STRATEGY, ENTERPRISE AND INNOVATION: Aldi's Strategic Analysis Report

This report provides a comprehensive strategic analysis of Aldi, a leading supermarket chain. It begins with an evaluation of Aldi's internal resources and capabilities, utilizing the VRIO framework to assess its competitive advantages, including its cost-efficient pricing strategy. The report then examines the key external factors influencing Aldi's operations, employing PESTLE analysis to assess political, economic, social, technological, legal, and environmental influences. Furthermore, it analyzes the competitive forces impacting Aldi's profitability using Porter's Five Forces model, highlighting industry rivalry and the threat of new entrants. The second section evaluates two strategic options for increasing growth opportunities: corporate social responsibility (CSR) and marketing strategies, discussing their suitability, acceptability, and feasibility. The report concludes by justifying the strategic choices, emphasizing the importance of adapting to market dynamics and consumer preferences to maintain a competitive edge.

STRATEGY, ENTERPRISE
AND INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
a) Internal resources and capabilities which assist organisation in attaining competitive
advantage.....................................................................................................................................1
b) Key drivers of external factors and their influence on entrepreneurial activities...................2
c) Influence of competitive forces which affect the profitability of company............................3
SECTION 2......................................................................................................................................4
a) Evaluation of two strategic options which assist the company in increasing opportunities...4
b) Justification of strategic choices.............................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Strategy and innovation plays an important role in the growth and development of
organisation. It acts as a backbone for firm and so, it is necessary for the enterprise to evaluate
innovation and strategies which can assist in gaining competitive advantage. Further, the report
will evaluate internal resources and capabilities of Aldi, the leading supermarket serving
consumer satisfaction across the globe. Besides this, it will identify the key drivers of macro
environment which influence activities of retailer in maintaining innovation. Moreover, the
report will outline two strategies which can assist Aldi in increasing growth opportunities.
SECTION 1
a) Internal resources and capabilities which assist organisation in attaining competitive
advantage
Aldi is the largest supermarket chain selling differentiated products at the lowest prices
possible. Major advantage for company and its products is the pricing strategy which it focuses
on maintaining the cost efficiency instead of maximizing profits. Internal resources and
capabilities of Aldi which assist the business in attaining competitive advantage are analysed by
using VRIO analysis which are described as under:
Valuable Rare Imitate Organized Results
Aldi’s grocery
and food products
are highly
valuable as the
ultimate focus of
company is
limited to serving
high quality food
to consumers
across the globe.
Products of Aldi
are rare according
to pricing as it
aims at the lowest
possible pricing
strategy in order
to attract more
consumers (Arora
and Gambardella,
2010).
The grocery
products of
organisation are
imitated.
The functions and
process of
company are well
organized in order
to make optimum
utilization of
resources and to
make buying
process consumer
friendly.
VRIO analysis of
supermarket
demonstrates that
the enterprise
holds a strong
control over long
term’s
competitive
advantage.
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Apart from this, internal sources and capabilities of Aldi have been analysed by
identifying its strengths and opportunities which assist the organisation in making innovation and
for standing out in competition.
Strengths: The major advantage of Aldi lies in services in which it delivers quick
shopping experience to consumers by its customer friendly process. Further, the efficiency of
supermarket of making optimum utilization of resources and effective functioning of labour are
the major strengths which assist business in dealing with innovation and resisting competition.
Opportunities: Expanding business operation across globe is the major opportunity which
can assist Aldi in its growth and development. In addition to this, it is important for the
enterprise to make use of advanced technology like establishment of online shopping system to
reach at maximum number of consumers across the globe (Chesbrough, 2010).
b) Key drivers of external factors and their influence on entrepreneurial activities
Macro factors which influence activities and innovation plan of Aldi are evaluated by
supermarket for implementing the use of Pestle analysis which is described as:
Political Instability in government policies and agendas is the major factor which
interrupts entire process of enterprise. On the other hand, employment
laws by government to promote higher wages for labour and create
employment opportunities for unemployed individual of country impacts
the internal processing of organisation
Economical The economic factors affect the costs, pricing strategy and demand for
products of enterprise. In accordance with this, economic factors are
uncontrollable and the major influential factor for supermarket is high
unemployment level as it impacts demand efficiency for some specific
goods (Davenport, 2013).
