Strategic Management Report: An Analysis of ALDI's Business Strategies

This report provides a comprehensive strategic analysis of ALDI, examining its business operations, strategic approaches, and responses to macro-environmental challenges. It delves into the balance between deliberate and emergent strategies, evaluating their effectiveness and offering recommendations for improvement. The report analyzes ALDI's strategic capabilities using Porter's value chain framework and the VRIO framework, assessing the sustainability of its competitive advantage. Additionally, it applies Porter's generic strategies and the Ansoff matrix to evaluate ALDI's strategic choices and internationalization approach. The analysis considers political, technological, environmental, and economic factors, particularly the impact of Brexit and the COVID-19 pandemic. The report concludes with recommendations for future strategic development, emphasizing the importance of adapting to changing market dynamics and maintaining a competitive edge.

BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
1: Balance of deliberate and emergent approach.........................................................................4
2: Macro-environmental issues....................................................................................................6
3. Analysing Aldi's strategic capability through porter's value chain framework and how
linkages in value chain is managed by aldi. Assessment of sustainability of aldi's strategic
capability via VRIO framework...................................................................................................8
4. Analysing aldi's strategy using porter's generic strategy models and ansoff matrix and how
much the strategies are appropriate in future. Also analysing internationalization which
company has adopted and at what extent approach is appropriate............................................11
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................17

INTRODUCTION
Strategic management is the ongoing process of planing, monitoring, evaluation and
assessment of the organizational necessaries which have to met by the company is order to
accomplish its goals. ALDI is the chosen organization for the analysis within the report. ALDI is
one of largest supermarket chain to be operating within UK and company provide products on
the basis of psycho-graphic market segmentation (Rice, 2016). Through which the overall
product placement is being done in such a way that customer requirements are being fulfilled.
Evaluation in the balances and emergent approach of the organization is being done in this
report, with that effectiveness of the balanced approach in terms if goal achievement is being
evaluated within the report. Study on ALDI response in context to the changing macro-
environment is also being analysed within the report. Analysis on the utilization of Porter's value
chain framework is also being evaluated within the report.
MAIN BODY
1: Balance of deliberate and emergent approach
Deliberate approach- It is the organizational strategy in which the company tend to identify its
requirements and then on that bases working strategy is being developed such that organization
is able to apply the integrated targetted actions. Through which the desired outcome can be
accomplished, Thus in order to achieve this organizational management is responsible to closely
monitor the current working process and then identify the difference which the company is
facing (Green, 2019). Therefore, on the bases of performed study working strategy is being
developed, through which overall performance can be increased. Since marketing department is
responsible to analysing the changing market trends and monitoring the organizational
performance. Due to which it is also responsible for identifying the future trends and due to
which it is highly productive for the company. Since the chances of failure is low in this
approach due to which it is often being used by the organizations like ALDI to ensure its
efficient performance within the market place.
Emergent approach- It is pattern of strategy which often tend to develop with the changing time
period and increasing experience within the respective job profile (Jory and et.al, 2019). This
happens due to the fact that organizations tend to manually monitors the changing market trends
and changing customer requirements. Then on that basis make suitable changed within the
working process, such that it is able to fulfil the customer needs and also at the same time

