3 How stakeholder participate in formulating strategies
Stakeholder are people who are related to organisation in direct and indirect way. They
are concerned about the business and show interest in it. Examples are creditors, debtors, etc.
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stakeholders analysis is a process through which the company identifies their needs and
accordingly produce products to satisfy them. It is done to develop a strategic view about them
and create a string relationship between them by solving issues or problems. Stakeholder analysis
is done to provide benefit to business by analysing market needs (Iselborn, Szolnoki. and
Szabó, ., 2016)
Why stakeholder analysis is important :-
 Gives project a shape- They will provide support to you in initial stage of strategy. They
will improve quality of strategy and gives inputs.
 Winning resources- Stakeholders provide resources like money, time, etc. It helps in
making the strategy successful.
 Building understanding- It helps in building relationship with each others so that
business operations are not affected. They support more in business activities.
Role of stakeholder in formulating strategies:-
 Marketing strategies- A market research is done to identify the needs and wants of
customers. In this stakeholder provides information regarding changes in taste and
preference of customers. Moreover, they suggest and share their ideas while developing
strategy (Yang,., Kueng,. and Hong, 2015).
 Motivating employees- A positive environment will encourage employees to work hard.
This can be done by involving employees in decision making.
 Corporate citizenship- Maintaining better relations with society will be useful in
creating a positive brand image. Therefore, stakeholder allows organisation to contribute
in CSR activities by developing strategies.
 Forming partnerships- It helps in forming partnerships with suppliers, retailers so that
products can be delivered to consumers. This adds value to goods and business for long
term success.
Stakeholders provide useful information on what are the needs and demands of people.
They contribute by providing useful data related to market condition and competitors strategies.
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They also provide information on what are the changes in taste and preference of customers. It is
done by taking their feedback. They communicate with people and identify their demands.
2.4 New strategy followed by ALDI
ALDI is currently been operating in UK and US. They are not having little presence in
Asian markets. The current mission of ALDI is to focus on existing markets. Now, ADLI must
focus on market development to give competition to local business in different countries. This
will give them competitive advantage. For this they must do research in market.
Strategic objective- To increase the range of products in larger area (Grant, 2016).
Goals- To grow and develop business operations by expanding the range of products.
Action items- It can be done by identifying needs of customers and developing strategies to
fulfil their needs. Also, by implementing the strategy of market development.
There are various strategies that can be followed by ADLI in order to expand their
business in the market. For this various strategies are described below:-
Limited growth- It is a strategy followed by organisation to grow and develop in the market. It
is generally implemented when entity wants to have either develop new product or market or
both. It is developed to limit growth for specific time period. In this there is three strategies:-
 Product development- In this the entity focuses on developing new products or
modifying certain features of exiting products. It is done to attract new customers or
retain existing ones.
 Market development- It refers to developing new markets for increasing the range of
products. Generally, it is followed by MNC”s to increase sales and gain larger market
share. The focus is on attracting new customers and markets. (Sharma, and et..al 2015).
 Market penetration- In this company focuses on selling its exiting products in existing
markets. This enables firm to increase its customer satisfaction by providing them extra
benefits.
Substantive growth- A strategy in which the business focuses on
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 Horizontal integration- In this a business acquires other activity at same level in
different industries.
 Vertical integration- In this business takes control over one stage of production unit.
 Related diversification- It means expanding the exiting product line or market. It is done
to focus on gaining more market share in existing market.
 Unrelated diversification- It refers to adding new products or market that
are completely unrelated to existing business products.
Retrenchment- It refers to closing down of one by business unit to reduce the expenses of
business. Usually, it is followed to improve the financial position. Furthermore, it is of two
types:-
 Turnaround- In this the wrongly decision implied are withdrawn or taken back again.
Decisions relating to market promotion or strategies that are affecting the market is
withdrawn (.Burlton, 2015).
 Disinvestment- In this a unit which is giving continuous loss is liquidated. It is done after
implementing turnaround strategy.
AlDI can implement limited growth strategy to expand its business. It helps them to enter
in new markets like India and China. This will help them to earn more profits and compete with
other retail companies like TESCO. Moreover, they can sustain in industry for long time. Also,
they can implement product development along with this. It will help in increasing customer
satisfaction and retaining them.
PART 3
3.1 Effective strategy chosen by ADLI
From the above strategies ALDI can choose the strategy of limited growth. In this they
can go for market development. It will be beneficial for them as they are not having enough
market presence in many countries. This will help them to expand their business operations in
countries like India and china. It is because they are already having string brand image in UK
and US. So it will be easy for them to do business in these regions effectively. Also, they provide
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high quality goods to middle class people, so they have a vast opportunity to take advantage of
these nations. New customers will be attracted leading to more sales. Thus, they will be able to
grow and develop (Drucker,., 2014).
ALDI can expand its business operations by applying limited growth strategy. With this
ALDI can focus on market development such as India or China. In this they can provide
products to meet the demands of customers. This will help ALDI to increase sales and profits.
Also, with limited growth they can increase their customer base and market share.
3.2 Justification of strategy chosen
The market development strategy is followed by ALDI to provide goods to people in new
markets. It is done because as ALDI is MNC, the entity must expand its business operation.
