Aldi Denmark's International Business: Issues, Impacts, & Solutions

This report analyzes the international business challenges faced by Aldi in Denmark, a multinational retail supermarket chain. It identifies issues such as cultural differences, distance-related problems, difficulties penetrating foreign markets, and communication barriers. These challenges impact brand image, sales revenue, and competitive advantage. The report discusses the impacts of these issues, including difficulties in understanding customer needs, potential conflicts within the workforce, and complexities arising from Brexit. To address these challenges, the report suggests implementing international trade theories like the comparative costs theory and the theory of comparative advantage, adapting to local cultures, and forming strategic alliances. The report also emphasizes the importance of effective communication, managing export/import activities, and understanding the local market dynamics to ensure successful global business expansion for Aldi in Denmark. Desklib is a platform where students can find similar solved assignments and past papers.

Running head: INTERNATIONAL BUSINESS
International Business
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Table of Contents
Introduction................................................................................................................................3
International business issues/challenges....................................................................................3
Impacts of these issues...............................................................................................................4
Ways of addressing these issues................................................................................................5
Value chain process analysis..................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................7

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Introduction
The research is being done for the inclusion of various aspects related to the
management of international business for Aldi in Denmark. The research will focus on both
primary and secondary data collection along with the analysis of these data and information
for addressing the major issues related to international business management and at the same
time, determine how these issues can create negative impacts. The retail supermarket chain
named Aldi is a popular and established brand and Germany based discount supermarket
chain, which consists of more than 10,000 stores in over 20 countries and an overall turnover
of more than €50 billion (Aldi.dk 2019). The research will be done to discuss about the
challenges faced while managing international business.
With the management of globalisation, multinational companies like Aldi in Denmark
has managed direct foreign investments in the foreign countries to operate in different parts
of the world. The largest discount global retailer named Aldi in Denmark has aimed at
expanding business to survive the highly competitive environment and ensure that it does not
become vulnerable to issues while managing global business. There are various issues and
challenges such as the cultural differences, poor communication high tariff and export fees
along with inappropriate marketing strategies and procedures, which have created negative
effects and deteriorated the business functioning (Dunning 2013). The company shall need to
address the challenges and issues, furthermore overcome the problems that are faced by the
organisation.
International business issues/challenges
Cultural difference issues
Though there are multiple benefits of managing international business, still there have
been multiple issues and challenges as well that are associated with the business functioning.

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There are differences in cultures and backgrounds along with irrelevant skills and knowledge
about the marketing activities, which have further resulted in poor communication along with
inability to cope up with the global business management conveniently for Aldi. While
establishing business in the foreign countries, especially in UK, often the retail chain
supermarket in Denmark named Aldi may face issues while meeting the human resources’
requirements and this can affect the business’ ability to sustain in the competitive
marketplace of the foreign country (Shenkar, Luo and Chi, 2014). Inability to adopt the
culture of the foreign country can also contribute to poor business management and affect the
sales generation and revenue structure too largely.
The business organisation named Aldi in Denmark already has started international
business in the year 1990 due to the saturation of superstores during the process of
internationalisation. The theories and concepts of internationalisation are relate to the foreign
direct investments and also the licensing done to enter the foreign markets, which can be a
major issue as well. In spite of the barriers related to these, Aldi still managed to enter the
global markets in UK by dealing with the challenges resulting from high competition within
the supermarket industry, lower level of profit, fluctuations in economies of scale along with
scarcity of new stores and inability to adopt the foreign culture within quick time (Killing
2013). As stated by Verbeke (2013), there are various challenges and issues that are
associated with the management of international business management for Aldi in Denmark,
which are needed to be dealt with. This should result in creation of a perfect plan for
addressing the main challenges and issues needed to be overcome, furthermore use different
international business management theories and concepts to rectify those efficiently.
Issues related to distance

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The physical distance often acts as barrier in spite of the internet and telephone
networks enabling communication between the two countries, which can facilitate the
international business management (Verbeke 2013). The different country, i.e., the foreign
country’s distribution networks, partners, freight, logistics and shipping costs are different
from the home country, which is a major issue that may be experienced by the company
while starting global business. Thus, it is important for assessing the costs while managing
global business, furthermore create new scopes and opportunities to ensure global business
expansion much more conveniently (Aldi.dk 2019).
Penetrating foreign markets issues
The differences in culture is also a major issue or challenge that can cost the business
to sustain in the competitive business environment of UK and while going global. Often Aldi
has faced problems in adopting the foreign culture, which is a daunting task sometimes and
this can affect the business performance as well as create a barrier to integrate with the
individuals who are to become the clients (Cavusgil et al. 2014). The company has not been
familiar with the purchasing behaviours in the new foreign nation where the company wants
to expand to and this can hinder reaching the potential clients to become global. Furthermore,
the customer base gets smaller and it will create difficulties for Aldi to penetrate the foreign
markets, which is necessary for ensuring successful globalisation in the long term future. To
deal with this kind of problem or challenge, Aldi needs to follow the trans-creation process
for developing better marketing content and enter the global markets with much ease and
effectiveness, thereby aim to achieve the internationalisation goals and objectives and
generate higher revenue in business (Forsgren and Johanson 2014).
Communication issues