ensures the availability of the trendy products or services. Since company makes changes on the
bases of changing situations, due to which it lags specific mission, vision and goals because of
which lack of concentrated efforts can be seen within the working process. Less amount of
predictability can be seen in this type of working strategy, due to which it is not often being used
by organizations.
in the past
Critical evaluation on the balanced approach and extend to which it can be used-
The deliberate approach is highly productive because systematic approach is being taken
in this step due to which highly productive (CHICKEN, 2020). Whereas situational changes are
often being made within the emergent approach because of which continuous efforts can often
get affected. Therefore, organizations like ALDI uses an integrated approach in which company
uses deliberate approach for its daily operations and uses emergent approach for making sudden
changes. Through this step company ensures that it is able to grab the business opportunities, by
which new customers can also be attracted towards the organization. This is a highly fruitful step
because organizations have to make sure that they are able to attain a competitive edge, through
which customers can also be attracted from the other supermarket chains. Despite several
advantages this approach increases the strategic development process because company has to
integrate the unique business performance perspective within the daily operations. Due to which
organizational employee work force will not be able to improvise their working process
accordingly because of which overall operations of the company will also be affected.
Recommendation for the transformation of balanced working-
ALDI tend to utilize the collaborative efforts, through which it utilizes deliberative
approach for daily operations and also to achieve situational advantages company uses emergent
approach. This is highly productive for the company, but on the other hand company faces
limitations in implementing the new improvisations within the daily operations, due to which it
faces resistance from the employee to implement changes (Series, 2017). Therefore, organization
may have to provide appropriate training to the employees, before implementing the changes
through which it can make sure that it is able to achieve high work productivity.
ALDI has to make sure that it is able to develop sell developed products and sell it to the
customers. Through this company can minimize the negative impact which is often being created
by making changes as per the changes happening within the retail industry. With this approach it

can make sure that it is able to additional expenditures to provide training to employees is also
minimized.
Support required to develop recommended balanced organizational strategy-
ALDI is having its physical availability at various geographic areas, due to which it is
having a large employee work force to provide best in class quality of organizational services to
the customers. Due to which organization has to develop organizational teams on which bases
training can be provided to the employees and also at the same time it can continue its operations
to maintain its economic growth, through the process of selling products.
It can also be recommended to ALDI that it develops an efficient bidirectional
communication with the customers, on which bases it can make sure that it is able to identify the
customer requirements (Payne, 2019). On this bases it can improvise the R&D department's
working within the organization and due to which new products can be developed. This can be
done such that customer requirements can be fulfilled and also at the same time it can establish
premium pricing on the developed product. Through this approach organization can ensure that it
is able to develop products such that customer requirements can be fulfilled.
2: Macro-environmental issues
ALDI tend to provide its services to the customers through several decades, due to which
company also have faced several macro-environment and industry changes, which tend to make
a significant impact upon the organizational working process of the company. These changes are
some of the biggest challenges which are as following.
Political- ALDI is an German based organization which tend of provide its services within
different parts of EU. Thus during the events of Brexit company's performance within the UK
was being affected (Corbet and McMullan, 2018). This happens because in order to provide high
level of services to the customers, company is having its operating sub-parts like warehouses at
different locations. Due to which after UK's decision of voting out of EU company has to pay
import taxes because of which its economic growth was also being affected. Thus in order to
minimize the expenditures made upon the taxations and import charges company has to make
several improvisations in its product shipment and warehousing the product. Through this it
ensures that expenditures to be made upon the transportation is reduced, however the due to the
free trade agreement import duties are not being introduced.

Technological- With the increasing availability of the technological advancements customers are
increasing their use of technological advancements like internet and social media. Due to which
organizations like ALDI have to improvise their working process in such a way that it is able to
maintain high level of customer engagement (He and Harris, 2020). Due to which the company
has to implement the innovative approach and integrate the technological advancements at the
working areas. Through this it make sure that it is able to provide services as per the customer
requirements. This is highly productive due to the fact that digital marketing is cost-efficient,
than compared to the traditional marketing and with the number of internet users are increasing
on an daily bases. Due to this ALDI has implemented the innovative approach for increasing
customer's level of engagement with the organization.
Environmental- ALDI has also made sure that it is able to minimize the negative impact upon
the environment and due to which company has to make several changes in the working process.
Through this it can make sure that it is able to develop a positive image in front of the customers
and also promote itself to a wide range of customer base. Due to this factor organizational
expenditures tend to be increased and because of which ALDI's economic growth was also being
affected (Aroge, 2019). However, despite this fact company uses this for promoting itself to the
customer base, by which it makes sure that it is able to achieve high sales. Also at the same time
through this step company minimizes the threat of facing financial penalties. Through this step
company manages to develop a positive brand personality and because of which is able to attract
a large segment of the customer base towards itself by which sales is also being increased.
Present time macro-environment challenges
Economical- In the present time of COVID-19 the governments all across the globe has to
introduce lock-down within their country, due to which customer travelling at different locations
is being affected. Due to which organizational sales of organizations like ALDI is also being
affected and because of which businesses have to introduce innovative steps. Through which it
can maintain its suitability within the market place, this also becomes important for the company
due to the fact that since the market competitions is being increased within the market. Due to
which chances of brand switching for the customer base is also being increased and therefore
ALDI has to improvise its working process. This has increased the overall work complexity for
the organization, but since company uses emergent approach because of which it is being able to
adapt its working process. This was being done in such a way that company is able to provide

