Strategic Management Report: Aldi's Macro Environment & Strategies

This report provides a comprehensive analysis of Aldi's strategic management, exploring its emergent strategies, and responses to macro environmental and industry issues. It examines Aldi's adoption of low-price strategies, its responses to challenges like Brexit and technological advancements, and its use of PESTLE and SWOT analyses. The report further delves into Aldi's value chain, VRIO framework, and generic strategy, providing a detailed understanding of its operations and competitive advantages. It assesses the impact of the macro and competitive environment on Aldi's future, offering insights into its long-term sustainability and growth prospects. This report offers a deep dive into Aldi's business strategies and how they contribute to its success in the market.

Strategic
Management
1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Emergent approaches to strategy formulation ............................................................................3
Macro environmental and industry issues that Aldi has faced....................................................4
Aldi responses to various macro environmental and industries issue....................................5
Impact of macro and competitive environment that can affect the future of Aldi.................5
Porter's value chain framework of Aldi's ...................................................................................6
Primary activities ...................................................................................................................6
Supportive activities ..............................................................................................................7
linkages in the value chain that Aldi manage particularly well..............................................8
VRIO framework Of Aldi......................................................................................................9
Porter's generic strategy framework and Ansoff matrix . ........................................................10
CONCLUSION
........................................................................................................................................................11
REFERENCES..............................................................................................................................13
2

INTRODUCTION
Strategic management is a concept which the control and evaluates the functioning of the
business it helps in analysing the activities of the competitors in the markets so that goals of the
business can be achieved effectively. It basically involves the implementation of the basic
strategic which helps the business to perform efficiently in the market. Strategic management
helps in proper utilisation of resources which help in the growth of the economy. Proper
formulation of strategies helps the business the business to achieve its goal in the short period of
time by providing the best services to the customers (Lauer, 2019). Strategies should be
implemented after analysing various factors of the economy so that performance of the business
cannot get affected.
Aldi is the discount supermarket chains which is owned by two German family it has more than
10,000 stores in various countries it has the combined turnover of €50 billion. It was founded in
1946 by two brother Theo Albrecht and Karl. It basically deals in household and grocery
products. Al provides the best quality services to the customers due to which it has increased its
demand in the market. In this report it will analysed that how strategic management help Aldi in
achieving its organisational goal.
MAIN BODY
Emergent approaches to strategy formulation
Strategies are formulated to achieve long-term goals in the organisation it helps the
business maintain proper management in the organisation it provides various opportunities to the
business to improve its services in the market Aldi has adopted the low price strategies in the
past so that it can attract the attention of the customers and increase the sale of the product in the
market Aldi aim at providing the best quality of products at the low prices Low price strategies
includes limited range, high brand products and focus in today's world people need the good
quality of products and services with affordable prices so that financial stability of the customers
cannot get effected. By focusing on this Aldi has planned the low price strategy which helped the
business to increase it demand in the market if the demand of the product will get increased it
will helps the business to increase its revenue in the market and get the competitive advantage
every organisation does not follow this strategy due to which there demand in the market gets
freezed fluctuation in prices helps the business to increase its demand and goodwill in the market
3

Aldi also focuses on providing new and innovative products to the customers which helps them
to survive in the market for a long period of time. Long term survival of the business helps in
increasing the customer loyalty. Customers loyalty gets developed when the customers are
satisfied by the products and services of the business. Every organisation wants to achieve its
success in the future by providing the best services to the customers. Aldi can develop its
services by providing variety in the products which is it offering to the customers which helps
the business to increase it market share and profit in the coming years more variety in the low
price attract the customer to buy the products (Hunger, 2020).
Macro environmental and industry issues that Aldi has faced.
Analysing the macro environment is very important for the business to achieve profit
there are various macro environmental factors that can affect the growth of the business in the
market. In macro environment there are various factors like economic, political, technological,
social,legal and environmental which affects the performance of the business. Aldi has faced
various macro environmental and industry issues in the past.
 Due to Brexit Aldi has faced the issue weakening of pound which led a price between the
super markets of UK which effected the profit of Aldi in the market. Aldi provides the
good quality of product and services to the customers at low prices which helps the
customers in satisfying their needs and requirement.
 Aldi is the fifth biggest supermarket in the UK. In the past years it has caused a
deflationary impact on the economy due to which profit of the supermarkets companies
has also decreased in the market. In 2008 Aldi has to go through various financial crises.
 Due to the increase in the income level of the customers there demand of Aldi has been
reduced in the market increase in income changes the lifestyle of the people now people
wants the high of quality and services to satisfy their needs and requirement which
affected the demand of the Aldi in the market (Raut, 2017).
 In order to satisfy the needs and requirement of the customers technology is very
important technology helps in increasing the productivity of the company. In the past
years Aldi was not updated with the technology due to which there demand in the market
was low but now it has the all the required resources so that they can satisfy the needs
and requirement of the business.
4

