Challenges Faced by Aldi in the UK Market: A Business Report

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Identification of Some of the Current
Challenges Faced by Business Organization
in UK with Reference to ALDI’s Response
to These Challenges
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Executive Summary
Aldi is a common brand of two important German Supermarket chain and it has its business
operations in 20 countries. The Headquarter of this company is located in Essen in Germany and
it has revenue of about 50 billion euro in the year 2010. Aldi is facing many challenges in its
business in U.K. I have gathered information about the business process of Aldi and have found
out that the company is facing problems related to complex business regulations, change of
consumer behaviors, improper Management, economic challenges and lower number of staffs.
This study focuses on analysis of the challenges faced by Aldi in its business in U.K and
evaluation of the strategies by which the organization has responded to the challenges. In this
study some recommendations have been provided to improve the process by which Aldi can
solve the challenges in its business in U.K.
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Table of Contents
Introduction......................................................................................................................................3
Company Background.....................................................................................................................3
Challenges faced by the Company..................................................................................................3
Challenges Related to Workforce....................................................................................................6
Recommendations............................................................................................................................6
Conclusion.......................................................................................................................................7
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Introduction
The various challenges that have been thriving in the market of UK have posed several
problematic situations for the companies that are trying to establish their business market there.
As an external observer, I have gathered the various challenges that have been thriving in the UK
business market (Louro, 2018). It is evident in the study of the UK business market that there are
several issues related to the socio economic business areas of UK. In this study, I have taken
Aldi as the company that has faced several UK business challenges and has faced certain
problems in order to establish the retail business market in UK. This study focuses on the
different challenges that Aldi has faced in UK market along with recommendation for the
company to overcome the challenges.
Company Background
ALDI is known as the multinational super market chain, which is seen to be operating in 10,000
countries in 20 countries. The company, which is based in Germany is headquartered at Essen
and is known to have an estimated combined turnover of over 50 billion Euros. The company,
which was founded by Theo Albrecht and Karl in the year of 1946, was separated into two
groups, namely Aldi Nord and Aldi Sud formerly. The company is known to have a subsidiary,
which is Aldi Nord. The German operations the company includes 35 regional companies of
Aldi Nord with almost 2,500 stores in northern, eastern and western Germany and 32 regional
companies of Aldi Sud with 1,600 stores in southern and western Germany (aldi.com, 2018).
The company is known to have revenue of 53 Billion Euros.
Challenges faced by the Company
Challenges Associated with Complex Business Regulations
Aldi faces many challenges from complex business regulations. As per the opinion of Dawid, et
al. (2017), the complex financial as well as financial policies of the Government makes it
difficult for the Aldi Company to develop its products. The Aldi Company is facing problems
due to complex business regulations of U.K related to the process of management of key
performance indicators in the business. As influenced by Barger et al. (2016), the government is
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creating new regulations by focusing on the reduction of environmental hazards in the process of
manufacturing of the products. The shareholders as well as clients of Aldi Company demand to
implement Green Technologies in its business process. The complex business regulations of U.K
related to corporate tax rates and carbon tax are creating problems for this organization to
develop new automobiles. As an external observer I have gathered information about this
company and has found out that the complex business regulations of U.K has increased the cost
to manufacture the products. The regulations of business of U.K are so complex that it is difficult
to understand them and implement them in the business of the Aldi Company.
Challenges Related to Consumer Behavior
As an external observer I have gathered information about the business process of Aldi Company
and has found out that the company is facing problems reacted to consumer behaviors. As per the
opinion of Narula and Desore (2016), the clients have adequate information about online
resources and that is why they want best quality of products. The consumers have adequate
information about the products from different social Media’s accounts and online community.
Aldi company faces problems related to consumer behavior as the business strategy of this
organization do not focus to involve the consumers in the buying process. Aldi Company faces
problems related to analyze the consumer behaviors as because of complex regulatory
compliances of U.K. Aldi company faces issues associated with consumer behavior as it faces
problems to sustain loyal consumers and analyze the functions of the members of the Team.
Challenges related to Economic Balance
The economic challenges that have thrived for the multinational retail company Aldi in the vast
UK business market is mainly focused around the economic misbalance of the company. I have
observed that the company has been going through several economic problems in terms of
having excess production and manufacturing rate that has outlasted the company in terms of
quality and quantity of the products (Akbar and Ahsan, 2019). Aldi has faced several economic
problems in this matter and I have noticed that the company needs to evaluate their economic
expenditure based on the market opportunity and expenditure. This economic problem, as
understood by me as the external observer of Aldi has posed a great threat for the company as the
consumer rate in the market is falling at a higher rate (Becraft, 2017). I have been observant of
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the consumer behavior in the market of Aldi. The conduct of the external and internal economic
threat and limitation has posed a huge threat for the multinational retail company Aldi. I have
been observant about the economic misbalance in the company as the company has not been able
to gain enough competitive advantage in the market. These are the major and primary economic
factors that have led to the basic misbalance of economy for Aldi in the market sphere.
Challenges due to Technological Inputs
The multinational business company of Aldi has a huge part of its business set up in the UK. I
have been observant of the challenges that the company Aldi has faced in its tenure of
conducting business in the vast market sphere of UK (Smyth et al., 2018). The technological
problems in Aldi refer to the excessive economic investment in the advanced technological
equipments in the company. The multinational retail company lacks the properly advanced work
forces that are unable to operate these technological gadgets in the stores of Aldi. The additional
costing that is required by Aldi in training their staff has resulted in the improper and extra
costing towards sufficiently training the working staff (Gregory and Fawkes, 2019). I have
therefore observed that the company of Aldi has been going through several challenges in the
UK business market due to improper training of the work employees in order to use the
technological equipments with skill and ability to precede the payment procedures at a faster and
modern way.