high level of organizational services to the customers, through the means of internet. By this
organization is being able to reduce the chances of brand switching from the customer side
because of which chances of goal achievement is also being increased.
Future strategy-
ALDI is having several stores at different geographical locations through which it is able
to achieve high sales. With that company is also able to achieve a diversity in its customer base,
through which it is able to accomplish an high brand awareness. With that in the present time
company tend to provide its services, through the means of internet. Due to which has to face
several unsynchronized working level within different departments of the organization
(RODERICK, 2020). Therefore, it can be recommended to the organization that closely evaluate
the different organizational working levels and then on that bases develop appropriate strategy.
Through this it can make sure that it is able to identify the weak areas and also is able to resolve
the problems, through this the overall working productivity of the organization will be improved.
With that it can also be recommended to ALDI that it develops organizational working
strategy as per the legal legislation and by covering all the employee legislations. With that
approach company can make sure that it reduced the chances of facing financial penalties by the
law enforcement agencies, for not obeying the government laws. Also at the same time through
this approach it can make sure that it is able to develop a positive organizational work culture.
By this it motivate employees to discuss the issues which they are facing within the organization
and then can take necessary steps to resolve the issues (Series, 2017). With this approach
company can make sure that it is able to increase the employee's loyalty towards the organization
by which ALDI can make sure that it is able to achieve high brand awareness. With that
approach company can also influence the employee to learn new skills and implement
appropriate improvisations in their working process. By this step it can make sure that it is able
to improve the quality of services which the customers can achieve.
3. Analysing Aldi's strategic capability through porter's value chain framework and how linkages
in value chain is managed by aldi. Assessment of sustainability of aldi's strategic capability
via VRIO framework.
Porter's value chain framework:

It refers to the activities which the business is conducting in the industry so that they can
provide valuable products in the market. Value chain analysis of aldi is famous worldwide. This
framework includes both activities which are as follows:
primary activity:
it includes those activities which included manufacturing and selling goods to the targeted
customers. Other primary value chain activities are as follows:
inbound logistics:
good relations with supplier are very important because supplier will supply raw materials and
by using that company will make finished goods (VALUE CHAIN ANALYSIS OF ALDI.,
2021). To analyse inbound logistics are important so that company did no face issues in product
development phase. Aldi focus on every stage of transformations which takes place from raw
materials to finished goods. Company have made strategy regarding raw material retrieving,
distributing raw material to start production etc.
operations:
operations comes into existence after the arrival of raw materials. Then aldi transfers raw
material into finished products and launch in the market. Operational activities include packing,
testing, maintenance etc. analysing operational activities are important because it helps in
improvising productivity and increasing profits.
Outbound logistics:
it includes those activities through which products are reached to the customers. It includes
warehousing, order processing, delivering, transporting etc. it is important so that company can
attain competitive advantage and can achieve higher growth (Bedeley and et.al., 2018). Company
has made strategy so that outbound activities are timely managed which helps in improvising the
customer satisfaction. They have adopted strategy through which company provide perishable
products quickly.
Marketing and sales:
Aldi provide good quality of products at reasonable price and also invest in marketing and sales
activities. Company do advertisement through social media so that can attract large audience in
less time. They had developed well integrated marketing activities which improvize their brand
equity.
Services:

