Business Research Project: Aldi vs Woolworths Strategy Analysis

This business research project analyzes the strategic practices of Aldi in the context of its competition with Woolworths, aiming to identify strategies for gaining a competitive advantage. The report begins with a research problem and question, focusing on Aldi's need to improve its market position. It then explores the concept of business strategic practices, defining how organizations maintain performance and gain a competitive edge. The literature review covers various aspects, including identifying business strategic practices, gaining competitive advantage through different strategies, and the importance of strategic planning. The report also examines strategies such as cost leadership and differentiation, and how these can be applied by Aldi to gain a competitive edge. The report highlights the significance of market analysis, strategic planning, and adapting to industry changes. This analysis provides insights into how Aldi can develop effective business strategies to compete in the Australian retail market.

Business Research Project

TABLE OF CONTENTS
BACKGROUND.............................................................................................................................1
Research problem and research question....................................................................................1
LITERATURE REVIEW................................................................................................................2
Identifying the concepts of business strategy practices..............................................................2
Identifying the concepts of business strategic practices.............................................................2
Gaining maximum competitive advantage by implementing various business strategies..........4
Critical Review............................................................................................................................6
REFERENCES................................................................................................................................7

BACKGROUND
Research problem and research question
A research problem “To analyse business strategic practices that aid an organisation to gain
competitive advantage”
A research analysis and comparative study on Woolworth's and Aldi.” is very interesting
research problem in current scenario. As it has become vital for all types of businesses to gain
the competitive advantage in order to survive in the market. In order to gain the competitive
advantage it is equally important to develop a compact business strategy which can help in
achieving this goal. Within the research problem the major problem is that Aldi wanted to
achieve the competitive advantage over Woolworth. Behind this their may various reasons of
Aldi gaining the competitive advantages over Woolworth. Aldi is not performing well and is
loosing the market share within the industry, besides Woolworth is the largest grocery store and
supermarket chain and it wants to improve its leads in order to gain the top position within the
industry (Yuan and et.al., 2018). Also, Woolworth is proving to be one of the major threat for
Aldi in decreasing their sales and has the capability to replace its brands. It can result in the
gaining of the market share for Woolworth which in return will decrease the market share for
Aldi. So, for this Aldi have to develop a proper business strategy which can help in gaining the
competitive advantages for the company over the other and for this company need to properly
analyse its competitors and carry out the market analysis as well that can result in gaining the
competitive advantage. Woolworths has been able to increase its market share and gains 34% of
grocery market with the growth of +1.4% but Aldi is at 11.4% with a growth of 0.5% and this
shows that it is Woolworths which has dominated the market. It has also been analysed that Aldi
has topped the list of shopper's emotional connections and this shows that Aldi has the capability
to grow in the industry.
Developing a business strategy also requires the skills which can be used to manage the
organisations and helps in creating the direction for the future. It also requires the proper
management teams who are able to understand the vision and the business strategy get ties for
the long term success of the company. In order to implement the business strategy Alsi can face
various challenges and it is important to understand how company can face the challenges that
get aligned with the organisational goals. Gaining a competitive can add to the profitability and
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reputation to the organisation and also it can increase the sale of company's products and
services. Also, there are various business structure and business policies that a company can
adopt which can help in gaining the competitive advantage. Aldi can develop various business
strategies in order to carry out their business activities, but choosing a single strategy that can
lead to a competitive advantage is very complex task (Trevisan, 2016). So, identifying the steps
towards the selection of Aldi's particular strategy is an interesting topic to understand which can
lead to the competitive advantage to the company for the long-run. There are also various types
of business strategies that company can incorporate within their business which can contribute to
their higher productivity and generating higher revenues and reducing the turnover. So, this is the
research problem or research questions which is very interesting to discuss and identify various
business strategies that can lead to gaining of competitive advantage for Aldi in the long run.
LITERATURE REVIEW
Identifying the concepts of business strategic practices.
According to Chang, (2016) business strategic practices is all about the identification and
description of the strategies that managers adopts to maintained the performance and a
competitive advantage for the organization. Basically, it is a concept of planning and designing
for predictable as well as unfeasible contingencies situations happened around the business. In
order to critique by other Demir, (2017) business strategic practices is start with the issues or
challenges of the organisation.
Therefore, In order to gain competitive advantage it is required to clearly define the
strategies and encourage inputs or sources at the time of strategy development process. As per
the Fletcher, De Massis and Nordqvist, (2016) The basic business strategic practices through
company can gain competitive position is to pull together a diverse business environment to
prepare the competitive business plan or team. Other practice can be allowing time for strategic
thinking means give time to their employee to think some of the new ideas etc. All such business
practices can help a company to make their own business environment more competitive as
compare to others. The main process of business strategic practices is to review the strategic plan
for performance achievement. It helps to ensure the accountability for results and have clear and
compelling consequences for differences. However, To gain competitive advantage Woolworth
should create their own value in front of their customers. This process or practices can be done
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by lower cost, faster service, better customer service, high quality etc. Alternately, business
practices enable to gain competitive advantage by analysing the business internal strength or
growth. Likewise, work also identifying the demographic qualities of the customer to serve more
better than competitors. According to Kurucz and et.al., (2017) business practices fulfils the
company commitments by utilising the resources equally. It enable to identify some more
business opportunity to develop new plans and ideas.
