Business Strategy Report: Analyzing Aldi's Strategic Approach

This report provides a comprehensive analysis of Aldi's business strategy, starting with an overview of its mission, vision, objectives, and strategic planning. It delves into the factors Aldi considers when formulating its strategic plans, including political, economic, social, technological, environmental, and legislative influences. The report evaluates the usefulness of various techniques, such as the BCG matrix and PIMS, in developing strategic plans. It then assesses Aldi's current strategic position using value chain and SWOT analyses, followed by an environmental audit using Porter's Five Forces. The importance of stakeholder analysis is also examined. The report further identifies and justifies Aldi's chosen market and strategy, assessing the roles and responsibilities of personnel and the resource requirements for implementing new strategies. Finally, it evaluates the importance of smart targets in achieving strategic objectives. The report highlights Aldi's competitive advantages, including its focus on price and core competencies, and emphasizes the significance of adapting to market changes and stakeholder needs for sustained success.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
1.1 Missions, visions, objectives, goals and strategic planning of Aldi's...............................1
1.2 Analysing the factors that Aldi consider while formulating their strategic plan.............2
1.3 Evaluation of usefulness of techniques in developing strategic plans.............................3
Task 2..............................................................................................................................................4
2.1 Analysis of current strategic position of Aldi...................................................................4
2.2 Environmental audit of Aldi.............................................................................................5
2.3 Assessing the importance of stakeholder analysis for Aldi when implementing new
strategies ................................................................................................................................6
2.4 New strategy followed by Aldi.........................................................................................7
Task 3...............................................................................................................................................8
3.1 Identifying the market and analysing the correctness of suitable strategy.......................8
3.2 Justification of adopted strategy.......................................................................................8
Task 4...............................................................................................................................................9
4.1 Assessment of roles and responsibilities of personnel.....................................................9
4.2 Assessing the requirements of resources in launching new strategies.............................9
4.3 Evaluating the importance of smart targets in achieving strategic objectives................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is the process of implementing new decision which helps the firm to
achieve its long term objectives. It also specifies the mission, vision, policies, strategies for the
organisation to regulate well functioning of these objectives. Aldi is retail industry founded by
Karl and Theo Albrecht. It is supermarket chain and has 10,000 stores in different countries. The
organisation has 3.6% share in grocery and overall turnover is €50 billion. In this case, mission,
vision and goals of Aldi are defined (Al-Deen and Hendricks, 2013). Further, analysis of the
factors which affect strategies plans are studied. Analysis of macro and micro environment
factors and importance of stakeholders in new strategies are assessed. Moreover, the
appropriateness of suitable strategies in organisational progress and its justification for entering
the new market is given. Role and responsibilities of the personnel are defined and analysis of
resources required for implementing new strategies are discussed. Moreover, evaluation of smart
targets for the achievement of strategic objectives are studied.
Task 1
1.1 Missions, visions, objectives, goals and strategic planning of Aldi's
Mission
Aldi will give its participation in creation of environment for its consumers that would
lead to improvement of society with economic independent citizens.
Vision
The lesson that life teaches us that one need to work hard in order to make our dreams come true.
The previously made goals have been achieved but still there are lot of work that has to be done
to make lives of its consumers better (Rialp-Criado and Komochkova, 2017).
Objective and Goal of Aldi
The main goal of Aldi is to provide the consumers with some range of good quality products at
sensible prices. They want that there share should modify in the UK market. Customers loyalty is
the focus of the Aldi. The concentration is on marketing activity that would boost consumers
who are familiar with the shopping at Aldi. They provide consistency that would render
responsibility. They are reconciled in dealings with people,product and day to day work of
workplace. They offer responsibility towards customers by including principles such as honesty,
friendliness etc(Bak and Jordan, 2017).
Aldi core competencies
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The core competency of Aldi is that its focus is on the price. Various methods that Aldi
undertake to ensure the price. These are as follows-:
Brand Focus-:Website of Aldi provides information that their main work is on their own brands
so that they are not dependent, also helping them to avoid high costs that are related to other
brands and gives the privilege to set their own prices on products.
Cost of labour is low-:They do not posses more number of staff. But they provide a good salary
to them. They do not provide carry bags.
It is essential that mission, vision, objectives and goals of the firm should be considered
for making the strategic plan for the business.
1.2 Analysing the factors that Aldi consider while formulating their strategic plan
There are various factors that Aldi can take into consideration to remain competitive in the
marketplace and they are as follows-:
Political Number of factors that are influenced by Aldi for operating in worldwide market
includes European Union (EU).The decisions given by the government gets affected in a
business, a particular business must follow all the legislation laws. The EU and UK had some
issues related to laws of policies with the UK prohibiting restrictive activities regardless its effect
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Illustration 1: PESTLE analysis
(Source: Teh, I., 2016)

on consumers, but EU only operates in condition where consumers are injured by the
activities(Owen and Mason,2017).
