Strategic Management Report: Organizational Change at ALDI UK

This report analyzes ALDI UK's strategic management and organizational change. It begins with an introduction and company overview, followed by external (PESTLE, Porter's Five Forces) and internal (Balanced Scorecard, McKinsey 7S, SWOT) environmental analyses. The report identifies issues like technological advancements and resource utilization, proposing changes like digitalization. It outlines the change procedure, Gantt chart, and organizational structure adjustments, concluding with recommendations for slow, sustainable change. The analysis aims to provide insights into ALDI UK's challenges and opportunities, offering actionable strategies for improvement.

ALDI STORES UK
ALDI STORES UK
MANAK JEET SINGH
UNIVERSITY OF CUMBRIA
STUDENT NO. 1553030

1ALDI STORES UK
Executive Summary
Organizational change can be described as a crucial aspect of the organization and it is
important for all the companies to ensure that they change with respect to the external
environment in order to maintain a competitive positioning. The given report follows a
structured format whereby the case of the Aldi Stores in the UK has been considered and
their issues have been analyzed. The report begins with a brief introduction which is then
followed by the brief about the company. The external and internal environment of the
organization has been analyzed to understand the problems as well as opportunities being
faced by the firm. This is followed by a proposal of the situations where the firm can
implement change. One of the problems related to the digitalization of the stores has been
selected followed by the procedure to change.
Lastly, the organizational structure which is necessary to incorporate the change has been
depicted followed by recommendations on the same.

2ALDI STORES UK
Table of Contents
Introduction................................................................................................................................4
About the organization...............................................................................................................5
Research into the internal and external environment.................................................................5
PESTLE Analysis...................................................................................................................5
Porters Five forces analysis of ALDI.....................................................................................7
Balanced Scorecard Analysis.................................................................................................9
McKinsey 7s.........................................................................................................................12
SWOT analysis.....................................................................................................................14
Identification of issues and opportunities................................................................................15
Technological advancements...............................................................................................15
People Management relationship.........................................................................................16
Supermarket- low utilization of resources...........................................................................16
Choosing one problem and elaboration....................................................................................17
Recommendations on the change.............................................................................................18
The procedure of change..........................................................................................................20
Gantt chart and action plan......................................................................................................22
Before and after organizational structure analysis...................................................................23
Before:......................................................................................................................................23
After.........................................................................................................................................24
Other recommendations...........................................................................................................25
Slow change.........................................................................................................................25

3ALDI STORES UK
Conclusion................................................................................................................................26
References................................................................................................................................27

4ALDI STORES UK
Introduction
Strategic Management plays a key role in the organization whereby the scanning of
the external environment, as well as the internal environment of a business, is very important
as it is assists in the identification of problems (Abushova, Burova and Suloeva 2016). These
problems might be related to the internal management of the organization or to the presence
of an external factor in an organization which might lead to issues for the organization.
Strategic Management not only helps a firm to analyze these problems but also helps to
figure out solutions for them so that the company can come on track.
Organizational behavior tends to play a key role in the given scenario whereby the
employees are greatly affected by the change which the company aims to bring into the
organization and hence, the study of both individual performance and the activity within an
organization is crucial in order to determine the impact of such changes in this organization
and how to manage them (Alkhafaji and Nelson 2013). The organizational behavior tends to
study human behavior at work and topics like communication and performance.
Hence the primary aim of the report is to analyze the problems which are being faced
by a company and recommend the changes which can be made in order to solve the stated
problem. The report will be following a structured format whereby the brief overview of the
company will be provided which will then be followed by the external and internal
environmental analysis of the same (Barney 2014). Using this external and internal
environmental analysis, certain problems faced by the organization will be figured out and
solutions for the same shall also be provided. Moreover, the change in the organizational
management structure before and after the change shall also be provided and certain relevant
recommendations shall also be provided. The organization which has been chosen for the
given assignment is the ALDI Stores in the United Kingdom.

