A Strategic Analysis of Aldi's International Business in Australia

This essay provides a comprehensive analysis of Aldi's international business strategies, focusing on its entry and operations in the Australian market. It begins by detailing Aldi's background and core resources, highlighting its competitive advantages, such as low prices and quality products. The essay then explores the cultural differences between Germany and Australia, examining how these differences impact Aldi's operations. It also assesses Aldi's marketing strategies in Australia, including its focus on value-driven goods and strategic advertising campaigns. Furthermore, the essay discusses alternative actions Aldi could undertake to grow its market size and maintain sustainability, such as improving product quality and enhancing consumer engagement. Finally, it addresses Aldi's commitment to social responsibility and ethical business practices. This document is available on Desklib, a platform offering a wide range of study tools and resources for students.

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Table of Contents
Part 1...........................................................................................................................................................2
Answer 1..................................................................................................................................................2
Answer 2..................................................................................................................................................2
Part 2...........................................................................................................................................................3
Answer 3..................................................................................................................................................3
Answer 4..................................................................................................................................................4
Answer 5..................................................................................................................................................5
Part 3...........................................................................................................................................................6
Answer 6..................................................................................................................................................6
References...................................................................................................................................................8

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Part 1
Answer 1
Albrecht Discounts (Aldi) is a German organization in the retail industry founded by the mother
of Theo and Karl Albrecht in the year 1913. At first it was a small grocery shop outside their
home but the organization was not successful till 1930s when the two brothers, Theo and Karl
Albrecht took over the business (Alonso, Kok and O’Shea, 2018). The brothers started their
business after remodeling the shop into a showroom in the local area with effective procurement
plans and operations. But the brothers were running the business efficiently till the year 1960
when due to a dispute between two brothers over selling cigarettes, the organization was divided
into two divisions, Aldi North and Aldi South (Arli and Tjiptono, 2018).
Aldi North has its head office in Essen and operates in France, Portugal, Denmark, Spain,
Belgium, Luxemburg, Poland, and the Netherlands. Aldi South has its head office in Mulheim
and operates in Australia, UK, USA, Ireland, Austria and Switzerland. Aldi is a retail
supermarket that sells various kinds of grocery items and it consists of dairy products and meats
as well as another item of daily needs. It offers a discount to its consumers on certain days of the
weeks. It has 10,000 stores in more than 20 nations and combinedly the estimated turnover is
almost €50 billion (Arup, Beaton-Wells and Paul-Taylor, 2017). The organization has positioned
itself as a low-cost store which offers the right quality products to its customers.
Answer 2
The core resources and capabilities of Aldi are as follows:
Resources
Tangible Resources - These resources are physical resources which are utilized by Aldi for
maintaining its business activities. Factory, electrical equipment, machineries such as lorries and
forklifts, insurance policies, and security equipment like CCTV camera are all tangible resources
of Aldi (Azeem et al., 2018).
Intangible Resources - These are technological resources which are utilized by Aldi for
maintaining its business activities. Patents, copyrights, intellectual properties, software licenses,
accumulate experiences and skills are all intangible resources of (Aldi Bailey, Price, Pyman and
Parker, 2015).

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Capabilities - The organization treats its staffs as valuable assets and provides them the best
working conditions of the retail industry. It also makes an investment for a great deal of money
and time in the training and development of the staffs. One of the three purpose-built training
centers are assigned to every new staffs before they are employed in the stores so that they can
learn all the aspects while they are fully paid during the training (Bilińska-Reformat, 2016). Low
price along with best quality products are also the capabilities of Aldi as it helps to attract several
loyal consumers and keep them competitive in the market.
Competitive Advantage - Low price along with the best quality products of Aldi helps the
company to attract several loyal consumers and keep them competitive in the market. Aldi is a
supermarket and sells all types of goods so that they could meet all the preferences and needs of
the consumers. Substantial discounts are provided by the organization to its consumers and
goods are sold at a lower price which helps the organization to build better relations with its
organization and stay competitive in the retail market of its operating countries (Chatterjee,
2017).
Part 2
Australia is the chosen host country for Aldi as it also operates in Australia as a part of Aldi
South.
Answer 3
The culture of Germany is based on popular trends and major intellectuals of Europe and is both
secular and religious. Whereas the culture of Australia is a Western culture derived from Britain
along with by the exclusive geography of the country, the cultural contribution of Torres Strait
Islanders, Aboriginal and other inhabitants of Australia. German is the official language of
Germany while Australian English is the official language of Australia (Devin and Richards,
2016). Both countries are religious and follow Christianity.
The typical stereotypes of the people of Germany are that they are ruthlessly well-organized and
have little time for unessential activities and irrational behaviors. But it has been that this
stereotype is not as it showed from time and again. The people of Germany are silly and fun-
loving like the people of the rest of the world except at the checkout of Aldi. In the supermarket

