Aldi's Leadership and Management Practices: A Report

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Context of Business
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Executive Summary
The assignment studies the overall nature of the global business environment along with an
emphasis on certain considerations that organizations must factor in for the future. The need for
organizations to behave ethically in the context of socio-cultural and environmental issues has
also been briefly discusses along with the influence of CSR approaches on leadership. The
organization of Aldi has been focused upon in order to discuss the various leader ship styles,
management practises and the organizational culture, which subsequently affects the business
functions and strategies internally. A set of recommendations have also been included for Aldi in
order to increase their organizational efficiency.
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Table of Contents
Introduction......................................................................................................................................3
L01 Nature of the global business environment and future considerations.....................................3
LO2 Need for individuals and organisations to manage responsibly and sustainably and behave
ethically in relation to social, cultural, economic and environmental issues...................................6
CSR impact on leadership in modern organisations........................................................................7
LO3..................................................................................................................................................8
1. Organizational overview and rationale for choice.......................................................................8
LO4................................................................................................................................................10
2. The vision, leadership style, management practices and the organizational culture using
implemented theories.....................................................................................................................10
3. Influence of the culture and management style upon the business functions and strategies with
specific examples...........................................................................................................................14
LO4................................................................................................................................................15
4. Recommendations for improvement..........................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
The overall business environment for an organization typically includes the various external and
internal factors that have a direct impact upon the operational functionalities of the business
enterprise. These various factors typically entail a multitude of positive advantages as well as
negative limiting factors, and this is where the concept of management and efficient leadership
styles come into play. A strategic approach to the same largely mitigates the various risk factors
that these various internal and external factors present to organizations. The global business
environment is extremely dynamic and subject to a variety of changing trends and preferences,
all of which must be factored in by organizations in order to grow sustainably.
L01 Nature of the global business environment and future considerations
The business environment per se historically used to be limited to specific regions and
geographies based on the companies and their place of operations. The advent of globalization,
liberalization and the subsequent emergence of international trade have largely removed these
geographical barriers and organizations today function in a much broader and global perspective.
Organizations can no longer survive if they operate in an isolated manner, as diversification and
expansion into overseas markets has become the core founding principles upon which most of
the successful companies and enterprises have based their vision and objectives (Shin et al.,
2015). The environment essentially comprises of the various internal and external factors, with
the external factors being relatively more influential in the context of business operations.
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Various components come under the purview of these external factors, and these include socio-
economic, political and legal implications, demographic statistics, social considerations,
competitive forces, global regulations along with the various technological changes and
advancements. The internal factors primarily include the likes of the management styles,
business decisions, customer bases, employees and so on, and the organizational authorities can
exercise a moderate amount of control within these factors as opposed to external factors, which
are mostly beyond the direct control of the organizations. The global nature of the business
environment further creates a network of interrelationships between organizations that
manufacture, assemble, distribute, retail, provide after sales services and so on, and over time
this has created a worldwide network or enterprises that are heavily dependent on one another in
order to maintain a smooth and steady flow of operations. In the context of changes and
alterations posed by the global nature of the business environment, managers and leaders
typically take on the roles of responders to change as opposed to being direct or indirect agents
of change. Efficient managerial competencies are the core of any organization, without which it
would be nearly impossible for an organization to grow substantially irrespective of the sector or
industry.
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Figure 1: Global business environment
(Source: Bolden, 2016)
Future considerations must also be kept in mind by organizations at large, especially due to the
emergence of several environmental issues like global warming, climate changes and so on.
Sustainable eco-friendly growth measures must be kept in mind while expanding operations or
increasing the scales, as the society in general has also developed significantly. Consumer groups
are more likely now to get attracted to companies that factor in these environmental and nature-
friendly considerations as opposed to organizations that indulge in unethical practises and leave
behind a massive global carbon footprint.
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LO2 Need for individuals and organisations to manage responsibly and sustainably and
behave ethically in relation to social, cultural, economic and environmental issues
Historically, organizations did not focus on the concepts of ethics in business and responsible
behavioural and management policies as they were largely localized and had a limited scale of
operations. However, the modern times have led to a massive influx of companies, which has
subsequently resulted in a large degree of competition as well as an abundance of substitutes.
Ethical business practices refer to identifying the right from the wrong, and engaging in practises
that are inherent and morally correct. Several notable thinkers and sociologist have depicted
business ethics as a fundamental science of conduct (Al-Ali et al., 2017). Organizations must
actively focus on maintaining a strong sense of ethics with respect to social- cultural, economic
and environmental issues and this further entails a sense of credibility and public acceptance that
are inherently underlined within the concept of business ethics. Social and cultural issues are
largely territory based, and must be emphasized upon in a targeted manner by companies that
already operate within them and even by those seeking to expand. Economic issues can crop up
due to a variety of factors, and they may be territory based or even due to global conditions
concerning the sector of business. Technological and environmental issues are much broader in
the sense that they are typically standard among similar economies, and every organization must
focus on adapting and integrating ethical measures regarding them. No organization can grow
exponentially across a global scale without a proactive approach towards responsible behaviour
and integrating ethical measures within their operations. The core organizational culture is a key
factor within this concept, and it largely shapes the policies, actions and the business decisions
that an organization makes (Maurer et al., 2017). These decisions further translate into the
products and services they offer, and can be a useful metric for consumers to gauge the degree of
responsibility and ethical measures while engaging in a monetary transaction. Conflicts primarily
occur within the context of responsible behaviour and business ethics when there is a strong
presence of opposing views and opinions, as well as the presence of more sustainable
alternatives. Organizations must actively try and accommodate these alternatives during
conflicting scenarios in order to maintain their operational efficiency, as any form of negligence
regarding the same could significantly hamper their operational flow.