Company provide effective after sales services which increases their customer loyalty.
Secondary activities:
it is the support to primary activities which are as follows:
firm infrastructure:
it includes activities like quality management, strategic management etc. effective infrastructure
helps in increasing market share.
Human resource:
Aldi goes through many processes before recruiting workforce. As skilled employees can help in
producing innovative products (Lopes and et.al., 2018).
Technology development:
Company understand the value of advanced technology and also adopted in providing
technology support customer service, data analytics etc.
Procurement:
Aldi conduct procurement effectively so that its inbound, outbound and operational can be
successfully carried.
Aldi's primary activities are more better than secondary activities and in primary its
marketing and sales are more effective. It can be said because of its effective marketing
strategies only company has able to increase their market share and able to beat the competition.
VRIO framework:
With the help of this company can look into the internal resources that whether they are
providing sustainability or not.
Valuable:
financial resources of company are valuable because through this company invests in the external
opportunities which arise into the market. It is also helpful in facing external threats. Local foods
products of company are also valuable because it is different from their competitors. Company's
workforce are also valuable because they are highly skilled (Eling and Lehmann, 2018).
Goodwill of the company facilitate value because it helps company in selling their goods as
customer trust on company. Research and development of company is not effective because it is
costly and not giving value to company.
Rare:

the financial resources of company is rare. Local food items of company is not rare because
competitors can easily provide these items (Murcia, 2020). Thus domestic brands can increase
competition. Employees are because they have knowledge and skills and company also provide
good working environment to them which ensure retainment. It patents are rare because it cannot
be used by competitors. Its distribution channels are also rare because its not easy to adopt such
distribution channel like aldi.
Imitable:
company's financial resources cannot be imitate easily because it is costly. As resources are
gained by company by prolonged profits. To accumulate financial resources competitors require
similar profits. Local food items are not costly to imitate because competitors can easily produce
it by doing little research. It does not require many years of experience. Employees of company
can also be imitate easily. As rival companies can acquire employees of aldi by providing good
salary package, compensation etc. patents can not imitate because legally it is not allowed.
Organization:
Financial resources of company are organized in such a manner that it can capture value.
Strategically resources are used so that investment is done into right thing (Chatzoglou and et.al.,
2018). It can be further used to take opportunities and at the time of threats. Patents are not
organized properly because company is not using to its full potential. Company can sell patent
products to attain sustainable competitive advantage.
capability valuable rare imitable organized
Financial
resources
yes yes no yes
Local food yes no yes yes
employees yes yes yes yes
patents yes yes no no
4. Analysing aldi's strategy using porter's generic strategy models and ansoff matrix and how
much the strategies are appropriate in future. Also analysing internationalization which
company has adopted and at what extent approach is appropriate.
Porter's generic strategy:

it has four elements which are as follows:
cost leadership:
Aldi follow cost leadership strategy by giving major discounts. Aldi is able to provide low cost
products because company purchase land at low cost which are at city's outskirts, build cheap
warehouse, also hire cheap labours and display products on pallets. There product range are also
limited as compare to their competitors which help company in saving money by doing less
expense. Because of less product portfolio company's store size is small as compare to other
grocery firms. It result in employing few employees in the store only (Schawel and Billing,
2018). Company also does not provide shopping bags to customer and encourage them to bring
their own. Useless costs are avoided by the company. It is said that in aldi stores lights are
switched off when there is enough sunlight. These all are the reasons why aldi are able to adopt
cost leadership.
Differentiation strategy:
Aldi is able to increase its market share because company have the capacity to launch different
products in the market. Aldi provide different products at low cost and with good quality. Aldi
also provide good remuneration to its staff so that helps company in increasing profits. As it
motivates workforce which increases their productivity and through which sales increased.
General used products prices are less than other rival companies. Aldi follows strategy of
providing good quality of products at the reasonable price which is helping company in retaining
existing customers and also bringing new customers. Aldi have strong brand loyalty due to which
new entrant discourage. Company manufacture such different products for customers which are
hard to imitate but these products are luxury products which are afforded by high class group.
Cost focus:
Aldi is cost focus because to take lower cost advantage company provide better quality of
product at less prices as compare to competitors (Martins, 2020). Products which are provided by
company at low prices are the basic products and purchased by large customer group. Examples
food items, household items etc.
Differentiation focus:
Under this strategy company focus on manufacturing creative products which are different from
their rival company. Aldi does not follow this strategy because company does not only focus on
small groups but covers wide population when it comes to differentiation.