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of Germany the stereotype of robotic behavior, humorlessness and efficiency breakdowns
terrifyingly to the ground.
The main difference is between Germany and Australia is that the checkouts of supermarkets are
almost seven times faster than the checkouts in Australia (Grimmer, 2017). It is due to the fact
that most of the stores have only one checkout which operates for the whole supermarket. They
have still not started utilizing self-service mechanisms as probably the people of Germany do not
trust them. Unlike Australia, they do not ask, "How was your day?” or “Planning something
exciting for the weekend?” like the storekeepers in Australia ask nearly all the customers. They
do not have that time and undoubtedly find the very concept absurd.
There are silly shopping separators in the stores of Aldi in Germany that not a single store of
Aldi uses in Australia or even knows about them. In Germany, they ensure that they utilize them
and if the store does not use them, then the consumers almost inevitably slam the other
consumers on the conveyer belt and look at them if they have spat over his purchased products.
They do not have time to say sorry for their mistakes (Grimmer, 2018).
Till the year 2004, in the stores of Aldi in Germany accepted only cash and the stores have
started accepting domestic debit cards, Girocard after 2004 but it still does not use credit cards.
The stores of Aldi in Australia both accept debit cards as well as credit cards although the
MasterCard and Visa are approved by the stores in Australia with a surcharge of 0.5% (Jie and
Gengatharen, 2019). The stores of Aldi in Germany has no policy of promotions except a weekly
bulletin known as "Aldi Informs" which is distributed in the stores, by direct mails and in local
newspapers of Germany. Aldi in Australia uses TV as its medium for promotion and the latest
advertisements are posted on its website.
Answer 4
Aldi is a supermarket chain based in a German and has set up its business in the market of
Australia with the help of its strategic marketing strategies. The mission of Aldi is to offer its
consumers with the products they purchase regularly and make sure that the products are of high
quality at an assured low price. Before entering Australia, the company had focused on building
long-lasting relations with its consumers by offering value-driven goods to its consumers. The
organization had strategically used principles of marketing to provide the right combination of
products at correct prices. The organization provided particular products of high quality at the

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lowest prices to the customers. It had strategically planned its advertising campaigns like ‘Like
Brands. Only Cheaper.’ for attracting the customers towards its brand (Peloza, Ye and Montford,
2015). The company also extensively used both the above the line as well as below the line
promotions for conveying its messages to the consumers. It also utilized the campaign ‘Swap and
Save’ for communicating its messages to the consumers that shopping in Aldi can save them
their money.
Before entering Australia, Aldi studied the social and economic status of the people of Australia.
It implied the occupation, wealth, income level and level of education of the people of Australia.
It was observed that the buying power of the people of Australia had increased by more than
45% from the last 20 years and they had acquired the practice of large consumption (Price,
2016). They give preference more to innovative goods over traditional products and like to have
wide-ranging options. The growing trends of diseases and obesity had increased the issues of
health among the people of Australia and so it had increased the demands for organic and fresh
foods. Moreover, Australians had higher living standards and growing demands for value-driven
goods. The customers in Australia were ready for paying a high amount for best quality products
(Voigt, Buliga and Michl, 2017).
After analyzing the external environment of the market of Australia, it was found by Aldi unlike
the Germans, people of Australia were not at all price sensitive and they were determined by the
values and quality of the services and goods (Sultan, Wong and Sigala, 2018). In Australia, Aldi
focused on maintaining its low prices in comparison to its competitors. The strategy had attracted
a vast customer base and proved to be a sustainable marketing plan for retaining the customers
for an extended period (Pulker et al., 2019). From the social and economic factors, it became
clear that Australians were looking for innovative goods that can simultaneously serve them with
values. Hence, the strategy of Aldi proved to be successful for entering Australia to achieve its
targets and maintaining the sustainability of the organization.
Aldi has used International Franchising as an entry mode to enter Australia as it is an effective
mode of entry ((Pulker et al., 2018). It is a method to expand the local business in foreign
markets and countries. The method is considered as a complicated process that needs certain
things like adaptability, risks and flexibility. This mode had been adopted by Aldi to enter the

