HI6006 Competitive Strategy Case Study: ALDI Supermarket

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HI6006 – Competitive strategy
Case 3- ALDI supermarket Strategy –
Acquisition and structure
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Executive summary
The report explores the competitive strategies which are
used by the organisation to enhance the performance of the
organisation. The group report focuses on the case of ALDI
supermarket, in which the major dominant companies as
Coles and Woolworths has faced various challenges at the
time of the entrance of Low-cost German brand ALDI.
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Table of Contents
Executive summary......................................................................2
Introduction....................................................................................4
Acquisition and structure (Merger and acquisition).................5
Challenges faced by the companies..........................................6
Strategies applied by the Aldi supermarket..............................9
Goals accomplished by Aldi with the help of acquisition and
structure........................................................................................12
Treats which can develop challenges for Aldi supermarket at
the time of entering into the Australian market.......................13
Conclusion....................................................................................15
References......................................................................................16
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Introduction
Competitive strategies are playing a crucial role in the
business. Here report aims to focus on the acquisition and
structure strategies which are applied by the company.
Along with this, the report focuses on the challenges which
are faced by Coles and Woolworths and demonstrate how
they try to implement some essential strategies and
techniques to overcome the challenges. As both, these
companies have developed their market share and extended
it up to 80%, but the entrance of low-cost German company
Aldi has suddenly reduced the market share of these
companies and reduce their customer segments due to
which both these companies have faced huge loss in the
Australian market. Along with this, the report focuses on
techniques which are applied by ALDI and how such
techniques led to major challenges and problems for other
market companies and how its strategies create an impact
on the customer retention rate of other larger industries.
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Acquisition and structure (Merger and
acquisition)
Acquisition structure refers to the framework of a company
which is structured on the basis of sales and purchase of the
company. It also refers to the share market in which the
company deals with its assets which are being included and
excluded. As by its acronym, the merger can be stated as
firms equally try to integrate which is done on equal basis as
there are some mergers because the market share, profit,
and growth is usually dominating the market. On the other
hand, acquisition refers to buying shares of other firms for
acquiring the business for operating. Here Coles is a
takeover by Wesfarmers for operating its operational
activities in the market which can be referred to as
acquisition (CHUNG, 2015).
Coles is the part of Wesfarmers which has already own more
than 300 stores. The Coles operates in more than 750
supermarkets along with 92 biggest hotels. As Coles and
Woolworths are also main competitors of themselves in the
market and both of these companies always try to enhance
own market share as compared to others (Mitchell, 2015).
The strategies or techniques which are applied by the
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Woolworth is the same copied by the Coles in the market to
engage more customers in the market. But Aldi has
developed critical challenges for both companies.
Challenges faced by the companies
The Aldi is a group of supermarket chain which operates
over 10,000 stores in the global market. In the view of
(Mitchell, 2015) it has analyzed that entrance of Aldi
supermarket led to the downfall of market shares for Coles,
Woolworths, and IGA, and these companies came under
pressure when Aldi has opened its 60 stores over next 12
months. Sudden decreasing of market share has created a
bad impact on the Woolworths which led to a loss of $1
billion dollars and over 7000 jobs were at risk. This situation
has created a critical challenge for the company and leads to
reduce the percent of market share (Mitchell, 2015). There
are some challenges which are faced at the time of Aldi are
defined below:
 Squeezed the margins: The margin of Woolworth is
fallen by 6.5% in 2016 in the context of food and
liquor assets (Berry, 2016). Along with this price,
labelling leads to a decline of around $ 270 million
loss on the basis of the report (Mitchell, 2015). On the
other hand, the market share of Coles was decreased
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to 3.4 % in the first quarter of 2016. But at the end of
2016, the Coles tried to enhance its margin but on the
other side, Woolworth was facing challenges.
 Reduce customer retention rate: As the entrance of
the new and powerful supermarket, companies like
Coles and Woolworth has lost its customer retention
rates and has lost its market share. As both of these
companies has covered more than 80% of market
share which was reduced to 40% (Mitchell, 2015). It
can be analysed from this report that Aldi has
developed powerful growth in the market by applying
better marketing strategies and techniques which
enhances the market share of the company and it has
developed effective supermarket chain at the global
level (Osegowitsch, and McCabe, 2018).