5ALDI STORES UK
About the organization
ALDI is a German supermarket chain which covers more than 10000 stores in more
than 20 countries. The company was found by brothers Theo and Karl Albrecht in the year
1946 after taking over the store from their mother. The organization is formerly known as a
low cost and efficient supermarket retail which has various stores and is one of the most
popular company’s functioning in the retail industry. In the United Kingdom, the company
came into the establishment I the year 1990 and comprises of the 7 percent of the market
share (Aldi.co.uk. 2018). There are around 726 ALDI stores in the UK each of them having
the latest technology in place and has been performing considerably well. The stores sell
goods at the cheapest price available and also tends to function on a system of faster checkout
which will enable faster and efficient operations in the organization. This creates a
competitive advantage for the firm over its competitors.
Research into the internal and external environment
For ALDI UK, the five major tools which shall be used which are PESTLE Analysis ,
Porters Five forces, Balanced Scorecard Analysis, McKinsey 7S and the SWOT Analysis
(Bettis et al. 2014).
PESTLE Analysis
The PESTLE Analysis is a useful tool to analyze the external environment.
Political
There exists high levels of conflict as well as political vulnerability which exists in the
United Kingdom currently and pose a threat to the different firms which function in the
respective countries. Although in different countries like China, Australia, and other
companies, Aldi does not face much of a threat but in the United Kingdom, it might face

6ALDI STORES UK
problems as there exists uncertainty after the Brexit (Bolino et al. 2013). This will be mainly
due to the regulation and legislative laws and relationships which exist due to the political
relations which exist between the UK and Germany.
Economic
As the Brexit took place earlier this year, an after effect of this has been the rising
prices in the United Kingdom. The pound has dropped considerably and this has impacted the
operations of ALDI which has helped the company to grow the fastest in the last two years.
The cost of imports has increased and this has impacted the functioning (Aldi-nord.de. 2018).
The inflation rate in the grocery market has also increased considerably, shoppers have to pay
extra for the goods which then makes them attracted to ALDI where they can avail to larger
discounts.
Moreover, the grocery market in the United Kingdom has grown to an average of
3.8% and this indicates that the demands have been increasing and so are the sales of the
firms. As ALDI has followed the law and has increased its wage from £7.20 to £9.75, the
employees will be attracted to the firm.
Socio-Cultural
At present, Aldi one of the highest paying supermarket in the United Kingdom and
there are more than 5000 employees working in the United Kingdom (Bratton and Gold
2017). Additionally, the ALDI Company has come up with the Get Set to Eat Fresh
Initiatives program which will further help the company to improve the operations of the
firm.
Technology

7ALDI STORES UK
With the advent of technological advancements, the Supermarkets are increasingly
making use of the access to Technology and are utilizing it to aid their service propositions
whereby consumers tend to have an access to self-service checkouts in the grocery provider
store (Brewster 2017). The company has not yet adopted such a technology.
Environmental
ALDI tends to increase their stock sourcing from British producers and the different
farmers which further tends to support the local producers and helps in ensuring the
sustainability of the local areas in which they tend to function inefficiently. With regard to the
conservation of the environment, the food norms need to be abided by regularly in the
business environment.
Legal
The grocery industry in the United Kingdom has been greatly affected by the scandals
which have taken place due to the content of food having been provided. This was very
relevant with respect to the horse meat scandal. With time, even Aldi has found itself amidst
legal disputes as it had misrepresented the sales of herbs (Brewster, Chung and Sparrow
2016). For this reason, the company needs to ensure that it abides by all legislative
requirements in order to ensure success in the long run.
Porters Five forces analysis of ALDI
The Porters Five forces tool can be described as an industry analysis tool which is
generally used by the companies in order to understand the different forces which operate in
the external environment or the industry environment. The forces have been examined as
follows:

8ALDI STORES UK
The Threat of new Entrants-LOW
This threat of new entrants is comparatively quite low because, the majority of the
supermarket stores in United Kingdom has been captured by the large retailers like the Tesco,
Sainsbury`s, ASDA and Safeway (Wright, Paroutis and Blettner 2013).
The Bargaining power of the suppliers- LOW
The bargaining power of the different suppliers is comparatively quite low in the
United Kingdom because the different suppliers fear losing their business to large
supermarket. In addition to this, the different suppliers are also worried about selling the
retailers getting their own manufacturing base.
The bargaining power of the customers-HIGH
The bargaining power of the customers has become considerably high because the
number of options present for the customer has become considerably high. As the products
being sold in the markets have become highly standardized, their choices change (Zott and
Amit 2013). The giant retailer Tesco tends to offer various loyalty programs to the customers
in order to retent them.
The threat of Substitutes- MODERATE
The threat of substitution in the given industry can be stated to be moderate in nature
because the major substitutes for the supermarkets are smaller stores like convenience and
express stores.
The rivalry among competitors

9ALDI STORES UK
As the grocery market has grown in size, the retailer concentration along with the
competition among existing players has increased considerably. This has led to accelerated
development in the industry and innovated the way of business.
Balanced Scorecard Analysis
The balanced scorecard can be defined as a performance metric which can be used to
improvise on the different internal functions of a business and thereby improving their
outcomes for the future. It provides relevant feedback to the organization and then is used to
formulize efficient strategies (Hill, Jones and Schilling 2014). The balanced scorecard
segregates four different arenas in the business so that the analysis becomes comparatively
easier and then, it uses these areas namely, learning and growth, business processes,
customers as well as finance in order to attain the objectives as well as the goals resulting
from these areas (Kalkan and Bozkurt 2013). Balanced scorecard is also used to implement
strategy mapping and add value to an organization. The Balanced scorecard analysis of the
ALDI Stores in the United Kingdom has been done as follows:
The financial perspective
The financial perspective seeks to attain information from annual reports and other
related statements. This helps in the formation of marketing strategies, management systems
and internal operations. The balanced scorecard of Aldi on financial perspective is as follows:
Objectives Measures Target Initiatives
Increasing the
revenues with
respect to assets
Revenue/Total assets
%
Increasing the
Revenue by 8% in
the next year.
Make more use of
assets to increase the
revenues
Increase revenue Revenue/employees Increasing the Increasing the

10ALDI STORES UK
with respect to the
employees
% measure by 5% in
the next 6 months
employee base
through efficiency ,
training and
technology
Increasing return on
investments made
ROI Increasing ROI by 2
% every year.
Reducing operating
costs and achieve
economies of scale
by making bulk
purchases.
As ALDI aims to use the cost leadership strategy, achieving these objectives will go a
long way to help the firm.
The customer service perspective
The customer service perspective helps in gauging the customer satisfaction by
making use of effective decisions like price and quality of the products available.
Objectives Measures Target Initiatives
Increasing the
average customer
size of Walmart
Average customer
size
Increasing the
customer size by 5%
every year
Providing better
choices to the
customers
Increasing the
customer rating of
ALDI
Improving customer
ratings
Improving the
customer rating by
10% in one year.
Practicing product
variety and cost
reduction
Reducing the
number of
The customer Reducing the
number of customer
Improving the
quality of the

11ALDI STORES UK
complaints complaints received complaints received
by 4% per annum
products in the
stores.
Internal Process perspectives
This perspective seeks to understand the manner in which the products are
manufactured and whether there are any gaps or delays and other bottleneck shortage as well
as wastage. The scorecard for ALDI is as follows:
Objectives Measures Target Initiatives
Reduction in the
total expenses
Administrative
expenses/ total
revenue
Reducing the
administrative
expenses by 2% per
annum.
Providing training to
the employees to
make them more
efficient
Reducing delivery
time
Average time taken Reducing the time
taken by 5% in the
next three years
Making use of
automatic packing
and handling
technology to reduce
the time taken.
Reducing the
waiting time of the
customers at the
counters.
Average waiting
time
Reduction in the
average waiting time
by 15% in the
coming year.
Bringing about a
change in the layout
of the store to ensure
more counters can
be kept.