 In the past years Aldi has to go through various copyright issues related to its brand. Due
to which organisation has to stop flagship advertisement which affected the promotion of
the company in the market. Advertising helps in building the brand image of the
company in the market.
 Various environmental mismanagement affected the growth of Aldi in the markets
environmental factor of macro environment has led various impacts on the supermarkets
of UK in the past years due to which Aldi has to keep low rate of its carbon emission in
the market so that environment cannot get affected.
Aldi responses to various macro environmental and industries issue
Aldi has planned various strategies to overcome from the macro environment issues sue to which
it has become the biggest food retailer in the world. Aldi has identified its strength and weakness
through the helps pestle analysing which helped them to improve its services in the markets.
There were many area in the organisation where improvement was needed so that growth and
demand of the business cannot get affected in the market identifying the trends which affects the
future growth of the company helped Aldi to enhance its services in the market. There are six
elements in the PESTLE analysis which evaluate the performance of the business on the macro
level Aldi has manufactured its goods according to the need and requirement of the people so
that growth of the industry cannot get affected also it can arranged various technology in the
organisation so that better services can be provided to the customer better services in the
organisation helps in generating the customer loyalty of the business in the market. Customer
loyalty helps in developing the goodwill of the business in the economy which helps in
increasing the productivity of the company. Less use of polythene bags by the organisation helps
in maintaining the environmental sustainability. To maintain this Aldi has reduced the usage of
polythene bags in the organisation so that nature cannot get affected and demand of the
organisation can also increased (Franza, 2018).
Pestle analysis
It helps in analysis various external environment factors like political, economic, social,
technological and legal so that performance of the business cannot get affected and demand of
the business can be increased.
 Political factors: Aldi is the best supermarket chain In UK which provides discount goods
to the customers as prices of the goods has been increased due to the Brexit it has provide
5

competitive advantage to the business aldi provide the goods as affordable prices due to
which demand of the aldi which increase in the market.
 Economic factors: As the demand of Aldi has increased due to the rise in the prices it has
affected various organisations like tesco, morrisons they are forced to close their stores in
the market. Due to it impacted in the whole GDP of the economy.
 social factors: Aldi provides the best quality of goods and services to the customers at the
affordable prices which helps in satisfying the needs and requirement of the society
without affecting their financial stability. Aldi provides the goods as per the needs and
requirement of the customers which helps in increasing the overall profit of the business.
 technological factors: Aldi uses various types of technologies to innovate its services in
the market which helps in increasing the demand of the business. Various technologies
helps in providing best quality of goods and services to the customers.
 legal factors: there are various legal rights which are provided to the organisation by the
government on the basis of which they have to perform their activities if the business will
not follow the rules and regulation then it can affect the performance and demand of the
business.
 Environmental: organisation is manufacturing the eco friendle products so that demand of
the business can be increased without affecting the environmental conditions. They are
also asking for the shopping bags from the customers so that carbon footprint can be
reduced.
6
Illustration 1: Available through
<https://www.stratechi.com/pestle-analysis/>