Ansoff matrix:
It is the technique which is used by company to take effective decisions regarding
business growth. It has four elements which are as follows:
market penetration:
Aldi has increased their capacity of production which helps company in targeting more audience.
It further helps in improvising effectiveness which controls overhead costs (Bell, Dyck and
Neubert, 2017). Reduced overhead costs helps in getting competitive advantage. Aldi invests lot
in marketing and sales in order to achieve market penetration. Company do advertisement on
social media platforms because it is cheap, consumes less time and covers more consumers.
Company has also enhanced distribution channel by introducing online shopping option. This has
increased sales and revenue of the company.
Market development:
it means launching existing products in new markets. Although company launches new products
in the market but aldi should invest more on research and development because it will help in
getting new customers and retaining the old one. Company should focus on regional expansion
and should target local audience more (Muhammad, Putro and Siallagan, 2019). Aldi is the
multinational company but should expand more internationally in those countries where it is not
present. For international expansion company have to understand cultural and preferences of that
country's customer.
Product development:
it means when company launches new products in the same market. Aldi can modified their
existing products in order to increase their sales. Through extensive research company can able
to launch new products which will help in gaining competitive advantage. Company can even do
strategic partnerships so that options can be explored related to new product development.
Company can even increase range in existing products which will help in increasing product
variants.
Diversification:
Diversification means when new products are launched by company in new market. Aldi
believes that diversification helps into innovation and remaining competent. Company can opt
for vertical diversification, into this company can launch new products in the existing product

category. Horizontal diversification can also be opted. Under this company launches completely
new products which are not related to its old products.
These strategies are appropriate in the future because aldi can opt product development
which will help company in growth and achieving success. As new and innovative products are
in demand. Customers gets attracted towards those companies which is manufacture innovative
goods. Company is following cost leadership strategy because they believe that providing low
cost goods at low price can attract more audience (Islami, Mustafa and Latkovikj, 2020). This is
true also for company like aldi. As adopting this strategy has helped company in getting high
market share and competitive advantages.
Approach to internationalization which aldi has adopted:
Aldi has adopted strategy of providing good quality of products at low price. Company
has adopted cost reduction strategy to remain in the market and beat their competition. The
approach which is adopted by the company but is strongly effective. Aldi is able to provide good
quality of products at low price because of its cost saving practice. Company operates in less
areas. There stores are small because have less products which help company in saving rent and
electricity. Company also require less resources ion terms of human and other equipments. They
do not use expensive advertisement method while use social media marketing which is cheap and
trending nowadays. Quality assurance is the key area of success for the company.
CONCLUSION
Through this report it can be concluded that report has analysed balance between
deliberate and emergent strategy approaches to strategy. Aldi formulate strategy to increase their
growth but is efficient in adopting emergent situations. Company is efficient in balancing both.
Report has also analysed macro environmental factors which industry has faced through pestle
model. Through porters value chain model strategic capability are analysed and through VRIO

assessment of sustainability of aldi's strategic capability is done. In the last part of report porters
generic strategy and ansoff matrix are applied to know company's previous strategies.

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to worry about. Three decades later, they know better. By Xam Rice. [Online].
Available through: <https://www.theguardian.com/business/2019/mar/05/long-read-
aldi-discount-supermarket-changed-britain-shopping>
VALUE CHAIN ANALYSIS OF ALDI., 2021. [Online]. Available through:
<https://www.essay48.com/value-chain-analysis/13672-ALDI-Value-Chain-Analysis >