Economical -:There are economic factors that bound the workplace. In international
organization, it is expected to enhance and provide benefit to Aldi visibility in the approaching
years. Since UK is still at recovery phase, this can be considered as a matter of concern by the
organization. High unemployment rates are one of the most influential factor that will affect the
demand for products.
Social and cultural -:As UK population is getting older, it may generate a downfall of workers
in the workplace. The government help should be acquired to provide more funds for health care.
Aldi acknowledge the precondition of market by identifying real potential as society is getting
less for their monetary system.
Technological :Aldi provide less cheap products in comparison of other contender,consumers
have become more price conscious and tend to use technology with more convenient experiences
that would increase the whole experience of shopping(Kew and Stredwick,2017).
Environmental -:The workplace have panels that offer good performance and roof system is
installed that provide friendly solution at low costs and enhance the performance by providing
electricity. Aldi has tried to increase their sale but they are forced to adopt sustainable
approaches which has affected the environment and suppliers. They are responsible for
increasing food insecurity and more consumption of the products.
Legislative -:The EU commissions have made it compulsory for products related to eatables to
provide facts about nutrition in the retail industry, thus providing customers with a better diet.
1.3 Evaluation of usefulness of techniques in developing strategic plans
Aldi has developed many strategies to grow their business. They have to allocate proper
resources in strategic business unit. The organisation has used BCG growth matrix to evaluate
the usefulness of the techniques which it is using to develop its business. BCG growth matrix
helps in allocating resources and helps to compare different business units at one go. Aldi market
growth is increased by 12% which has helped them in becoming fourth largest supermarket of
UK (Bharadwaj and et.al., 2013). As the customers of Aldi found that their products are best and
available at lower price from other companies. They are main players of the market after Tesco,
Asda and Sainsbury which helped them to satisfy the needs of the customers.
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Further, Profit impact of marketing strategy(PIMS) helps Aldi to understand business
strategies, its position in the market and allocating budget related aspects. It helps the
organisation to evaluate the techniques which are used for strategic planning. Additionally, it
assists Aldi to understand the market scenario and competition (Aldi becomes UK's fifth largest
supermarket, 2017). To determine the status of the company SPACE matrix is used.
Additionally, it guides the organisation to take better strategies for operating successful business.
It also helps in analysing the financial factors like turnover, cash flow and competition with other
companies. This matrix is used to make competitive advantage and environmental stability so
that they can achieve their business goals. Moreover, it helps in making effective policies and
plans to achieve business objectives of the firm. The below diagram describes that Aldi has
effective position in the market and has taken effective growth strategy (Buckley, Burton and
Mirza, 2016).
Task 2
2.1 Analysis of current strategic position of Aldi
Value chain analysis:
Aldi is trying to increase the value of their product by decreasing their price and
enhancing the quality of them. Value chain is used to determine marketing and sales and
operations and outbound logistics. It is essential to identify the raw materials and price of the
final items so that organisational audit of Aldi can be properly carried out. Further, outbound
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Illustration 2: SPACE analysis matrix
diagram
(Source: Simister, P. 2011)

logistics helps to determine the storage of items which should be moved from one city to another
(Gendron, 2014). Marketing and sales has considered the marketing strategies and revenues of
the business.
SWOT analysis:
Strengths:
 Aldi has many efficient stores.
 High network covering major
developed markets.
 Provide cheap and branded products.
Weaknesses:
 Shortage of staff members.
 Do not accept cash with credit cards.
 Limited variety of products.
Opportunities:
 E-commerce and m-commerce has
given opportunity to increase retail sale
(Goetsch and Davis, 2014).
 More customers encouraged them to
expand their supply chain.
Threats:
 High taxation rates.
 More competitors in the market.
 Customers interest is shifting to local
products.
Aldi is trying to maximize its business growth by taking advantage of its business. The
major advantage of this organisation is that it provides innovative ideas to increase their
productivity. It is focusing on increasing its stores and customers in order to minimize their
weaknesses. It is offering many discounts and offers to luxury products and providing the best
customers service to expand its customer's range. It is facilitating online services to their clients
and taking the opportunity of digital media technology.
