Business Strategy Report: Analyzing Aldi's Macro and Internal Factors

This report provides a comprehensive analysis of Aldi's business strategy, examining its macro and internal environments. It begins with an introduction to Aldi's mission and vision, followed by an analysis of the macro environment using PESTEL and SWOT frameworks, and the internal environment using the McKinsey 7S model and VRIO framework. The report then applies Porter's Five Forces model to evaluate the competitive forces within Aldi's market sector. Finally, it interprets and devises strategic planning for Aldi, applying various models and concepts such as Porter’s generic strategies and Bowman’s Clock Strategy to understand the strategic directions available to the organization. The report concludes with a summary of findings and recommendations for Aldi's future strategic development. This report is designed to help students understand the complex business strategies used by large organizations.

Business Strategy

Contents
Introduction..........................................................................................................................................3
LO1 Analyze the impact and influence which the macro environment has on an organization and its
business strategies......................................................................................................................................3
P1Applying appropriate frameworks analyze the impact and influence of the macro environment
on a given organization and its strategies...............................................................................................3
Mission and vision of Aldi..............................................................................................................3
Analytical frameworks for the macro environment......................................................................4
LO2 Assess an organization’s internal environment and capabilities....................................................8
P2 Analyze the internal environment and capabilities of a given organization using appropriate
frameworks.............................................................................................................................................8
Key components of strategic capabilities......................................................................................8
McKinsey’s 7S model.....................................................................................................................9
VRIO Framework...........................................................................................................................9
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector............................................................................................................................................10
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organization................................................................................................................................10
Ansoff Matrix...............................................................................................................................11
LO4 Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organization.......................................................................................12
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organization..............................................................................................................................12
Porter’s generic strategies.......................................................................................................12
Differentiation strategy.................................................................................................................12
Focus strategy..............................................................................................................................13
Differentiation focus strategy......................................................................................................13
Bowman’s Clock Strategy............................................................................................................13
Conclusion...........................................................................................................................................14
References..........................................................................................................................................15

Introduction
Every business organization comprises of a number of missions and visions. In order to
fulfill all those objectives set by the organizations, the business organizations are ought
to adopt a number of techniques and strategies. Those strategies help these
organizations to thrive and to attain every success which they have targeted
(Ramsinghani, 2014). This report has been prepared to discuss about the macro and
the internal environment of a business organization which impacts on the operations
done within the organization. At the same time, the outcomes will be further analyzed
with the help of the Porter’s five forces model and a strategic plan accompanied by
different theories concepts and models will also be proposed for the selected business
organization. The business organization which has been chosen for this particular report
is Aldi. Aldi is one of the leading supermarket retailer companies all over the world.
LO1 Analyze the impact and influence which the macro environment has on an
organization and its business strategies.
P1Applying appropriate frameworks analyze the impact and influence of the macro
environment on a given organization and its strategies.
The business organization Aldi was founded in the year of 1946 by Karl and Theo
Albrecht. After some years, in 1960, the company has been further divided in to two
parts- Aldi Nord and Aldi Sud. This is basically a supermarket store company providing
all kinds of household and otherwise products and equipments with excellent kinds of
services. The recent researches have found out that there are almost 10,000 stores of
this company in over 20 countries all over the world (Kearns, 2008).
Mission and vision of Aldi
The mission statement of the business organization Aldi is “Simply Aldi” which clearly
indicates that the main motive of this organization is to provide the best kinds of
products and services to their customers in a most simple and authentic way. On the

other hand, the vision of this company is to be the leading supermarket retailer
throughout the world which would satisfy every needs and requirements of their
customers (Chua, 1994).
Fig: The updated logo of Aldi (Kearns, 2008).
The business organizations like Aldi need to take into account about a number of
strategic measures if they have the will to meet all their objectives and attain the highest
amount of success. These strategies help in getting their every day daily operations
done in a more systematic and organized way. At the same time, the processes are
also made far easier with the help of these strategies (Scholes, 2016).
However, in order to make good and appropriate strategies, the business organization
Aldi needs to critically assess their macro environment and all the factors within this
environment as these have huge influences over the decisions which would be taken for
the making of strategies.
Analytical frameworks for the macro environment
There are quite a number of frameworks which could be used by the business
organization Aldi in order to assess and identify the macro environment of their
business. The stakeholder analysis is one of those and this framework helps in finding