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Aldi has also been facing communication issues and challenges due to change in
tariffs and export fees and this has been considered as a huge barrier considering the fact that
the organisational members are associated with the communication of globalisation efforts
along with keeping track of the impacts created while entering the foreign markets with ease
and efficiency. The trade tariffs ad export fees are different for different countries, which in
turn, results in charging extra fees for Aldi to bring goods in the foreign country. Without
proper knowledge about the trade tariffs and how to incorporate those, the globalisation plans
may not be successful. Another major challenge faced by Aldi is while adapting the foreign
culture, which created issues in working according to the interests and preferences of the
clients and failing to meet their demands and expectations too (Casson 2013). One more
major issue associated with the international business can be the lack of advertising and
promotional approaches, due to which, there have been major challenges associated with the
global business management, further resulting in the loss of clients and sales decline too
(Aldi.dk 2019).
Impacts of these issues
These major issues and challenges are responsible for creating adverse impacts on the
business performance and have even resulted in deteriorated the brand image, further leading
to degraded sales revenue and lack of ability to attain competitive advantage in business.
There are various theories, frameworks and concepts that are related to the lowering down of
negative effects caused by these issues like the comparative costs theory and competitive
advantage theory. According to Jenkins (2013), with the difference in trade tariffs and
varying foreign laws, rules and regulations, it might be difficult to enter the targeted market
properly and this could in turn, affect the international business management. The labour and
employment requirements are also different in the foreign countries, which can also affect the

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company’s ability to form a new workforce and appoint new employees residing in the
foreign country (Jenkins 2013). A heavy crackdown on the rental properties that are
advertised and considered to start global business also could lead to penalty and should have
to pay heavy fine due to breach of the laws, rules and regulations. One of the most important
legal areas considered while managing global business is the tax compliance, which is very
crucial and can cause major threat or challenge to Aldi, Denmark, which is important while
expanding business in UK. The international issues and challenges have often been
considered as threats that caused major negative impacts while penetrating the target markets
in UK. Due to the cultural differences, Aldi should face difficulty in understanding the needs
and preferences of the clients properly, which could also result in major issues related to the
expansion of business in UK globally. The Brexit has further created complexities while
leaving the EU, which should prevent cross cultural trade negotiations and create issues like
trade barriers and lower scopes for growth trends (Picciotto 2017). The streamlined
construction could also create problems for Aldi to gain planning permissions from the
Government and regulatory bodies. While expanding into the foreign market Aldi might even
fail to attract investors or shareholders to invest in the company. Due to poor communication
and diversified workforce while introducing new stores and manufacturing departments in
UK, there could also be different opinions and responses, which might create conflicts and
misunderstandings within the workforce, thus lead to business performance degradation. To
handle business perspectives while entering and operating a global market, it is always
important for time management and often decision making is time consuming and an entirely
complex process (Clarke, Tamaschke and Liesch 2013). Thus, while managing global
business in UK, Aldi should remember about connecting with a third party and manage tie
ups with other small businesses to succeed in the long run.

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There are other implications that showed that the barriers were overcome previously
with the manufacturing, production and selling of branded items from the small sized
businesses rather than using the own brands and labels. As stated by Cano-Kollmann et al.
(2016), the lack of enough unexploited stores sites in UK was a major issue which is needed
to be overcome to gain a sustainable position and at the same time, survive in the highly
competitive business environment with much ease and effectiveness. To manage global
business, it is also necessary for the company to raise the interests and awareness among
people in the foreign countries about the products and services to be delivered, furthermore
make them informed about the discounts offered in grocery retailing and influence their
buying behaviours largely too (Cano-Kollmann et al. 2016).
Ways of addressing these issues
Not only the issues are needed to be addressed, but also it is necessary for
implementing new theories and concepts that are responsible for the management of
international trade along with focusing on managing global business expansion successfully.
The major theories include the comparative costs theory and the theory of comparative
advantage, both of which, are aimed at managing international trade activities properly along
with creating cost advantages by trading products and services across borders. These kinds of
theories can also be considered for ensuring that the international differences are overcome
along with attaining benefits in terms of the goods’ opportunity costs and enhance the
revenue generation level too (Čiarnienė and Vienažindienė 2013). While starting business at
another country like in UK, Australia, etc., the traditional economic theory should be
considered for the assessment of various factors related to the production and differentiating
features such as the patents, copyrights, brands along with the cultural factors and
management styles too. This should facilitate the production process as well as allow Aldi to