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market of Australia, where the company utilized its brand trade name for selling its grocery
products.
Answer 5
The alternative actions that would be undertaken for Aldi in Australia for growing its market size
and maintaining its sustainability are given below:
 Improve its Product Quality: Aldi can improve its product quality and make sure that the
consumers get fresh products. It will help the organization for maintaining its sustainability
and retaining its current consumers
 Engage its Consumers - The organization could attract its consumers by providing them the
options of home delivery services in order to give them great experiences of shopping. It will
help the company to enhance its consumer engagement by providing them the ease of
shopping. Loyalty Cards can also help the company in retaining its consumers and
maintaining the sustainability of the company
 Open Other Channels for Increasing its Customer Base - The organization can utilize
new shopping channels for increasing its customer base. It can use online platforms through
the latest web-based applications that are in recent trend among the customers
Part 3
Answer 6
Aldi is a socially responsible organization and it provides importance to both the satisfaction and
trust of the consumers. The retail organization promise to deliver the best quality goods not only
in terms of value and safety but also in environmental and social conditions which are involved
with its production. The company as an international retailer, takes its duties seriously and is an
active member of the Business Social Compliance Initiative (BSCI) (Rajaguru and Matanda,
2019). As a member of BSCI, every operation of Aldi in European countries, which also includes
its suppliers is committed to finish the principles of the code of conduct of BSCI. The
compliance with national and local legislation is promoted by this code of conduct and it
prohibits the following aspects:
 Excess working hours
 Child labor

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 Illegal disciplinary measures and forced labor
 Non-payment of minimum wages
 Any type of discrimination
 Inadequate provisions of health and safety
 Corruption and bribery
 Poor practices of environmental safety
 Infringements on collective bargaining rights and freedom of association
The membership of BSCI of Aldi also promises the organization and its suppliers to implement
and execute an independent social auditing program based on international criteria (Richards et
al., 2015). The organization has decided to utilize this program to generally analyze the social
performance of the company. Along with its suppliers, it also took decisions to recognize that the
social aspects in the supply chain are adhering to the highest possible standards (Soosay et al.,
2016). As a member of BSCI, the company is also committed to some global standards which are
given below:
 The principles of the UN Global Compact
 The Declaration of Human Rights of the UN
 The working rules and rights and the fundamental policies of the International Labor
Organization (ILO)
Recommendations
 To maintain an active social responsibility, Aldi is recommended to provide information
about the strategy of the company's social responsibility to all its stakeholders. The proper
information will help the concerned groups to grasp it quickly and also make it easier for the
staffs to contribute to achieving the strategy id the organization
 It is also recommended to the organization to form a partnership with its suppliers for
ensuring a positive environment and social changes beyond the compliance. The company
can also make a partnership with the local charity organizations to make the differences and
offer opportunities to the supporting local communities associated with Aldi
 Aldi needs to create a health and safety program to set up some reliable techniques to protect
its staffs from injuries and accidents. It will also make sure that the company is compliant
with the health and safety legislation of BSCI

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 The organization also needs to develop some practices and policies which will enable Aldi to
meets its commitments towards the environment. It might consider producing a report which
will record the activities and outcomes that will be related to the environmental impacts of
the company. It can also consider creating a broader sustainability report that will include
environmental and social activities.
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