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CSR impact on leadership in modern organisations
CSR or corporate social responsibility fundamentally refers to the management of an
organization whereby the overall impact of all the operations, functions and decisions of the
company entail an inherently positive impact on the general society. The leadership within an
organization is a key contributing factor to the degree of social responsibility implemented
within the organization. The global business environment has been significantly rattled by the
multitude of scandals and crises, both economic and non-financial in nature. Consumers are
extremely self-aware because of these factors, and organizations must be aware and ensure that
they engage in healthy CSR practises throughout their internal structures. Managers and leaders
in the current business scenario are a lot more dedicated towards the overall impact the
organization has on the society, and companies irrespective of their scale and nature try and
engage in ethical measures in order to inherently impact the consumers positively while
minimizing their negative environmental impacts (Edwards et al., 2015).
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LO3
1. Organizational overview and rationale for choice
In the context of this assignment, the organization of Aldi has been focused upon. Aldi is one of
the fastest growing retail chains within the UK despite the presence of massive large-scale
competitors like Tesco, Morrisons, Sainsbury’s and so on, and commands a significant market
share within the local grocery and retail sector at around 10.9%. The company has over 9,800
outlets in over 18 different countries and posts annual revenue figures of around 50 billion Euros
consistently (Aldi.co.uk., 2019). Headquartered in Essen, Germany, Aldi was initiated by two
brothers Theo and Karl Albrecht in 1913, and has successfully become a global giant within the
worldwide retail sector. Aldi opened its first store in the UK in the year of 1990, and has proved
to be a major competitor to the big four of retail within British markets ever since. The expansion
was facilitated using the wholly owned subsidiary strategy by the name of Aldi Stores Limited,
and the company opened its 300th outlet within15 years of operations.
Figure 2: Market share of Aldi compared to its competitors
(Source: Acha et al., 2016)
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The company is divided structurally into two segments, Nord and Sud, both of which have
successfully managed to establish themselves in different markets while functioning under the
Aldi pennant (Schmid et al., 2018). The key strategy that Aldi relies upon is the provision of
quality products and services at competitively discounted prices. The organization also utilizes
the strategies of offers and coupons significantly and that has been a key contributing factor to
their rapid growth within a relatively short time-period. Aldi also won the Supermarket of the
Year award in the UK two years in a row, and this provided the brand with the much-needed
boost that massively drove up their sales and market positions. The company further focuses on
the use of eco-friendly measures in their operations, and has a number of implementations
dealing with solar and green energy (Filimonau and Gherbin, 2017). Aldi was one of the first
supermarket brands within the UK that declared themselves as carbon neutral, and this was a
huge accomplishment to say the least. The company further won the Retailer of the year 2018
award help by Supermarket news, and plans to open an outlet every month within the UK in the
next decade (Souza-Monteiro and Hooker, 2017).
The rationale for choosing Aldi predominantly focuses on the effective management and
leadership practises followed within the organization, which turned out to be key contributing
factors to their emergence as a global brand despite the presence of heft competing forces.
Figure 2: Market share of Aldi compared to its competitors
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(Source: Burgoine et al., 2017)
Figure 3: Location of Aldi stores across the world
(Source: Jones and Mair, 2016)
LO4
2. The vision, leadership style, management practices and the organizational culture using
implemented theories
The core objective of Aldi was essentially to offer the highest quality of groceries and
accessories at the most affordable prices possible. The company operates on the values of
consistency in services offered, simplicity in their operations and maintains an overall sense of
responsibility and accountability (Liu et al., 2017). The vision of Aldi primarily refers to making
the purchasing procedure as simple as possible for their consumer groups, and this translates into
every aspect of the organization including the business decisions, management styles,
organizational culture, store designs and so on.
The leadership within the organization of Aldi is largely situational and functional, and relies
heavily on the frameworks of the trait theory and the contingency theory (Boyer et al., 2018).
The trait theory fundamentally relies on the core aspects that are typically witnessed in
successful leaders as well as unsuccessful leaders, and goes on to differentiate between the two
in a comprehensive and extensive manner (Jack et al., 2018). The key competencies for leaders
as mentioned by the trait theory include high effort levels and ambition, self-motivation,
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integrity, cognitive expertise, domain-specific knowledge, emotional maturity and a general
sense of charisma and inspiration. A plethora of research has been conducted on the trait theory
and it is widely acknowledged by organizations around the world including that of Aldi.
However, the theory does have its limitations in the context of being overly complex and
ignoring the presence of subjectivity.
Figure 4: Trait theory of leadership
(Source: Meuser et al., 2016)
The contingency theory on the other hand, stresses on the dynamic nature that is an inherent
underlying concept within the idea of leadership. The theory mentions that leadership styles
should be flexible and change according to presented situations in order to handle the same in a
much better and strategic manner. The theory was based on Fiedler’s contingency model, and has
received a high degree of recognition across organizations in a global context. The model goes
on to describe contingent situations based upon the three factors of interpersonal relationships,
structural foundations of the tasks allocated and the chain of command flow, all of which need to
be factored in by leaders and mangers while engaging in their operational functions.
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