Social Consumers are becoming health conscious day by day due to which
demand for the food products of the firm is decreasing. Therefore,
company is now making innovation in food products according to
consumer’s demand. Moreover, to attain competitive advantage, Aldi has
started using eco-friendly procedure and products in order to enhance the
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level of society to gain consumer’s loyalty
Technological Technological advancement is the major factor which assists enterprise in
attaining competitive advantage. With regard to this, Aldi has started
making innovation in its packaging and advertising techniques. On the
other hand, major weakness of Aldi in technology is that, it only offers
services on stores and therefore, it is important for business to upgrade its
online shopping system (Freeman, 2015).
Legal Compliance with all regulations imposed on food and beverage industry
plays major role in growth and development for company which is the
reason that Aldi keeps track over all legislation and its procedure in order
to attain competitive advantage.
Environmental The society is becoming environmental friendly and therefore,
supermarket changed its entire system of processing in order to establish
the use of renewable resources to preserve natural resources and to use
environmental friendly gases and substances in order to maintain the
suitability of environment.
c) Influence of competitive forces which affect the profitability of company
It is important for company to analyse influence of competitive forces in order to
maintain stability in profits. Generation of adequate profits is the best way by which the
organisation can maintain its competitive advantage (Tatikonda and Montoya-Weiss, 2011).
Further, by analysing forces, the supermarket evaluates the need of innovation in services to
stabilize its business operations. Moreover, to discover the influence of competitive forces, Aldi
implements the use of Porter’s five forces model which is described as:
Bargaining power of
Suppliers
Power of supplier is low as there are numerous providers of similar
material. Due to low bargaining power of suppliers, Aldi gets
advantage to buy products at the cheapest possible price.
Bargaining power of
buyers
Bargaining power of buyers is moderate as there are various products
available at different prices. In accordance with this, Aldi holds a
strong control over forces because consumers are price sensitive and
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retailers are focused on “best quality at the cheapest price”.
Industry Rivalry Competition in industry is very high as there are numerous retailers
serving consumer satisfaction such as Tesco, Morrisons, Lidl, etc.
Further, all the organisations deal in same products and services
which limit the functions and growth of Aldi (Amran, Ooi and Devi,
2015).
Threats of new entrants Threat of new entrants for supermarket is high because there is no
major regulation which restricts the entry and exit in this industry.
Further, there are different competitive strategies used by retailers to
stabilize its business operations.
Threat of Substitution Threat for substitute is very high as the quality can vary according to
products but it is unable to protect innovation of product. This
influences demand for commodities in supermarket as there are
various similar products at the lowest possible prices. In this, Aldi
owns the advantage as its pricing strategy is focused on serving
consumer’s satisfaction at affordable prices.