As according to Thompson, Strickland and Gamble, (2015) Business strategic practices is
been defined as a proper process which starts from strategic intent, strategy formulation, strategy
implementation and strategic evaluation. All such process is been going under the deep
observation by manager. All such business strategic practices makes the company objectives
accomplished and generate the more profit revenue. Within the business environment, business
strategic practices also adopts the new technologies and development approaches that helps to
full fill or build the future achievements. It makes the business more lightly and effectively done
with more efficient manner. Business strategic practices are the on going activities or plan which
more likely to explore the working opportunity and goals. Make strategy habit and not just a
retreat also makes the things more slightly more understandable. Satisfaction companies put in
the efforts to develop and define a strategy which keeps the organization involved seriously
implemented.
As per the views of Farha, (2016) strategic planning within the organisation is considered
as one of the least preferred process of organisation. Executives of various companies keep on
criticising such practices which is mainly due to insufficient market insights, due to bureaucracy
and even will suited changes in the markets especially within the retailing industry. For
developing a well suited business strategy a company has to develop a proper strategic plan
which can help in gaining the competitive advantage over its rivals. If a company lacks effective
strategic process, it will never be able to achieve the success within the industry. Also its vital for
the organisation to think about the strategy for different market areas as each market segment
may have different goals and objectives to be achieved. There can be three types of developing a
business strategy for gaining the competitive advantage. One is for the long term, main purpose
of developing a long term business strategy is that company can redefine its goals and objectives
or mission. It all about develop a business strategy for more than five years in the future. In
order to develop a long term strategic plan, a company have to consider various factors such as
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advancement in technologies, demographic shifts, mega trends, etc. Also what will be the
strategic opportunities and risks by considering the competitive advantage. Another strategic
plan can be of short term which may include the planning of overcoming the current challenges
for gaining the competitive advantage. Here its is important for the company to consider how a
can it adapt to the changes within the industry. Also, company can develop a strategy for the
medium term and it is important for the company to develop actionable and clear plan which
includes multi-year strategic initiatives which can result in the process of gaining the competitive
advantage.
Gaining maximum competitive advantage by implementing various business strategies
As per the views of Kharub and Sharma, (2017) developing a business strategy is a
complicated process and it requires a effective planning process and proper market analysis.
Each and every organisation have got different business strategies based up on the nature of
business. Also, with the help of business strategy companies can identify their strengths and
weaknesses and with the help of effective business strategy companies can decide where to
invest their time and money. In the absence of effective business strategy company can never
achieve their business goals and more accurately the competitive advantage. It will become very
hard for any organisation to gain success within the business that they are in and compete in the
strong competitive industry. As Australian retailing industry which is the most competitive
industry and there are various market players like Aldi and Woolworths which have to compete
with each other within the industry. So, it is very important for the companies to develop an
effective business strategy that can help a company to gain a competitive advantage over others.
There various business strategies that a company can adapt to gain the competitive advantage.
As illustrated by Gakuya and Mbugua, (2018) one the best way of gaining the
competitive advantages over the rivals is adopting a cost leadership strategy. The strategy which
can be adopted by a company is that to let the organisation to adopt a business model with very
less fixed costs as well as overheads as compared to the costs which are incurred by its
competitors. Here company can offer their products at the lowest possible price as compared to
its competitors. This strategy can be adopted by two ways one is that company can keep its costs
low as much as possible or even ensure that company can have a large market share by setting
the average prices. It is to be noted that in both the cases the main focus of the company should
be to keep their prices low. If the strategy of cost leadership is applied effectively, an
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organisation should have substantial investment capital at the disposal, and also should have the
low costs in relation of labour and materials with an efficient logistics.
As, this strategy is suitable for the large scale business which are offering the standard products
with relatively very less differentiation within the products. For example, Aldi and Woolworths
sell and offer the products to customers which are relatively different and products offered are
accepted readily by the customers of Australia. So, cost leadership strategy can prove to be
effective for Aldi to gain the competitive advantage over Woolworth within the industry. There
should be a close cooperation between all functional areas of the business. In order to achieve
cost leadership company can achieve cost leadership strategies like high capacity utilisation, high
levels of productivity, using of bargaining power in order to negotiate for the lowest prices for
the production inputs, etc.
As elucidated by Brem, Maier and Wimschneider, (2016) in order to gain the
competitive advantage company can adopt a differentiation strategy which can result in rise in
the demand of products within the competitive industry. By adopting this strategy, company can
make their products more exclusive as possible and can also make it more attractive than that of
its competitors. This can help in increasing the demand for the company's products as this
strategy can generate attractiveness among the customers towards the products. In order to
succeed in this strategy company need to go for proper research and development, increase in
the quality of products and high levels of innovation. So, Aldi can adopt this strategy in order to
gain the competitive advantage. Here company need to improve its quality of its products, or
make an innovation which should be based on the proper market research and analysis. After
only company can be able to differentiate its products from other which can help the company to
gain the competitive advantage. For example Aldi has adopted a differentiation strategy where it
is offering weekly two special offers in order to gain customer's attention this is how company
has adopted a differentiation strategy.
