Strategic Business Report: ALDI's Mission, Strategy, and Analysis

This report provides a comprehensive analysis of ALDI's business strategy, encompassing its mission, vision, objectives, and core competencies. It examines the factors ALDI considers when formulating strategic plans, including competition, consumer needs, and competitive advantage. The report details various planning techniques like PEST and BCG matrix, along with an organizational and environmental audit utilizing SWOT analysis and benchmarking. It explores market identification, strategy selection, and the roles and resources involved in strategy implementation. The report highlights the significance of SMART targets in achieving strategic objectives. Overall, the report offers insights into ALDI's strategic approach to achieve growth and maintain its competitive edge in the retail sector.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Assessment of ALDI missions, visions, objectives, goals, core competencies................1
1.2 The factors that ALDI needs to consider while formulating strategic plans....................2
1.3 Different planning techniques..........................................................................................3
2.1 Organisational Audit for ALDI........................................................................................5
2.2 An environmental analysis for ALDI ..............................................................................8
2.3 The significance of stakeholder analysis..........................................................................9
2.4 New strategy for ALDI...................................................................................................11
TASK 2..........................................................................................................................................11
3.1 Identifying market and choosing best strategy...............................................................11
3.2 Justification of choosing substantive growth strategies.................................................12
TASK 3..........................................................................................................................................12
4.1 The roles and responsibilities of personnel involved in strategy implementation.........12
4.2 Requirements of the resources for implementing strategy.............................................13
4.3 The use of SMART targets and its contribution in strategic objectives.........................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
A business strategy is considered to be an art, craft and science of preparing, applying
and evaluating various cross functional decisions that are taken by organisation as to attain its
goals and objectives in a well defined and efficient manner. It is a used as to co-ordinate and
integrate different activities and direct all the efforts in one direction for achieving all goals and
objectives. The business strategy is based on mission, vision, objectives and goals of an
enterprise. It is very important and vital for organisation success. It provides strategic alignment
and consistency for organisation and assist it organising various activities in a effective and
efficient manner (Astrachan, 2010). This report is based on ALDI which is a multinational
discount store operator, o0ffering various products related to grocery and merchandise to
consumers at lower cost. In this project various methods and techniques will be covered and it
will be stated as how it assist organisation in achieving its goals. The importance of mission,
vision, objectives and goals will be covered to. Also to implement strategy manager needs
various resources, they will be stated in a proper manner. Other issues will be addressed to which
will ensure a higher rate of growth and profitability for organisation.
TASK 1
1.1 Assessment of ALDI missions, visions, objectives, goals, core competencies
Business strategy is a tool that is developed by organisation as to gain competitive
advantage over its competitors. It is completely based on company mission, vision, goals,
objectives and core competencies. ALDI is one of the fasted growing firm in the retailing sectors
that has earned a title of being a king of discount stores (Auzair, 2011). But it is still a small
player in UK market and it needs to gain more market share rapidly as to survive in a saturated
place. A business strategy will provide path to the company as to strengthen itself and its
activities in order to gain more profitability and productivity levels. The mission, vision,
objectives, goals and core competencies inform strategic planning in many ways:
Vision statement: It is a statement that signifies as to what organisation wants to be in
future. It states about a condition that will be achieved if its employees achieves all their targets
in a set period of time (Burlton, 2010). As stated by ALDI, they want to introduce new and
revolutionary products in the market which are in common person reach.
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Mission statement: It is a statement that describes about all the short term goals and
objectives. If organisation attains all their targets in time then it will be able to be in the position
as stated in their vision statement (Campbell, Edgar and Stonehouse, 2011). This provides
inspiration to employees and assist them in operating to their maximum level.
Goals: As per this concept, the aim of ALDI is to become one of the biggest retailer in
the world. It is a long term goals that will be achieved by company once it attains a level of
efficiency and effectiveness. The goals of are as follows:
 To grow further in UK and world
 Reaching the top position in retailing market
 Establishing its presence in more countries
Objectives: They are the one which assist employees in segmenting larger goals in short
term targets (Casadesus-Masanell and Ricart, 2010). They are used a method to measure the
performance of organisation. Employees are motivated when they are able to achieve these
objectives.
Core competencies: This term states about the core values, ethics and capabilities of
organisation. For ALDI, their main USP is that they sell their products at discounted rates to the
customers. Also company is able to introduce interactive and innovative marketing
advertisement that are more attractive to the customers.
Strategic planning is a process that is done for making various plans and procedures
compatible for organisation. It is a complete method of preparing, directing and taking different
decisions regarding resource allocation and managing activities (Chang and Chuang, 2011). It
also assist manager in implementing strategy and provides them a extended version of control
mechanism. Basically it is a process that is based on organisation, mission, vision, objectives and
goals.
1.2 The factors that ALDI needs to consider while formulating strategic plans
Strategic plans are based on various factors that might impact company if not considered
while making plans and polices. It is prepared as to direct all the efforts and energy of
organisation in same direction while ensuring that efficiency and effectiveness is maintained.
There are certain factors that will be analysed for making better strategic plans for ALDI:
 Future Direction of Competition: This is a factor that is addressed in every strategic plan
as to ensure that company is able to differentiate itself in market from its competitors.
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Competitors plans and polices are analysed for countering it with a more effective
strategy.
 Needs of consumers: This is the most important factor that needs to be analysed by
organisation as to ensure that they are able to cater to all types of needs of consumers in a
effective manner.
 Gaining and maintaining competitive advantage: ALDI strategic planning is done as to
ensure that company is able to maintain its differentiation and competitive advantage
(Cinquini and Tenucci, 2010). It enhances company ability to gain more market share.
 Competitive level integration and communication of plans and procedures: The
management has to make sure that they are able to integrate all the changes are proposed
by strategic planning panel. Also they need to communicate these changes to the
employees at all levels.
1.3 Different planning techniques
There are different types of planning techniques which are used by organisation as to
prepare a effective strategy (Dong-Hun, 2010). They assist managers in supervising and guiding
employees in right direction. The methods employed by ALDI for strategic planning are as
follows:
 PEST: It is a method that is employees by organisation for analysing macro factors in a
effective manner. It includes four factors:
◦ Political: These are the factors that are related with the political dynamics. UK is
currently is in a process of leaving European Union, which as triggered a unstable
environment in country that has direct impact on organisation.
◦ Economic: The economic scenario in country is still not stable. The impact of Brexit
as well as recession are there (Eccles and Krzus, 2010). They are slowing down the
business activities and flow of money in market.
◦ Social: The migration as well as globalisation has led to a more dynamic society
where preferences and choice of consumers is changing constantly.
◦ Technology: Technology is in a phase where it is changing and become more
effective, organisation need to use new equipments in there premises as to increase
efficiency.
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 BCG Matrix: It is a matrix that assist in categorising and managing various products
offered by company to consumers (Hahn, Kolk and Winn, 2010). It is based on two
axis(relative market share and market growth rate). The image below states about the four
groups existing in matrix:
Dogs: This is group of products which do not have higher market share and also have
lower growth rate (Haley, Haley and Tan, 2011). This are required to be phased out so that
investment made in them can be used somewhere else.
Cash Cows: These are the products which do not need higher level of investment but they
have more market share than any other product in market. They do not have more market growth
rate as they have reached their product life cycle peak and now need to be renovated.
Question mark: These are the products which have higher growth rate but lower market
share (Higgins, Omer and Phillips, 2015). Company need to invest more in their marketing and
promotion as to improve their image in the mind of consumer.
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Illustration 1: BCG Matrix and its Four Quadrants, 2017