SECTION 2
a) Evaluation of two strategic options which assist the company in increasing opportunities
There area various strategic options which assist the organisation in attaining competitive
advantage by discovering various type of opportunities to expand and enhance business
operations. According to Aldi and its functions it is important for the enterprise formulate its
policies and procedures according to Corporate social responsibility, it is the best strategy which
assist the firm in measuring its goals and performance and to analyze the growth opportunities
(Why Corporate Social Responsibility is Important 2017). Compliance with the practices of CSR
is the best strategy which improves the stakeholder engagement which provides advantage to
supermarket to gain their interests shareholders, customers and employees with entrepreneurial
functions. However, in contrary using appropriate marketing strategy such as promotional
campaigning and attractive marketing techniques is the best way to increase comer demand for
products of Aldi (Staake, Thiesse and Fleisch, 2012). In addition, this, it is important for the
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company to grab the opportunity of technological advancement by offering services at online
platform because its is the Major limitation which is interrupting the growth and development of
the company. In contrast, the marketing strategy at online platform is the best way to analyze the
competitor's strategy for attracting consumers by which Aldi can make innovation in its services
accordingly. Whereas, CSR practices can provide supermarket in improving brand recognition
among consumers by making innovation in products by using environmental friendly materials
for production. Compliance with Corporate social responsibility can assist Aldi in saving
operational cost. Further, it assists the firm in determining the interest of consumers and
shareholders in products and services of enterprise by which the entity can make innovation in its
services according to demand. However, marketing strategies can assist the super market in
collecting consumers feed back which is the best way for determining the need of change
(Wesseling, Niesten and Hekkert, 2015).
Corporate social responsibility can be used by the company to make innovation in its
products and services keeping in mind the sustainability of environment which is the best tactic
to attain competitive advantage while marketing strategies assist the firm in evaluating the
innovation and strategies used by its competitors to attract consumers which can help the
business in making changes according to competitors. There is big difference in benefits of
marketing strategy and corporate social responsibility because by complying CSR strategies the
company automatically gets the opportunity for innovation whereas in Marketing strategies
technique the management has evaluates the opportunities.
b) Justification of strategic choices
Corporate social responsibility
Suitability: It is suitable for Aldi because the market environment for food and beverage
industry keeps on fluctuation and compliance with this can assist the organisation in stabilizing
its business operations.
Acceptability: It is acceptable because in this minimum risk is involved and it provides
the advantage of comparing performance according to determined goals. Moreover, it is helpful
in gaining interests of all key stakeholders (Houdet, Trommetter and Weber, 2012).
Feasibility: It is feasible because it considers all the necessary resources required by the
company to make profits and serve consumers satisfaction. Further, it is viable as it focused on
maintaining the sustainability of environment due to which the company gets advantage over
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making innovation according to needs and wants of buyers and helps in attaining competitive
advantage
Marketing Strategies
Suitability: Marketing strategies are suitable for Aldi because it assists the management in
collecting information about the consumers preferences by which the organisation can make
changes accordingly (Why Corporate Social Responsibility is Important, 2017).
Acceptability: The marketing strategies are acceptable for super market because it is the
get's strategy which assist the company in collecting feedback about its products and services.
Further, it assists in analysing weakness of organisation which need to overcome and lastly it is
the best way of evaluating the need of change in services according to consumer demand which
fluctuates with products supplied by competitors in the industry (Hoi, Wu & Zhang, (2013)).
Feasibility: It is feasible for Aldi because it assists the company in forecasting change
according to market survey. Further, with the use of marketing strategies the organisation
identifies the needs of resources and innovation. For instance, with marketing strategies Aldi
analyzed the major limitation of firm that the services are limited to only stores and therefore in
order to attain competitive advantage it is important for the enterprise to make innovation in its
distribution channel. Hence, the strategies are viable as it helps the business in determining the
resources which will be required to attain certain objective of innovation and creation (Smith,
(2011)).
CONCLUSION
The report summarized the importance of innovation in attaining competitive advantage.
It stated various business strategic tools used by Aldi the largest supermarket chain across the
globe to analyse its influence of various external factors which interrupts the internal functioning
of the business. Further, it identified the strengths and opportunities of Supermarket which
demonstrate its internal resources and capabilities such as “highest quality products at cheapest
price”. Moreover, the report outlined the two strategic options which can assist Aldi in making
innovation in order to attain competitive advantage against its biggest rivalries such as, Tesco,
Asda, Morrison's, Lidl etc. Hence, the report concluded by analysing the suitability, acceptability
and feasibility of corporate social responsibility and marketing strategy for Retailer in making
innovation and creation in its products and services.
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