ALDI's Value Chain Analysis: Enhancing Operational Activities

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MGMT20130 ASSESSMENT 1
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Executive summary
With globalisation, the business is experiencing great changes in the market. This is not only
enhancing the level of competition but is likewise hampering the goodwill or image of the
organization. Hence it is very important for the firm to analyse the issues in their operations and
frame policies for the same. The assignment is completely based on a value chain model that
can help in enhancing the operational activities of the organization. The assignment is focused on
the operations of ALDI and is highlighting the factors that can impact the value chain process of
the respective firm.
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Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Background of organization............................................................................................................5
Value chain paradigms....................................................................................................................6
Value chain design for enhancing operational activities.................................................................9
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Introduction
In this era of globalisation, it is very important for all the organization to enhance the value of
products and services they are offering in the market. With the help of this process, they will be
able to enhance their goodwill and can gain a competitive advantage. The assignment revolves
around the respective concept. With the help of the assignment, the value chain model of ALDI
is shown. Along with this the assignment additionally incorporates the factors that hamper the
operational activities of the organization in this competitive period. A variety of strategies are
highlighted in the assignment that can assist in reducing these issues and their importance is
likewise identified in the most attractive manner. With the effective study of the assignment, the
users can gain their knowledge regarding the value chain process and its implication in this era.
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Background of the organization
The retail sector is an important part of the economy of Australia. ALDI is one of the most
renowned parts of the retail industry in Australia. The respective organization is known for
providing elite and quality services to its customers. The company provides grocery related items
to its customers. The fruits, vegetables or other dairy products provided by the company are fresh
and are of supreme quality (Al‐Ansari et. al., 2016). The managers of the respective firm always
try to understand the demand of the market and then introduce new and innovative products.
ALDI is completely consumer-oriented organization. The managers of the firm take the
perspective of the consumers very seriously and try to function as per their concern. Along with
this the respective organisation likewise tries to follow the CSR as per which the managers try to
function in a completely ethical manner (Mago, Musasa & Matunhu, 2013). With the help of all
of these policies the company is able to satisfy its customers and is likewise is capable of
securing the environment. All of these approaches contribute to the goodwill of the company and
help it in sustaining in the global market (Kaminski et. al., 2018).
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Value chain paradigms
Value chain paradigms are a process that is directly related to the competitive approaches of the
organization. In other words, it can be said that it is an approach in which the managers of the
firm frame various policies to gain competitive advantages for themselves. This process helps the
company in understanding the concept of the value and what it really matters for the growth of
the organization (Kaminski et. al., 2018). With the help of this process, the managers of the firm
are able to enhance the value of their goods and services being offered in the market. Value is
referred to as the total amount of money that the consumers are willing to spend on the
commodity offered by the organization. It is very important for the firm to make continuous
steps in improving it as it helps in enhancing the reserves of the firm (Al‐Ansari et. al., 2016).
The value chain of ALDI
The value chain followed by the company basically comprises of all the activities that are
required for converting the raw material in the finished product (Mago, Musasa & Matunhu,
2013). The primary goal of every organization is to maximize its profit reserves and enhance its
market share. With the help of Value chain, the managers of the firm will be able to reduce the
cost of production activities and are able to enhance the profits of the firm (Kaminski et. al.,
2018). The value chain model comprises of two activities which are primary and supportive
activities. The primary activities are directly related to the activities of production and
delivering. The primary activities that are involved in the value chain are as follows:
 Inbound Logistic: In this step, the raw materials are collected from the supplier which is
used for the production activities. In this step, the main objectives of the managers of
ALDI is formed an effective relationship with their5 suppliers that can help them in the
long run.
 Operations: In this step, the raw materials are converted into final products. This is an
important step of the process, as in this process the manager’s tries to add value to their
product as per the desires of the customers. In the scenario of ALDI activities like quality
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testing, packagings, assembling of products etc, are comprised in this step (Al‐Ansari et.
al., 2016).
 Outbound Logistic: This is the process of distribution. In this process, the manufactured
products are distributed to the wholesalers, retailers or to the online stations of the firm.
With the help of these activities the managers of the respective firm try to reach out to the
actual consumers. The activities such as transportation, scheduling and warehousing etc
take place under this step. It is very important for the managers to manage these outbound
activities in minimum cost and time as this can help in enhancing the profits of the firm
in near future (Kaminski et. al., 2018).
 Marketing and Sales: In this era of excessive competition and globalization, marketing
is the most important part of value chain process. This activity will help the managers of
the firm in reaching to the target market. With the help of marketing the managers will be
able to improvise their brand equity. In the case of ALDI the managers try to advertise
through the digital platforms. Under these step activities like sales, promotions, selection
of advertisement channels, pricing etc are included. The managers of ALDI try to frame
strategic policies in the respective direction that can help in enhancing the stability of the
respective firm (Mago, Musasa & Matunhu, 2013).
 Services: This is the last step in the primary activities of the Value Chain process. In this
process, activities like pre-sale services and post-sales services are included. In order to
maintain the consumer base, it is very important for the managers to provide pre-sale
services and post-sales services to their consumers. These services help in enhancing the
goodwill of the firm and additionally help in enhancing the position of the firm in the
market. With the help of sound post-sale services, the managers can gain a competitive
advantage in the market (Kaminski et. al., 2018).
All of the steps narrated above highlighted the primary activities of the value chain models.