Swot analysis
It helps in enhancing the performance of the business by analysing the strength, weakness
, opportunities and threats of the business so that profit of the business can be increased in the
market.
Strength of Aldi
 Pricing: Aldi provides the best quality of goods at low prices which is the biggest
strength of Aldi it helps in increasing the demand of the company in the market.
 Customers support: Discount products strategies attracts the attention of the customers
which helps in increasing the customer loyalty of the business.
Weakness of Aldi
 Low margins: As Aldi provides discount products because of which they have to depend
upon the sales volume to increase the profit of the business.
 Poor satisfaction of employees: Employees have to work in different shift to increase the
productivity of the business because profit of the business is based on the productivity of
the company.
Opportunities of Aldi
 High demand of customers: As demand of the Aldi is more in the market it provides
various opportunities to the business to develop its services in the market so that profit
and demand of the business can be increased and innovative services can be provided to
the customers.
Threats of Aldi
 High competition: As demand of the grocery products are increasing in the market it can
create a threat for the Aldi because many new companies are entering in the market like
best buy, walmart etc.
7

Impact of macro and competitive environment that can affect the future of Aldi
Unsustainable macro environment can affect the future strategy of the business. In order
to achieve growth in the economy analysing the macro environment is very important if the
organisation will not perform its activities according the requirement of the macro environment
then it can affect the profit of the business in the market for the long term survival of the
business analysing the macro environment is very important. It also help in evaluating the
strategies of the business which helps the business to get competitive advantage in the
environment macro environment includes various elements like GDP rate, employment rate,
income level etc. on which growth of the organisation is dependent. So if macro environment is
not stable it can affect the growth of the business in the market. Main motive of every
organisation is to fulfil the need and requirement of the customers if needs and requirement of
the customers will not be satisfied by the organisation then it can affect the productivity of the
business. Various strategies help the Aldi to increase its profit in the market formulation of
strategies helps the business to achieve it future objectives (Kemppainen, 2017).
Porter's value chain framework of Aldi's
Porters value chain framework is the set of activities which the business performs in
order to provides best quality of products to the customers it helps in enhancing the performance
of the business so that more profit can be earned in the organisation there are various elements
in this framework which helps the business to increase it demand in the market. If quality of
8
Illustration 2: Available through
<https://www.slideshare.net/IzmirVodinaj/aldis-expansion-strategy>

goods will be improved in the market it helps the business to increase its productivity in the
market. In porter value chain frame work there are two type of activities primary and supportive
activities which helps the business to increase its productivity in the market.
Primary activities
Inbound logistics: Aldi inbound operations includes the supply of various goods of the different
stores around the world. Organisation invest high amount to increase the logistics because if the
goods will be supply in the high quantity to the organisation then it will helps the business to
achieve profit in the market. Aldi as a low price supermarket in UK Its demand in the market is
high due to which it requires high amount of goods and services to satisfy the needs and
requirement of the customers. If the demand of the goods are high and supply is low then it can
affect the revenue of the business in the market (Hitt and Duane Ireland, 2017).
Operations: Aldi has various stores in the world which it provide its services it provides the wide
range of products and services to the customers at the affordable price if the price the goods and
services increases it force the customers to switch the organisation which helps Aldi to increase
its demand in the market if the business another reason of increased demand of Aldi is that it
provide the best quality of goods at low prices which attracts the attention of the customer in the
market.
Outbound logistics: It helps the organisation to increase its demand around the world by
promoting its products Aldi products various home delivery option to the customer through the
e-commerce platform which increase the profit of the business it also provide home delivery
services to the customer which are purchasing their goods through offline which helps in
building the customer loyalty for the business. If customers will be satisfied with the services of
the business then it will help the company to survive for a long period of time (Durand, 2017).
Marketing and sales: Aldi has adopted the low price strategy to increase its demand in the market
it also helps in the sales promotion due to which more customers gets attracted Aldi has various
online and offline channels which helps in increasing the demand of the products and services in
the markets. Marketing and sale plays an important role in the business to achieve its targets
efficiently if the sale of the business will not be increased in the market it will affect the growth
of the business in the market. High number of sale helps in increasing the revenue of the
company in the market. To promote the products and services of the organisation there are
various channel which can be used by the Aldi to increase its sale in the market.
9