out about the relevant issues related to the stakeholders of the business organization.
The process of stakeholder mapping can help Aldi in identifying the potential and
existing stakeholders for their business actions (Kearns, 2008). There is another
process known as the stakeholder matrix which helps in finding out about the needs and
demands of the stakeholders and the ways to achieve those.
However, besides this vast analysis of the stakeholders, there is another very effective
framework to assess the macro environment of any business organization which is
known as the PESTEL analysis. This framework determines about the political, social,
economical, environmental, technological and legal factors of the business environment
which have huge impacts on all the operations (Scholes, 2016).
Fig: PESTEL Analysis (Chua, 1994).
The PESTEL analysis for the business organization Aldi has been conducted below-
Political: The political conditions of the country in which the organization Aldi is
supposed to extend their operations play a vital role in making their strategies. After the
incident of Brexit, the European stores in UK became much more vulnerable and it
impacted on Aldi as well (Kearns, 2008).
Economical: The impact of Brexit also proved to be beneficial for Aldi as the prices of
the pound decreased to a huge extent in the United Kingdom. Due to this decrease, the

people of UK decided to change their shopping places to the discounters and Aldi is the
biggest discounter company all over the UK (Ramsinghani, 2014). Besides this there
are some other economical factors like the inflation rate, interest rates, foreign
exchange rates etc. which Aldi has to consider while making their business strategies
(Chua, 1994).
Social: The lifestyles of the people can have massive influences on every business
action which Aldi performs and that is why, the organization needs to keep in track
about the recent trends and demands of the customers in their own sector. In order to
bring about good cultures, Aldi has decided to teach and train 1.2 million children of the
UK to eat healthy and fresh foods (Scholes, 2016).
Technological: As this is a modern and technologically advanced era, Aldi needs to be
much updated and extremely developed in case of technologies. The customer services
which they offer to their customers are oriented with a number of modern technological
equipments (Ramsinghani, 2014).
Environmental: Environment and the preservation of it is a must for every business
organization and the strategies which are made by the management of Aldi are
generally as such that those do not hamper the overall environmental condition of the
country.
Legal: Every country has some laws and legislations in case of conducting businesses
and it is the duty of the business organization Aldi to acknowledge and maintain all
those legislations while they are making business strategies (Scholes, 2016).
Beside the PESTEL analysis, the SWOT analysis can also be an important tool to
measure the macro environment of the business environment and to make the
strategies. This is the framework which identifies the strengths, weaknesses, threats
and opportunities which any business organization possesses (Botten, 2006).

Fig: SWOT Analysis (Ramsinghani, 2014).
The SWOT analysis for the business organization Aldi has been carried out in this
portion of the report-
Strengths: One of the strongest points of this organization is the low price levels of the
products and services which Aldi has been able to offer to their customers. Moreover,
there are a huge number of locations in which the stores of Aldi are situated and this
makes it easier for the company to attract more customers (Chua, 1994).
Weaknesses: Although, the services which the company Aldi offers to the customers
have been proven to be very effective, the employees of this organization are not that
much satisfied at their workplaces (Botten, 2006). The payments which they get are
comparatively lesser than the amount of hard work which they have to do. In addition to
this, Aldi has also failed to attract the people of high-income as this is a discount store
and the products and services of this company are generally low-ranged.
Opportunities: The Company Aldi has a number of opportunities which they can grab
in order to make more profits and earn more recognition. One such opportunity is to
grab the customers with high-income by offering them with premium quality of goods
and services along with the regular low-priced ones.
Threats: There are a huge number of existing and emerging retail stores which can
pose as threats for the business organization Aldi. Some of those competitor companies
are Walmart, Best Buy, and Tesco and so on.

There are a number of benchmarking indicators which can help the organization Aldi in
making the right decision on business operations and at the same time in making the
exact and proper strategies which can help the company to grow and evolve (Botten,
2006). The company can take a successful and developed retail company as an
example in this regard and assess their performances and strategies. If the overall
conditions of both the companies match, they can easily set that company as the
benchmark and follow their footsteps in order to succeed.
LO2 Assess an organization’s internal environment and capabilities
P2 Analyze the internal environment and capabilities of a given organization using
appropriate frameworks.
The strategic capabilities of a business organization are generally those abilities which
help the business organization to make proper use of all the resources which it has and
to thrive in the long run. The strategic capabilities further help in making appropriate
kinds of frameworks for the strategy making of the organizations like Aldi.
Key components of strategic capabilities
The strategic capabilities of a business organization generally have six components
which are-
 Analytical tools: These are basically the frameworks which help in analyzing the
internal business environment of Aldi like the SWOT analysis.
 Strategic purposes: The purpose or the reasons behind the formation of the
strategies is another key component of the strategic abilities.
 Vision: Vision is the component which determines and indicates the right path in
which the organization should proceed (Botten, 2006).
 Goals: The goals are the aims and objectives which have been targeted by the
business organization Aldi in order to attain.
 Values: Value basically refers to the culture of the business organization Aldi
which prevails within.