As illustrated by Nishitani, and Itoh, (2016) another strategy which can be used for
gaining the competitive advantage is focus, this strategy rests on the choice for narrowing the
competitive scope within the competitive industry. Within this strategy company can select a
particular segment or a group of segments and then tailors its strategy in order to serve them by
excluding others. This type of strategy has got the two variants one is cost focus where a
company may seek to gain a cost advantage within its targeted segment and another one is
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differentiation focus in which a company focus on seeking the differentiation within the targeted
segment. It is to be noted that both types of focus strategies depends on the difference between
the company's target segments and other segments within the industry. It is also to be noted that
for this to implement in order to gain the competitive advantage, targeted segments should have
the buyers in the market with unusual needs or should have the type of a delivery system which
is serving best for the targeted segment and also it must differ form other industry segments. So,
this is also the type of strategy by which can be adopted by Aldi in order to gain the competitive
advantage over Woolworth.
Critical Review
As there are various opinions given by various authors by through which Alsi can gain
the competitive advantage over Woolworth. Aldi can adopt various strategies which can help in
gaining the competitive advantage over its rival. Either it can go for cost leadership strategy or
differentiation or focus strategy which can help the company to gain the competitive advantage.
By analysing the different views from various authors the best strategy which can be adopted by
Aldi to achieve competitive advantage over Woolworth is Cost Leadership competitive strategy.
As, both the companies operate in the same industry and there very less difference between
products offer by both the companies (Kharub, Mor and Sharma, 2018). So, with this strategy
Aldi can gain competitive advantage over its competitor, as it will allow the company to offer its
products comparatively at lower price without any change in the quality and features within the
product. This will attract the existing and potential competitors towards the company's products
and will also make it difficult for Woolworth to introduce new products in the market. This
strategy will also increase the profit margin for Aldi within the industry. With the help of this
strategy company can enjoy the protection for Woolworth in the future. By gaining the
competitive advantage it can reduce the competition within the market, if company will be able
to implement its cost leadership strategy successfully it can gain higher market share and profits
irrespective of if retail cost of products is low. Also, cost leadership strategy allows a company to
draw many techniques in order to lower their cost and each technique can result in specific
advantage for the company (Dutse and Aliyu, 2018). Also, it will also develop a culture of
pursuing the higher efficiency within the organisation, which can itself be referred as a
competitive advantage within the industry. Besides Woolworth's performance lacks in some
areas like prices are high, lack of quality, not meeting the customer's expectations, etc. So, in this
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scenario cost leadership competitive strategy can be the best strategy as well as an opportunity
for Aldi to gain competitive advantage over Woolworth.
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REFERENCES
Books and Journals
Brem, A., Maier, M. and Wimschneider, C., 2016. Competitive advantage through innovation:
the case of Nespresso. European Journal of Innovation Management. 19(1). pp.133-148.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Demir, B., 2017. The Effects of Strategic Management Practices and Risk Perception on
Competitive Advantage. Sosyal Bilimler Araştırma Dergisi. 6(4). pp.287-297.
Dutse, A. H. G. and Aliyu, M. S., 2018. Cost Leadership, Market Orientation and Business
Performance: An Empirical Investigation. Journal of Quantitative Methods. 2(2). pp.28-42.
Farha, A. A., 2016. Matching organizational frame of reference and business strategy with
contemporary marketing practices. International Journal of Emerging Markets.
Fletcher, D., De Massis, A. and Nordqvist, M., 2016. Qualitative research practices and family
business scholarship: A review and future research agenda. Journal of family business
strategy. 7(1). pp.8-25.
Kharub, M. and Sharma, R., 2017. Comparative analyses of competitive advantage using Porter
diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review: An
International Business Journal. 27(2). pp.132-160.
Kharub, M., Mor, R. S. and Sharma, R., 2018. The relationship between cost leadership
competitive strategy and firm performance: A mediating role of quality
management. Journal of Manufacturing Technology Management.
Kurucz, E. C., and et.al., 2017. Relational leadership for strategic sustainability: Practices and
capabilities to advance the design and assessment of sustainable business models. Journal
of Cleaner Production. 140. pp.189-204.
Nishitani, K. and Itoh, M., 2016. Product innovation in response to environmental standards and
competitive advantage: a hedonic analysis of refrigerators in the Japanese retail
market. Journal of Cleaner Production. 113. pp.873-883.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
Trevisan, E., 2016. The Irrational Consumer: Applying Behavioural Economics to Your Business
Strategy. Routledge.
Yuan, Y and et.al., 2018. Business strategy and corporate social responsibility. Journal of
Business Ethics. pp.1-19.
Gakuya, R. W. and Mbugua, D., 2018. EFFECTS OF COST LEADERSHIP STRATEGY ON
CUSTOMER LOYALTY AMONG PHARMACEUTICAL COMPANIES IN
NAIROBI COUNTY, KENYA. European Journal of Social Sciences Studies.
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