2.2 Environmental audit of Aldi
Porter's five forces analysis:
Threats of new entrants:
Due to small scale industry, it has faced many problems in entering new market due to
low economy scale, government policies, brand loyalty etc. Further, low price offers from the
new entrants is badly affecting the sale of Aldi. Therefore, the organisation has great need of
having more advanced technology and resources to make stability in the market.
Bargaining power of buyers:
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Customers always try to purchase the product by lowering the price of products with best
quality. Strong buyers increase their profit by purchasing the product at lower price and selling
them at high costs. Further, they make it possible because they have full information of goods
which they sell to others (Grover and Kohli, 2013). All products of grocery have different price
and standard which brings threats from the buyers as they compare price from other stores. Aldi
have to suffer loss if it brings products at low price
Bargaining power of suppliers:
It refers to the capability of suppliers to raise the cost of products or increase the price of
the firm. Bargaining power of suppliers include costs, distribution channel and inputs to the
firm. Suppliers increase their profits by increasing the price therefore they bring threat of
integration. Further, another reason of their threat is that buyers are not strong suppliers.
Threat of substitute products:
Products which met the demands of customers are substitute products. They set the limit
on the price of products according to which the organisation has to charge. Aldi will suffer loss if
the price of substitute products are low (Hoejmose, Brammer and Millington, 2013).
All these factors have affected the decision making process of the organisation as new
entrants are becoming threats as they are offering the products at cheaper rate which have
affected their sale in the market. Bargaining power of buyers sometimes creates conflict situation
as they want the product with lower price. Furthermore, bargaining power of suppliers has
increased the costs of company as they provide input to the firm by raising the price of goods.
All these factors forced the organisation to make effective decision so that they can increase their
sale and achieve their objectives.
2.3 Assessing the importance of stakeholder analysis for Aldi when implementing new strategies
Stakeholder include suppliers, customers, employees, government etc. Stakeholders plays
an important role in making the organisation successful. They must be considered while making
new strategies of Aldi (Hoffman and Woody, 2013). Their concern is important because products
become successful only when it is designed according to their needs and demands.
Further, employees should also be considered while implementing new plans.
Justifications:
 Employees involvement is necessary because they well understand the needs and trends
of the customers as they interact more with them.
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 Staff members helps to provide innovative ideas to design the product which will help
Aldi to implement effective strategies.
Culture of organisation and good salary package should also be considered in making new
strategies.
Justification:
 In order to make business strategies successful, it is very necessary to consider salary
package of staff members because they work hard only if they were given rewards and
proper wages.
 Organisational culture and environment plays an important role in making product
successful because effective environment will encourage employees to handle difficult
tasks and helps in increasing sales of the firm (Iyamu, 2012).
Moreover, government rules and regulation must be properly followed by Aldi in order to make
product and service popular. Properly following government policies will help them from legal
issues. Involving stakeholder will avoid conflicts and helps in planning effective strategies.
Further, Aldi will run successfully if the new strategies will cover the interest and requirements
of all stakeholders.
2.4 New strategy followed by Aldi
In order to face challenges and risk of competitive market, it is very necessary for Aldi to
make new strategy. This strategy will allow the organisation to increase its sale in the market and
lead the market. Aldi have to launch 'product differential' strategy in which it can provide goods
and services to the customers with extra features which will attract more customers towards
them. The main mission of implementing this strategy is to provide the products with the best
quality and at lower price. Focus of this strategy is to face competition of the market effectively
and to make advance supermarkets which are different from traditional stores (Frynas, and
Mellahi, 2015). These stores are capable for providing smart customer service so that they can
increase their sale.
Aldi is behind of Tesco, Asda and Sainsbury's supermarket therefore it has to invest more
on developing its smart stores. The organisation main vision is to make more profit by satisfying
the needs of their users. The competitive advantage of Aldi is that it has offered the products at
great discounts for attracting more customers towards their goods and services. This will help the
firm to give competition to other competitors in the market. Further, Aldi has developed apps
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and website for providing various services to their customers. These will help them to easily
access the products at home at reasonable price. The main goal of implementing this strategy is
to raise the value and quality of product so that they can increase more number of customers.
Task 3
3.1 Identifying the market and analysing the correctness of suitable strategy
Aldi is great dealer in grocery market and making rapid progress in the market.
Therefore, it has to adopt new strategies to accomplish their objectives. The prices of the
products must be feasible for all types of customers and must be according to the geographical
needs. Further, 'product differential' strategy helps in attracting more customers and increasing
their ratio as this offers branded products with lower rate. This will promote their goods and
services to other countries also and will help in increasing their revenues and sales. The company
has to implement new ideas for setting the price so that they can develop their business. The
organisation has to analyse the market and target people (Hair and et.al., 2012).