 Reduce dominance power in the market: The
results at the time of the entrance of Aldi has reduced
the dominating power of both the companies as both
these companies have developed the dominating
power in the market. Both these companies have
developed effective competition which develops
challenges in the entry of new business (Berry, 2016).
It is impossible to develop challenges for those companies
who have already developed effective sustainability power in
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the market because both these companies are operating
more than 1000 stores, 600 petrol stations and more than
500 hotels. By developing effective corporate strategies Aldi
did the same things and by analysing the consumer needs,
the company has developed and implemented some market
strategies help in developing and extending the market
growth in the Australian market.
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Strategies applied by the Aldi supermarket
After analysing the tough competition in the market is
created by Coles and Woolworths, it was not easy to enter
into the Australian market. For entering into the market Aldi
has developed some effective strategies and techniques
which help in analysing the market demands and it has
determined the price factors. The main motive of every
organisation is to develop and implement some effective
techniques which would help in enhancing the customer
retention rate and help in enhancing the profitability of the
company in the global market. There are several techniques
and strategies which are applied as a strategy in the market
and for setting up the business structure accordingly:
 Porter’s five forces: According to the result of the
Australian market, there are only tough 2 competitors
as Coles and Woolworths. To enhance the profit
ad=nd market growth of new venture in the Australian
market is not a difficult task, it is just to analyse all the
aspects of market carefully and to understand each
aspect carefully which help in developing an effective
marketing strategy and better business structure in a
new market. Porter's five forces develop buyer power
by analysing the number of customers and help in
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setting up the cost structure. It also helps in analysing
about the supplier power which determines the
number of suppliers in the market. This help Aldi in
developing effective strategies through which it can
develop tough competition for Coles and Woolworths
and prevent the entry of new business in the market.
Cost of change is the main threat of substitution which
can be overcome by analysing with the help of
Porter’s forces.
 Competitor analysis: It is essential to analyse the
market conditions and strategies of other business
used in marketing. The Aldi has analysed that Coles
and Woolworths are playing a major role and these
companies have already developed more dominating
power. It is difficult to enter into such a market where
the competition level is very high, so Aldi managers
have analysed the strategies which are used by such
companies. Most of the techniques which are used
are the marketing mix strategy. The Aldi has applied
the same marketing strategies to engage customers
in the market by lowering the prices of product which
help in enhancing the market growth and develop
challenges for Coles and Woolworths.
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 Analyse the market area of Coles and
Woolworths: After analysing their strategies, It is
essential to analyse the market areas and segments
which are covered by these companies. It is analysed
that more than 750 stores are operating my Coles and
Woolworths in the Australian market. So in the first
quarter years, Aldi has launched its more than 60
stores which develop critical challenges for both the
companies. Aldi has developed supermarket chain in
the Australian market and has enhanced its market in
Australian suburbs and in all over the market. Further,
in 2018, the Aldi has opened its more than 500 stores
in the Australian market which increases its 13%
market of the company (Osegowitsch, and McCabe,
2018).
 Analyse customer demands: The main essential
way in which an organisation can earn a profit is by
analysing the customer needs and demand in the
market in relation to the product and services of the
company. The company can enhance its market by
fulfilling the requirements of the customer in an
effective manner. Along with this, it is necessary for
analyse customer demand as it helps in enhancing
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the profitability and productivity of the company
(Osegowitsch, and McCabe, 2018).
 Develop effective price factors: The price factor is
playing an effective role in enhancing the customer
engagement towards products and services of the
company. The main motive of Aldi is to set up the
business by applying the same strategies of Coles
and Woolworths and develop effective price factor to
develop customer retention rate. It is analysed that
Aldi has lower the price rate of its products by 10% as
compared to the price rate of Coles and Woolworths
products (Osegowitsch, and McCabe, 2018).
These are the main strategies and techniques which are
used by the Aldi supermarket to accomplish the target in the
Australian market.
Goals accomplished by Aldi with the help of
acquisition and structure
There are some specific goals which are accomplished by
Aldi in the Australian market are:
 Develop effective market growth after facing tough
competition in the market.
 Enhanced profitability by opening more than 500
stores in Australian markets including suburbs.
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