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combine its strengths through strategic alliance, mergers and acqusitions, furthermore
accomplish the goals of managing human resources, physical resources and capital as well as
knowledge resources more reliably (ZHOU and CHENG 2015).
Not only does the theories influence the management of international business, but
also there are several factors that are responsible for creating a positive impact on the way
business is managed globally. The theories of international trade, especially the mercantilism
theory would allow Aldi to improve the economic growth and wellbeing through
management of export and import activities across the barriers while the comparative theory
should allow Aldi to bring wide range of new products such as the health care items and
technological products that have the greatest advantage. Considering the analysis of Aldi in
terms of I-R framework for the integration of responsiveness framework, it can allow for
understanding the company strengths and also determine the forces influencing global
integration and responsiveness to the market demands in the foreign markets (Markoska et al.
2014). This would help in meeting the standardised customers’ demands worldwide,
furthermore share or exchange information among people in the foreign market by enabling
product recognition along with the management of international distribution infrastructure
too. The framework enables responsiveness, which enables putting pressure for managing
global business and at the same time, manage production of products and services at lesser
costs. This should allow for responding to the local market needs as well as cater the needs of
international markets, furthermore aim at competing globally by responding to the demands
in the market conditions with ease and efficiency (Mazur 2017). The IR framework could
also be effective in terms of analysing the business based on the response to the market
conditions along with the environment and competitors.

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The I-R framework has been chosen to analyse Aldi because it can help to analyse the
business in terms of the response to the market, environment and competitors. For the
management of global coordination and managing responsiveness, Aldi should be able to
position its brand name properly and focus on both quality and cost along with expanding the
range of products and services for responding to the clients; requirements easily. The
company also should combine luxury items and lower prices along with responding to the
environmental issues by introducing the Fair Trade Certified food line (Beamish and Lupton
2016). With the consideration of culture in Aldi, the company must adapt and continuously
innovate to hold a strong position within the market and change the negative perception of
retail companies providing discounts and offers to gain strength in the international business
management (Aldi.dk 2019).
Recommendations
To address and overcome the issues of cultural differences during global business
management, Aldi should from multinational and cross-cultural teams, which can facilitate
management of diverse knowledge and skills of team members, furthermore develop
approaches to overcome the global business issues effectively. Other than the diverse
knowledge and skills of the team members, the foreign norms, laws and rules must be shared
to gain foreign cultural acceptance as well as focus on the three major areas including the
communication, organisational hierarchy and consumer tastes and preferences. Aldi
workforce should consist of diverse sets of skills and knowledge of the team members for
advancing in professional interactions with the locals of the new location where the business
should operate and also belonging from a different culture (Hallbäck and Gabrielsson 2013).
The management of organisational hierarchy at Aldi and attitudes towards the management
roles are crucial for overcoming the cultural differences faced while entering UK,

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furthermore define the roles in the cross cultural teams and focus on overcoming the
challenge with convenience. This should enable Aldi to resolve the challenges and exploit the
opportunities while working across borders and cultures during global business management.
While aiming to overcome the international challenges like cultural differences acting
as barriers, poor communication and poor marketing techniques, the company should also
keep the costs of labour management lowered, though managing a cross cultural team for
knowledge diversification and skills acqusitions from different people. Aldi should also
differentiate the positioning status and follow the aggressive expansion by adopting the
online marketing strategies to strengthen the customer base and influence the buying
behaviours of clients. Aldi should continue to grow at a similar pace in UK just as in
Denmark with the prioritising on different market segments with different tastes and
preferences of clients and introduce new stores (Forsgren and Johanson 2014). The company
could also introduce a loyalty card scheme for encouraging them to carry out shopping and
get points, based on which, they could get additional discounts during their next purchase.
Prioritising on the corporate social responsibilities, especially the CSR strategies to fulfil the
ethical, legal and philanthropic responsibilities, furthermore conduct ethical global business
and meet the expectations of global stakeholders. This should not only address the
environmental issues, but could also focus on managing sustainable measures to create a
positive impact on the environment.
Recommendations
 The value chain analysis would allow Aldi to analyse the network consisting
of processes and services managed to deliver the best quality operations with
ease and effectiveness.

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 The internal operations are responsible for increased competitiveness and
efficiency and thus Aldi should focus on the internal operations, furthermore
ensure prioritising on both the primary and supporting activities to create
additional value to the organisational outcomes.
 Before managing global business, ALDI should analyse the value chain
processes and at the same time, understand the primary activities that are
associated with the value creation while the support activities are focused on
the administration procedures, financial management, procurement strategies
and information technology implementation (Abbott and Snidal 2013).
 These kinds of activities should not only allow Aldi to manage successful
business functioning, but should also ensure gaining strategic advantage and
even reduce the costs of operations and processes involved.
 The value chain process managed by Aldi should facilitate business expansion
in United Kingdom and implement new strategies to reduce the costs of
operations and remain competitive in terms of pricing and supplier distribution
in the global market.
Conclusion
The topic focused on the identification of various international business issues and
challenges associated with the Aldi’s approach to expand business globally. Various
challenges faced were the cultural differences, poor marketing techniques, different tariffs
and trade laws along with the distribution networks. The challenges were also associated with
the approval of licenses and trade agreements, which could further act as barrier to the global
business expansion. The lack of advertising and promotional techniques also act as major
global business expansion challenges while entering the UK market. The IR framework was