Aldi Australia: Strategic Analysis & Recommendations - 9953

This report provides a comprehensive analysis of Aldi Australia's business strategy, examining its strategic planning techniques, data analysis strategies, and overall strategic management practices. It delves into the application of Porter's Five Forces and SWOT analysis to understand Aldi's competitive positioning within the Australian retail sector. The report identifies Aldi's strategic direction, focusing on its rapid expansion and discounted retailer image, and assesses the managerial strategies supporting this direction. Furthermore, it evaluates Aldi's strategic management practices, particularly the resource-based view, and offers recommendations for improvement, including a greater emphasis on customer needs and agility in adapting to market changes. The analysis concludes that while Aldi employs effective strategies, continuous improvement and a focus on competitive forces are crucial for maintaining a competitive edge in the Australian retail landscape. Desklib offers a range of similar documents and study tools for students.

Running Head: BUSINESS STRATEGY 1
Business Strategy (Management)

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Table of Contents
Introduction.................................................................................................................................................3
Strategic Planning........................................................................................................................................3
Porter’s Five Forces Analysis....................................................................................................................3
SWOT Analysis.........................................................................................................................................4
Data Analysis Strategies..............................................................................................................................5
Strategic Direction.......................................................................................................................................5
Managerial Strategy....................................................................................................................................5
Organization’s Strategic Management Practices.........................................................................................6
Recommendations and Conclusion.............................................................................................................6
References...................................................................................................................................................7

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Introduction
Aldi Australia is leading retailer of Germany that has started its business operations in 1948 by 2
brothers Theo and Karl. Currently, the company has converted in a major food retailer all over
the world. In Australia, Aldi has established its business in the year 2001 and it is emerging over
the years. It is a discounted supermarket chain that owns more than 10000 stores in 20 nations
with a forecasted turnover of over €50 billion (Aldi Supermarkets, 2018). By implementing
effective strategies, Aldi Australia is able to establish an image of discounted retail store. It is
operating its business in Australian retail sector. The industry has experienced significant growth
in past few years and it has attained the revenues of $20 billion.
Strategic Planning
By researching the organization, I found that Aldi Australia is using different techniques and
frameworks to analyze the market and design its strategies (David, 2011). The strategies analysis
of Aldi Australia is discussed below:
Porter’s Five Forces Analysis
Industry Rivalry
This is one of the most important forces that help my chosen organization to analyze the
competitiveness in the industry. For Aldi Australia, competition is intense as there are various
brands which offer retail products by using price comparison techniques. This rivalry leads Aldi
to implement aggressive marketing activities to capture market share (Knox, 2015).
Bargaining Power of Buyers
For Aldi Australia, bargaining power of customers is high because they can make choices about
which retailer to use very easily on the basis of ease to access, discounted offers and availability
of products. This force assists the organization to understand the needs and wants of customers
towards retail products (Euromonitor International, 2018).
Bargaining Power of Suppliers

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Aldi Australia has more bargaining power than suppliers, generally forcing them for favorable
items and discounts because of level of purchasing power. Suppliers may receive large orders
from other bigger retailer like Coles and Woolworths, so they may be less keen to provide offers
and discounts to Aldi. This force can assist the organization to know about the prices of suppliers
and manage good terms with suppliers.
Threats of New Entrants
In the retail industry, threat of new entrants is low because of huge capital investment,
competition and cost of entry.
Threats of Substitutes
Threat of substitutes is moderate for Aldi Australia as sometimes people prefer to shop at nearby
retail stores and departmental stores than going to supermarkets.
SWOT Analysis
Strengths Weaknesses
 Focus on offering quality products on
affordable prices
 Lower operating costs
 Brand image of discounted retailer
 It offers a wide range of products
 Good relationships with suppliers and
customers.
 Immense competition well-established
retailers like Coles, Woolworths, Harvey
Norman and David Jones (Knox, 2015).
 It is smaller than other players in Australian
retail sector.
 Less spending on marketing and
advertisement
Opportunities Threats
 International expansion
 Investment in marketing and advertisement
 Spreading business in developing
economies
 Competitive pressure from leading firms
like Coles, Woolworths.
 Supplier related risks
 Poor employee satisfaction