 Action plans: A strategy is only useful if it is implemented. Only panning a
strategy would not suffice and action plans are the processes to implement
those.
McKinsey’s 7S model
The McKinsey’s 7S model is a framework which is adopted by a number of business
organizations like Aldi in order to manage all the operations done within the
organization. The use of this framework in the case of Aldi is shown below-
Structure: The structure of the business organization Aldi has been found out to be a
flat one.
Style: The style which has been adopted by the organization Aldi demands that the
company keeps a minimum amount of price for all the products and services they offer
to their customers. Moreover, different types of leadership styles are also practiced
within this organization.
System: The systems which Aldi adopts involve producing grocery and other financial
products and services (Botten, 2006).
Strategy: A number of strategies are adopted in this organization. The cost leadership
is the one which has made Aldi this successful and taken the organization this far.
Skills: The leaders of this organization have helped in finding out the most skilled
persons to put to work and these skills and competencies of the employees are always
nurtured within the organization.
Staffs: The business organization Aldi is filled with diversified employees and all of
them have been chosen very carefully.
Shared values: The values which are shared by the business organization Aldi are
basically related with the culture of the organization and the employees are kept in total
engagement with all kinds of decisions and activities of this organization.
VRIO Framework
The VRIO framework is another tool which helps the business organization to get
competitive advantage among the other existing and emerging business organization all
over the world. The analysis regarding this framework is conducted below-

Value: The value of the products and services which are offered by this organization
are generally of very low prices which increase the value of the organization to the
customers throughout the world.
Rarity: The rarity of the products and services of this business organization has been
identified as well. This is because the other business organization in the same category
cannot provide such good quality products and services at such low prices.
Imitability: Because of the same reasons which are mentioned earlier, the services of
this business organization are very difficult to imitate.
Organizing: The organizing of the business organization Aldi is a very structured one
and the employees and the employers of this company both work very hard to maintain
these organizing capabilities of the organization.
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model
to a given market sector
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organization.
The business environment of these days is not a very simple one; rather it is very much
complicated. There are a huge number of business organizations operating in the same
sector which makes it quite difficult for the organization to exist and sustain and also to
attain their desired goals and objectives. Because of this reason it is imperative that the
business organizations like Aldi attains the competitive advantage in order to sustain in
the existing competition of the business world of today’s world. The Porter’s five forces
is such a model which can help the business organizations like Aldi to gain their desired
levels of competitive advantage. This model has been carried out in this portion of the
report for the business organization Aldi.
 Threats of new entries: This is a very common threat for any kind of business
organization as new organizations emerge every day at the environment of the
business. Because of this reason, the business organization Aldi needs to find
out about the ever growing needs, demands and requirements of the customers
so that they can meet all those and obtain the competitive advantage among the
other organizations (Schoening, 2005).

 Threat of substitution: Another force of this model is the threat of substitution
which the business organization Aldi has to face while they are in the course of
their business actions. There are many other emerging organizations in the retail
sector which are also providing the customers with the same kind of products
and services. This could make the organization replaced and this could be a
threat for the company.
 Bargaining Power of the Buyers: The bargaining power of the buyers is a very
significant mater to be discussed by the organization Aldi as it decides the
attaining of competitive advantage by a great deal (Schoening, 2005). If the
power of the people is higher to buy their products, the profits of the organization
will increase and at the same time, it the powers of the buyers are less, the
profits will tend to lessen. In the case of Aldi, the prices which have been fixed to
be paid by the consumers are very less which makes it easier for the customers
to avail these services of the company.
 Bargaining Power of Supplier: Besides the bargaining power of the buyers, the
bargaining power of the suppliers also bears much significance. A lot of raw
materials are needed to make the products and services of the organization Aldi.
Because of this reason, the bargaining power of the suppliers also plays a role in
this. If the suppliers charge a lot of money, it will hard for the organization to keep
their prices low for the consumers which will ultimately lead to lesser profits for
the company (Schoening, 2005). Barriers to entry: Sometimes, the business organization faces a lot of difficulties
in entering into a new business environment due to a lot of factors. That is why,
Aldi has to take a lot of measures and adopt different kinds of strategies so that
they can enter into any kind of new market and expand their business operations.
Ansoff Matrix
The Ansoff matrix is yet another tool which is used by the management of the business
organization Aldi in order to maintain growth and development of their company
(Murphy, 2009). This framework has four divisions –
 Market development
 Product development