Analysing proper market is very necessary to launch the product because, if product is
launched in high competitive market then it fails. Similarly, analysis of target customers are also
important to make product successful. The customers age, financial status must be analysed so
that they can be given proper information of the items and they can understand different terms,
condition and use of that product. Aldi has to provide regular discounts and offer sale on their
products so that customers get benefited and attracted more towards their product. This will help
the firm to focus more on the demands and need of their customers.
3.2 Justification of adopted strategy
Product differential strategy is appropriate for competitive market as it gives more
competition to old competitors and new entrants. The customers require the goods which are
unique, having extra features and available at cheaper rate. Aldi has focused on keeping price
low and increasing the volume of customers (Morgan, 2012). Launching product differential
strategy in new market will help the organisation to give tough competition to its competitors.
From this company will able to make good position in the market. Further, this strategy will
allow them to increase their sale and develop their business.
The organisation has also evaluated market, position and target customers which will
help them to determine that product is launched in which geographical region among what age of
people so that their product will get success. It has make effective progress in SA market and
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WA market (Peteraf, Stefano and Verona, 2013). Further, this strategy is adopted by the
organisation to increase more number of stores which are able to provide the best quality of
products. Product differential strategy has attracted the customers to prefer online services of the
organisation as they believe that there is no compromise in the quality of product by the
company.
Task 4
4.1 Assessment of roles and responsibilities of personnel
In implementing new strategies, various department of the organisation are responsible.
For example, top management is responsible for analysing the scenario and trends of the market.
It has to consider all the factors which affect the market strategy so that they can effectively
handle the critical situations. Top management is also responsible for determining demand and
supply of the goods and services for before implementing new strategies. Further, middle
management also helps top management authority to intimate them about internal and external
factors and performance level of the organisation.
Team leaders and staff members plays an important role in better functioning of Aldi.
They motivate their senior authority to make effective business strategies. They also play an
important role in providing innovative ways to enter in new markets. Further, partners and
suppliers of the organisation also provides their services in gathering data from the market and
analyse the trends of market which helps top authority in implementing better strategies. They
help them in analysing different culture, demands and trends of the market so that they can
effectively design the products (Barney, 2012).
4.2 Assessing the requirements of resources in launching new strategies
Various things are required while implementing new strategies. These resources include
funds, technology, human power, time etc. Aldi must have strong finance and manpower to
provide products at lower price. It also requires finance for launching new strategies at different
geographical areas. Further, it has to take care of time as all the strategies should be operated on
time so that their products should be delivered to the consumers before its deadline. Further, raw
material must be available at reasonable price and must be effective quality so that they can
easily accessible.
Technology also plays an important role in successful implementation of new strategies.
Lack of proper technological equipment will adversely affect its promotion. Further, new
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technologies like internet and social media is used to promote new product and its features. The
app and websites also plays an important role in the promotion of new ideas and policies of the
organisation. All these resources are very necessary to implement new strategy in the market.
Lack of any resource will affect the performance of organisation in the market (Krogh 2012).
Proper availability of these resources will increase the popularity of new strategy of the
company.
4.3 Evaluating the importance of smart targets in achieving strategic objectives
Establishing smart targets will help in achieving the desired goals of Aldi. It helps the
organisation to achieve their objectives on time and with better results. Further, it helps in
improving the areas which needs development. Smart targets also guides employees to set their
goals and achieve them on time. Further, the targets must be specific according to strategies that
needs to be implemented. The smart targets must be established before implementing any new
strategy in the market and must be effective that it will help in achieving the task. It must be
realistic and correct according to resource availability.
Smart targets also helps staff members to face challenges and issues of future goals. It
helps in getting ready to employees to face the critical situations. The targets must be set such
that it will help top management authority to implement new strategies (Eden, and Ackermann, ,
2013).
CONCLUSION
From this report, it can conclude that business strategy are very necessary to achieve the
goals and targets of the organisation. It helps in successfully achieving the desired results and
securing the best position in the market. In this report, mission, vision, objectives and goals are
designed with the help of business strategy. Different factors like political, social, legal,
economical and technological factors are analysed which affects the strategic planning of Aldi.
Further, different methods like BCG matrix, PIMS and SPACE matrix are evaluated. Porter's
five forces are used to make organisational audit of the organisation.
Moreover, importance of customers, employees and government is defined in making
new strategy. New strategy like product differential has been adopted by Aldi. Additionally, its
appropriateness and justifications are given by the organisation. Further, roles and
responsibilities of top management, middle management, employees and team leader are defined
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in implementing new strategies. Further, evaluation of smart targets in achieving the strategic
objectives is done.
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