Moreover, India is a developing economy. So this will give an advantage to ALDI in identifying
needs of customers and fulfilling them. It will help them to grow and gain market share in India.
Furthermore, market development will provide a platform to ALDI to generate more profits and
revenues. This will make their financial position strong and compete against TESCO and
sainsbury.
By expanding business operations in markets like India and China ALDI can increase its
customer base. It is because they are already having a strong base in UK so they should focus on
these markets. Apart from this they are capable enough to attract customers with their products .
They can increase its presence in these markets. Company will be able to gain competitive
advantage in this market.
PART 4
4.1 Roles and responsibilities of personnel in ALDI
The personnel is responsible for performing the following functions:-
 Recruitment- HR must recruit right candidate for right job. It is done to ensure that
candidate is having enough skills and abilities to perform particular job role. Also, they
establish relationship between employer and employee by acting as a mediator (Halpern,
2018).
 Professional development- HR must involve employee in workshops, programs that are
related to business decisions. This will make employee feel that organisation is concerned
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for them. Also, it will enhance their knowledge and skills that will contribute in
implementing strategy
 Appraisals- Employee must be appraised for their performance. It will be useful for them
in performing better. Also, this will motivate others to work hard in completing their
tasks. Hence, this will overall improve ALDI efficiency in implementing strategy
(Torrent-Sellens, 2015).
 Training- It is the first and foremost duty of HR to provide training to employees. This
helps them to gain skills and abilities that are required to perform a task. HR will get an
insight on how employee is contributing in achieving the cited firm goals and objectives.
Employee understands the culture and policies followed in the ALDI.
 Rewards and incentives- Providing rewards and incentives to employees will encourage
them to put more efforts in completing tasks. It will also help ALDI as their productivity
will increase leading to accomplishing overall business objectives. Various methods such
as holiday package, pay incentives, etc. can be used in this (Zhu, and Chertow,., 2017 ).
 Resolving conflicts- It is the moral duty of HR to provide a better and positive work
environment within ADLI.. This can be done by building strong relations with employees
and solving their problems. Moreover, it helps employees to work with each other
effectively.
 Employee relations- HR must create strong relations with employees. This is done to
communicate or share information between manager and employees. It will help in
promoting work culture in ALDI and developing morale values.
4.2 Resource required in implementing strategy
In order to implement the strategy, necessary resources are required in ALDI. These
resources describe the effectiveness of strategy implemented. The various resources are:-
Finance resources- It is the most important resource that describes ALDI ability to
finance the strategy. Any firms market position is determined by its financial position. Therefore,
ALDI must require enough finance to implement the strategy (Deans,., 2015). It includes assets
such as debtors, land, etc. and liabilities such as creditors, loan, etc. ALDI must raise funds to
implement new strategy.
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Human resource- They are considered as most important element of every organization. It
refers to work force that will perform tasks to achieve goals and objectives. The HRM is
responsible for recruiting skilled and qualified work force. They must possess skills and
knowledge to fulfill ALDI needs. An effective work force will be able to provide efficiency in
business operations (Hair, and Sarstedt,, 2014).
Physical resources- It includes all operational resources in which the organizations is engaged
is. It is of three kinds:-
 Marketing facility- It is related to analyzing existing market strategies that are prevailing
in the market. Thus, to implement new strategy it has to do modifications in supply chain,
promotional strategies, etc.
 Information technology- An effective IT system will ensure that changes made in
procedures or process are beneficial to organization. Therefore, it is essential to have the
latest IT systems to implement strategy. These systems provide ease in working and
allows employees to work easily (Yang,., Kueng. and Hong,, 2015).
 Production facility- It refers to production process as implementing new strategy
requires ALDI to have enough machinery and other equipment's. ALDI must be capable
to make modifications in production process.
4.3 How SMART targets contribute in strategic objectives
Abbreviation Description
S Specific To target a specific area to increase
sales.
M Measurable To compare the past and present sales.
A Achievable To increase the range of products.
R Reliable Results are relevant to its mission.
T Time bound Targets must be achieved within given
time period.
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 Specific - It is required that ALDI must implement market development as new strategy.
It will lead to attracting more customers and generating more sales.
 Measurable- It can be done by comparing the past and present sales in ALDI. This will
be useful in finding out whether sales has been increased or decreased.
 Achievable- The new strategy implemented is market development so ALDI will focus
on increasing the range of its product all over the world. This will also help in fulfilling
demands of people (Grant, 2016).
 Realistic- With market development it is important that the benefits are achieved if any
changes is made. It should be realistic in nature as changes made will be seen in long
term growth of business.
 Time based- Targets must be made by considering the time limit in which it can be
achieved. It should not take long time to make develop markets so that it becomes
difficult to meet the demands of customer.
CONCLUSION:
From this report we can conclude that strategic planning involves various elements that
define the overall business operations. It shows what business goals and objectives are and how
it is made. This includes mission and vision of company. Business plans are formulated by using
various techniques. This is because it helps in providing clear view of goals and objectives to be
achieved. The organisation strategic position is determined by doing SWOT and PESTEL
analyses. Stakeholder analysis is done to provide benefit to business by analysing market needs.
The personnel is responsible for performing various functions. Also, to implement strategy,
necessary resources are required in ALDI.
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