 Diversification
 Market penetration
All these segments can be used by the business organization Aldi in order to make
significant strategies for their company and to attain all the targeted goals and
objectives of this organization. However, the safest option for this business organization
would be the market penetration as by this process, it can also emerge into a totally
new market attracting more and more new customers to their products and services
(Kearns, 2008).
LO4 Apply models, theories and concepts to assist with the understanding and
interpretation of strategic directions available to an organization
P4 Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given organization.
There are a number of theories, concepts and models which can help the business
organization Aldi to interpret the appropriate strategic direction for their company as well
as to develop from their own conditions. Among all those models and theories the most
effective two are discussed below-
Porter’s generic strategies
This is a model which helps any kind of business organization to attain the competitive
advantage. This model describes that there are four kinds of generic strategies which
are described below in the context of the organization Aldi (Colli, 2003).
Differentiation strategy
This strategy demands that the business organization Aldi continues making innovative
and creative products and services which could be very helpful in making the demands
and needs of the customers of this company met properly. If Aldi has the ability to
understand about all the requirements of the customers and effectively make creative
and innovative products to satisfy the needs of the customers, then they can easily
obtain competitive advantage (Murphy, 2009). For this reason, Aldi will have to adopt
the differentiation strategy and make all their products and services differentiated. This

is a very convenient process to attract a lot of customers and the organization will be
able to attain a lot of profits adopting this strategy.
Focus strategy
This is the kind of strategy which helps the business organization to focus on a specific
niche market. This strategy is actually already adopted by the organization Aldi and they
have targeted the people with low income as their niche market. This makes them
attract a lot of customers and as a strategy for this they have made the prices of their
products and services very low which becomes affordable for the people of this class to
avail. Thus, it will be very profitable for this company to continue using this strategy.
Differentiation focus strategy
The differentiation strategy is the one which makes the business organization Aldi to
focus on a specific target market and produce differentiated products and services for
them. The products and services which are produced by the help of this strategy are
generally very much unique and exceptional (Colli, 2003). However, the products and
services which have been provided by Aldi have gained much recognition and people
are comfortable at buying this type of products and services from this company so this
particular strategy will not be that much profitable for this organization.
Bowman’s Clock Strategy
The Bowman’s Clock Strategy is such a tool which helps the business organizations like
Aldi to acknowledge about their own position in the entire market environment. This tool
also helps the business organizations to gain more competitive advantage from the
market.
Hybrid
Hybrid is the concept which demands that the business organization Aldi maintains both
the pricing strategies along with ones which make them attain the competitive
advantage within the market (Murphy, 2009). The business organization Aldi maintain a
very low price which makes them attractive in the market in front of the customers and
the same time, they have also gained a lot of competitive advantage due to this. This
has proved to be a very effective strategy for the company and because of this reason,

it is imperative that Aldi continues to keep their prices as low as possible. This kind of
pricing strategy helps Aldi in keep hold of their target market which is the people of low
and middle income.
Diversification
The products and services which are offered and provided by the business organization
Aldi must be very much unique and at the same time differentiated. This is because
different an exceptional products and services help the business organization to attain a
lot of competitive advantages (Colli, 2003). The products and services which are
provided by the business organization Aldi are very similar and because of this reason,
it is very essential that this organization starts to produce different sorts of products and
services in order to attract more customers and also to gain more competitive
advantage.
Conclusion
Strategies are musts to be adopted by every business organizations in order to thrive
and attain every success and development. These organizations need to acknowledge
every needs and demands of the customers and make their strategies as such that they
can meet all the requirements of the customers very effectively. This report has
described about all kinds of strategies which can be adopted by these organizations
along with the theories and models which could be adopted and learned by these
organization in this regard.

References
Botten, N. (2006). Management accounting. Oxford, U.K.: CIMA Publishing/Elsevier.
Chua, J. (1994). Management of business. Singapore: McGraw-Hill.
Colli, A. (2003). The history of family business, 1850-2000. New York: Cambridge
University Press.
Kearns, P. (2008). HR strategy. Amsterdam: Butterworth-Heinemann.
Murphy, P. (2009). The business of resort management. Amsterdam: Elsevier.
Ramsinghani, M. (2014). The business of venture capital. Hoboken, N.J.: Wiley.
Schoening, H. (2005). Business management of telecommunications. Upper Saddle
River, N.J.: Pearson/Prentice Hall.
Scholes, M. (2016). Taxes and business strategy. Edinburgh: Pearson.