Challenges due to Improper Management
ALDI is seen to be facing several challenges due to improper management, which have been
provided below:
Decreased Employee Productivity
With poor management, ALDI is seen to have decreased employee productivity since
performance expectations are not defined. Besides, the management fails to follow up with the
productivity with the employees. As per my observations, I have found out that the management
department of the company does not provide the employees with a performance plan. Besides,
they do not follow up with the employee performance reviews’ due to which, the employees do
not feel motivated and fails to provide the company with productivity (Rahim, 2017).
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Decreased Profit
I have observed that ALDI is suffering from loss of profit due to lack of proper management.
Poor management has led the company suffer loss due to the inability of company budget
enhancement as well as lack of supervision capability of the personnel property (Kerzner, 2017).
The sales department is seen to be affected due to bad management, which directly affects the
gross profit of the company.
Conduct of Ineffective Meetings
I have detected that lack of proper management has led to conduct of ineffective meetings. Most
of the meetings have been seen to be highly time consuming with less payoff due to poor
management.
Challenges Related to Workforce
Aldi differs significantly from other supermarkets in terms of the total number of workers. Each
time I visited Aldi, I could not find any worker standing at each stocking shelves or checkouts.
Rather, I was surprised to see that Aldi has a different recruitment guideline. The organization
only fills four positions at each of its stores. As per my observation, Aldi recruits a store manager
and a manager trainee. Additionally, they also recruit shift managers and store associates. They
are given the responsibility to handle all the departments of the supermarket (Voigt et al., 2017).
I saw that these staff work as cashiers as well as manage restocking shelves. If needed, they also
clean up the supermarket on rotational practice. My research suggests that Aldi does not invest in
staffing practices. The staffing is kept at a minimum level by hiring about 12 people at each
store. Some believe that low staffing practices are advantageous for the organization as they can
keep their prices low (Chatterjee, 2017). However, I believe that low staffing practices are
increasing the workload on the existing employees. Due to this reason, the existing staff is
leaving their job as they are not finding any career opportunities there. This is hampering their
business as the customers' demands are increasing and this minimum staff level is not able to
cope with the pressure.
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Recommendations
I believe that to excel in the competitive market, Aldi must enhance its staffing practices. It is
required that the organization recruit massive staff so that they can take efficient care of all the
business operations. My opinion is that they must improve their advertising strategies so that
more workers are attracted to the company. Additionally, the training and development program
must also be enhanced so that the workforce becomes competent to manage multiple tasks at the
supermarket. Team cohesion is required by Aldi so that each department can work together to
mitigate the threats existing within the organization (Gassmann et al., 2016). I believe that the
organization must implement new strategies to expand their business. For this, they must analyze
the key resources that will help their business to excel in the competitive market. They must
focus on all the resources that are essential for their business processes like bank loans, finds,
equity, human capital, and skilled employees. In my opinion, Aldi must reform its mission and
vision that must include the expansion of the business in other countries (Wang et al., 2019).
Along with this, new and innovative strategies must be applied. Additionally, a time limit must
be set so that Aldi can achieve its targets within that period. Moreover, continuous improvement
is needed so that Aldi can deliver its innovation on-time to the customers' base.
Conclusion
From the entire discussion, it can be concluded that the economic challenges that have thrived
for the multinational retail company Aldi in the vast UK business market is mainly focused
around the economic misbalance of the company. I have been observant about the economic
misbalance in the company as the company has not been able to gain enough competitive
advantage in the market. These are the major and primary economic factors that have led to the
basic misbalance of economy for Aldi in the market sphere. As per my observations, I have
found out that the management department of the company does not provide the employees with
a performance plan. Besides, they do not follow up with the employee performance reviews’ due
to which, the employees do not feel motivated and fails to provide the company with
productivity.
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Reference List
Akbar, S. and Ahsan, K., 2019. Workplace Safety Compliance Implementation Challenges in
Apparel Supplier Firms. Journal of Cleaner Production.
aldi.com (2018) available at: https://www.aldi.com/ [accessed on 15.07.2019].
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review and research agenda. Journal of Research in Interactive Marketing, 10(4), pp.268-287.
Becraft, A., 2017. Potential for home-use hydroponic systems to increase food security in Cape
Eleuthera, Bahamas. i-ACES, 3(1), pp.12-18.
Chatterjee, S., 2017. Two efficiency-driven networks on a collision course: ALDI’s innovative
grocery business model vs Walmart. Strategy & Leadership, 45(5), pp.18-25.
Dawid, H., Decker, R., Hermann, T., Jahnke, H., Klat, W., König, R. and Stummer, C., 2017.
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Gassmann, O., Frankenberger, K. and Csik, M., 2016. Innovation Strategy: From new Products
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controlling. John Wiley & Sons.
Louro, D.F.D., 2018. The competitiveness of modern retail and the imperative to respond to the
challenges of the circular economy (Doctoral dissertation).
Narula, S.A. and Desore, A., 2016. Framing green consumer behaviour research: opportunities
and challenges. Social Responsibility Journal, 12(1), pp.1-22.
Rahim, M.A., 2017. Managing conflict in organizations. Routledge.
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Smyth, C., Southern, R.J., Van Wiemeersch, J.R., ERKKILA, D.R., Westra, M.R., CAUSHI, A.,
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In Business Model Pioneers (pp. 11-24). Springer, Cham.
Wang, X., Boys, K. and Hooker, N.H., 2019. Organic innovation: The growing importance of
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