Along with them, there are additional supportive activities that help in enhancing the scope of the
value chain model of the company. These activities are performed to enhance the viability and
reliability of the primary activities of the respective process. Some of the supportive activities
of this process are:
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 Development of technology: In this period of time it is very important for the managers
to make use of the most effective and latest technology. This process will assist them in
enhancing the reliability of their production activities and will likewise assist them in
enhancing the quality of production (Mago, Musasa & Matunhu, 2013).
 Firm infrastructure: Firm infrastructure is the basic thing that impacts all the functions
of the organization starting from the procurement of raw material to its selling. It is very
important for the firm to have an elite infrastructure that highlights the effective legal,
economical and financial position of the firm. With the help of this approach, the
managers will be able to allocate the resources effectively. Optimum utilisation of
resources helps the firm in embarking its success in the market.
 Human resource management: HRM is the most important part of the organization.
This department is responsible for managing and controlling the workforce of the
organization. The employee retention rate of the firm is also dependent on the effective
functioning of the HRM department. With the help of this department, the managers are
able to employ the right person for the right position.
 Procurement: In this process, it is ensured that the manager must procure high-quality
raw materials from their suppliers. With the help of this process, the managers will be
able to ensure high quality of their products in the market and will be able to enhance
their potential of growth (Huybrechts et. al., 2018).
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Value chain design for enhancing operational activities
Value chain design is extremely important for the development of operational activities in the
organization. With the help of these designs, the operational managers of the organization will be
able to perform every function in a clear and concise manner. The design of Value chain will
provide an effective framework to the operational managers that can be utilised by them to
enhance the value of the organization in the market (Mago, Musasa & Matunhu, 2013).
ALDI is a part of the retail industry. This company is a renowned grocery store and is famous for
providing quality products to its customers. The managers of the firm are currently facing issues
in the supply and distribution channels of the firm (Huybrechts et. al., 2018). They are not able to
maintain a secure connection with their suppliers and are neither able to frame a network with
the distributors. With the help of the value chain process, the managers will be able to scrutinise
the processes that are enhancing the issues of the organization. There are a variety of ways in
which value chain process can help the managers of ALDI in resolving their operational related
queries. Some of them are as follows:
 Adequate planning: It is important for the managers of ALDI to plan in an adequate and
strategic manner. This will help them in getting connected with proficient stakeholders.
With the help of this process, the managers will be able to study the market and can
frame decisions regarding their suppliers and distributors in the most strategic manner.
 Cost controlling: It is very important for managers to control the cost of operational
activities. For the respective process, the managers will try to invest in the stakeholders
that have a good name in the market and have a stable background in the market.
 Scrutinizing the market: Scrutinizing and evaluation of the market is the most
important and essential element that helps the managers of the respective firm in
resolving the operational issues. With the help of this activity, the managers of the firm
will be able to analyse the current trends and practices of the market. This will help them
in selecting the most effective suppliers and distributors.
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By making improvement in this process the firm will be able to seek growth in the market. With
the improvement in the respective operational function the managers of ALDI will be able to
experience the below-stated experiences:
 The managers will be able to reduce the level of cost. This will later help in accelerating
the profits of the organization
 Improvement in this sector can help in improving the image or position of the firm in the
market
 This will help in reducing the time of operational activities and at the same time will help
in enhancing the proficiency of the organization (Mago, Musasa & Matunhu, 2013).
 This process will help in improving the relationship of the firm with all the stakeholders
such as the suppliers, distributors, brokers, agents and so forth (Huybrechts et. al., 2018).
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Organizations operation strategy
In the current business situations, it is important to note that there is the various challenge that
the business can face and it is significant to resolve all the issues and fight the challenges so that
the business is ready for the future operations. The challenges that ALDI can face in the near
future are given below:
 Internet of things: Internet of things is the first challenge that is faced by ALDI. Internet of
things is the physical interconnectivity of computer applications and programs. In the current
business scenario, it is important that all the information is conveyed to all the significant
stakeholders of the business. Internet of things has various benefits as the information of the
business can be easily communicated to all the stakeholders of the business but this is
actually a threat for the company as the information shared by the internet of things is closely
monitored which can lead to misuse of relevant data and information of the company. The
company must take essential steps so that the data and information are not leaked or misused
by anyone (Matthyssens, et. al., 2016).
 Industry 4.0: The concept of industry 4.0 is associated with the wireless connection of
systems that are capable of visualizing the whole production system and these systems are
also capable of taking important business decisions on their own. But there are some issues in
this concept too. The major challenge in this concept is that there is no touch of human in the
decision making which is a question mark on the credibility and reliability of the decisions.
The information on the production system can be leaked by this method (Sears, 2017).
Given below are some ways by which the proposed issues in the business can be mitigated and
the challenges of the business can be fought:
 Development of database and cloud computing: To resolve the issue of the misuse of
important business information, it is significant for the company to develop a company
database that is capable of recording all the important information so that the information is
not saved in any other program or application. This will also be convenient for the managers
of the business to retrieve the data as and when required (Vernimmen, et. al., 2017).
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 Artificial intelligence in decision making: As there are some systems that are capable of
making decisions for the company but there is no interference of humans in those decisions
so it is important for the company to implement the technology of AI in the decision making
by the systems. This will have a human influence in decision making. It is also advised to the
management of the business to always review the decisions taken by machines and make
changes if required.
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