Service: The main aim of Aldi is to provide the customer satisfaction by the products which they
are providing satisfaction of the customers helps in development of business in the market if the
customer will not get satisfied with the products and services of the business then it will effect
the performance of the business in the market. Companies should always innovate it service to
attract the attention of the business in the market. If Aldi will provide old services to the
customer on regular basis then it will force the customer to switch their demand to other
organisation which can be a loss of the business and also it will give the competitive advantages
to other firms in the market( Tonysheva, 2019).
Supportive activities
infrastructure: it consist of activities like legal, accounting, finance, public relations, strategic
management etc. which helps in the increasing the profit of the business proper infrastructure
management helps the business to achieve its profit in the market Aldi has to maintain its
infrastructure so that smooth functioning of the business can take place. If proper management
will not be there in the infrastructure then it can affect the functioning of the business.
Technology development: Development in technology helps in upgrading the products and
services of the business technology helps in transforming the input into output due to which
revenue of the business gets generated. It also helps in reducing the work load of the employees
so that their performance in the market can be increased. Improvement in the technology helps in
developing the products and services of the business it also helps in creating a demand of the
business in the market more demand helps in increasing the profit in the business. Every
organisation should develop the its technology in the business so that goods quality of goods and
services can be provided to the customer which will increase the customer loyalty. Better
services helps in the development of the economy (Barbosa, 2020).
Human resource management: It helps recruiting the well skilled employees in the organisation
so that better services can be provided to the customer employees helps in the increasing the
profit of the business especially in the supermarket industries skilled employees are important so
that they guide the benefits of the products and services to the customers so that sale in the
organisation can be increased it also helps in creating a proper working environment due to
which performance of the business get increased and more profit can be earned.
Procurement: It provide the decision to the companies regarding the purchase it is basically the
acquisition goods from the external sources so that productivity of the business can be increased.
10

linkages in the value chain that Aldi manage particularly well
Aldi can analyse its external and internal linkages through the activities of the value chain
linkages are basically relationships between the activities performed on the performance or cost
of another it also helps in providing competitive advantages due to which coordination and
optimization takes place. Aldi can perform its Quality assurance functions in different ways
which helps in increasing the profit of the company. Value chain framework helps the business
to analyse there cost which is used for performing the activities of the business. So that financial
stability of the business cannot get affected. Low cost strategy helps in increasing the profit of
the business Aldi provides the goods and services to the customers on time according to the
demand of customers through the helps of there inbound services which helps the business in
achieving there targets in the markets Aldi also maintains proper coordination in the organisation
through the help of supportive activities of the value chain network. Aldi has financial resources
11
Illustration 3: Available through
<https://www.slideshare.net/ChrishanSmith/aldi-australia-case-part-1>

which helps the business to increase its profit in the market Aldi invest high amount of resources
to increase the revenue of the business (Iqbal, 2019).
VRIO framework Of Aldi
It is an strategic analysis tool which is developed to protect and save the resources of the
organisation so that business can get competitive advantage in the market and achieve it long
term goals. This framework is used after the development of vision statement. Aldi uses VRIO
analysis to check whether the resources of the business can provide high competitive advantage
to the business or not. VRIO stands for valuable, rare, imitable, organisation.
 Valuable: it helps in analysing the financial resources of Aldi which are highly valuable
because they help Aldi to invest in the external opportunities so that profit of the business
can be increased. Valuable resources help the business to sell its products in the market
without any competitive interference which help Aldi in increasing its revenue in the
market.
 Rare: In Aldi financial resources are found as rare because these resources are obsessed
by some organisation in the market. The foods products which Aldi deals in is not
considered as rare because these products are easily available by the other forms in the
markets.
 Imitable: In Aldi financial resources are very expensive to imitate as per the VRIO
analysis because these resources of the business are achieved after the profit of the
several years. Food products are not found very expensive to imitate because these
resources are easily available by the firms in the market.
 Organisation: Financial resources of the business is organised because Aldi uses these
financial resources to get the competitive advantage in the market and eliminating threats
which helps increasing the project of the business. In Aldi patents are not well organised
which indicates that Aldi is not utilising its patents properly. Aldi has organised
distribution network which ensures that products are available to the customers on every
outlets so that demand of the business can be increased (Gamble, 2019).
12