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Data Analysis Strategies
In addition to above strategic planning techniques, I have experienced that Aldi Australia is
using business intelligence to analyze the data related to needs and demands of customers. In this
system, it has used different applications, tools, practices and infrastructure which allow the
company to access and analyze the data to enhance the performance and make strategic decision
(Sharda, Delen and Turban, 2016).
The above strategic planning and data analysis strategies help the organization in to forecast and
develop the strategic direction. For example under business intelligence predictive analysis is
helping Aldi to forecast future demands of customers and it can estimate the number of
customers. By using strategic frameworks, firm is able to gain the data about its external
environmental threats, customers, suppliers and other related parties. In this way, above
strategies are helping Aldi in approaching it current strategic direction.
Strategic Direction
By analyzing the organization, I examined that strategic direction of Aldi Australia is to increase
the presence of its stores by establishing various outlets all over Australia. This discounted store
has positioned itself as a discounted retailer and better value retailer by making investment in
advertising campaigns. According to my opinion, the organization can use both television and
print media for approaching its products (Scurtu & Neamtu, 2015). It is operating business with
the vision to allow the Australian shoppers to spend wealthier lives for less. So, strategic
direction of this firm is to ensure that Australian population should have an opportunity to
purchase everyday foodstuffs of higher quality at lower prices.
Managerial Strategy
As per my view, rapid expansion strategy of growth is the major strategy that supports the
strategic direction of Aldi Australia. At Aldi, it is evidenced to me that this organization
continues to practice rapid expansion strategy and increases the number of retail stores in
Australia. The aggressive pricing technique placed increased pressure on well-established
retailers like Wesfarmers and Woolworths. As per my perception, the company needs to continue
this expansion with the plans to move away from its dependence on east coast area to other

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locations. By adopting diversification strategy, it is looking to develop its operations online and
it has announced an online website. It will assist the organization to expand its product range and
approach its strategic direction (Nyariki, 2013).
Organization’s Strategic Management Practices
From the above analysis and modules, I have learned that implementation of strategic
management practices have become the major focus of retailers due to its role in developing
economic wealth. In my view, Aldi Australia uses resource based view strategic management
practice under which the company first identifies and exploits the internal capabilities and
competencies of retail stores (Weerawardena and Mavondo, 2011). These internal competencies
form a foundation of Aldi’s business strategy. I analyzed that Aldi identifies three capabilities in
this practice i.e. delivery, marketing and innovation. By combining these competencies and
capabilities, Aldi Australia is making efforts to maintain competitiveness and attain competitive
advantage over competitors (Kamukama, et al, 2017).
Recommendations and Conclusion
By conducting above analysis, I analyzed that Aldi is using effective strategies and management
practices, but still there is a scope of improvement. So, I hereby recommend that company needs
to consider the needs and enhance their shopping experiences. The company should go through
focus groups and marketing research so it can understand that what is working and what they
should start to look at. In today’s changing world, it should become more agile and adapt the
changes. Additionally, the company should make more emphasis on Porter’s forces model that
will assist Aldi to find a position in industry. Thus, it can be concluded that by using more
practices, Aldi Australia will be able to gain competitive edge in Australian retail sector.

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References
Aldi Supermarkets. (2018) ALDI Supermarkets - Good Different - ALDI Australia, Available
from https://www.aldi.com.au/ [Accessed on 11 August 2018].
David, F.R. (2011) Strategic Management Concepts And Cases, Pearson Education Publishing.
Euromonitor International. (2018) Aldi Group in Retailing, Available from
http://www.euromonitor.com/aldi-group-in-retailing/report [Accessed on 11 August 2018].
Kamukama, N., Kyomuhangi, D.S., Akisimire, R. and Orobia, L.A. (2017) Competitive
advantage: Mediator of managerial competence and financial performance of commercial banks
in Uganda, African Journal of Economic and Management Studies, 8 (2) 221-234.
Knox, M., (2015) Supermarket monsters: The price of Coles and Woolworths' dominance (Vol.
6). Black Inc.
Nyariki, R. (2013) Strategic Management Practices As A Competitive Tool In Enhancing
Performance Of Small And Medium Enterprises In Kenya, Available from
http://chss.uonbi.ac.ke/sites/default/files/chss/Strategic_Research_Project_November-
%20Ruth.pdf [Accessed on 11 August 2018].
Scurtu, L.E. & Neamtu, D,M. (2015) The Need Of Using Knowledge Management Strategy In
Modern Business Organizations. The USV Annals of Economics and Public Administration, 2
(22), 157-164.
Sharda, R., Delen, D. and Turban, E. (2016) Business intelligence, analytics, and data science: a
managerial perspective. Pearson.
Weerawardena, J. and Mavondo, F. T., (2011) Capabilities, innovation and competitive
advantage. Industrial Marketing Management, 40(8), 1220–1223.

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