Stars: These are the prime products which have crossed the stage of question mark and
became a higher growth rate and market share items. The demand of these goods is very high
and they can be considered to be in a phase where they are known as trend.
 ALDI keeps its product in star group as it is investing huge sum of amount in its
activities. It is also gaining market share at rapid speed, it has achieved second highest
growth in sales.
2.1 Organisational Audit for ALDI
ALDI has to identify various threats and risk that can hamper its capabilities and productivity in
long term. They need to ensure that environment around company is positive and they are able to
exploit all the opportunities (Hsieh and Chen, 2011). There are two types of environment that
needs to be analysed and evaluated by organisation as to identify various variances. SWOT
analysis will assist managers in evaluating organisation abilities in a proper manner:
 SWOT analysis: It is used for evaluating various strengths, weakness, oppourtun8ities
and threats that exist in organisation internal as well as external environment. Following
is the SWOT analysis of ALDI:
Strength
 Serving top quality products
 Low-cost pricing
 Well established presence in Germany
 Operating cost is very low
 Established presence in more than 15
countries
Weakness
 It is still a small company than its
competitors
 Less impact due to competitors in UK
 Considered as a store as a inexpensive
and lower quality products
Opportunities
 Need to change people mentality by
using advertising and public relations
 Scope of expansion in Asia and Africa
Threats
 It is not a one stop buying place
 Less heterogeneous that is why carries
higher level of risk in its business
process
 Smaller sub companies established by
ALDI are not strong.
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 Benchmarking: ALDI can employ this method as to set various standards for its
employees to achieve (Liedtka, 2010). There are many companies in UK market which
are serving better qualitative products to is customers. ALDI can idolise them and set
them as a benchmark for its services and other functions. As stated in image the current
benchmark is with the level of sales:
ALDI ranks 10th in this list and it has taken Tesco as its benchmark as to align itself with
the end goals and objectives of company (Oltra and Luisa Flor, 2010). Currently the strategic
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Source 1: Top 10 Retailers in UK, 2016

policy of organisation in marketing is directed towards penetrating whole market. In the year
2011 ALDI held only 1.9% market share in UK but n9ow they have captured more than 5% of it.
Last year it registered second highest growth rate in sales of its products. It is stated in the image:
2.2 An environmental analysis for ALDI
Environmental audit has an impact on the organisation functioning as well as its
operational capabilities. That is why it is very essential for company to analyse and assess its
environment so that it can manages upcoming changes and adapt to them (Parnell, 2010). The
definition of environmental audit is as follows, When an organisation evaluate its internal as well
as external environment as to understand how these factors will impact company and its
functioning then it is known as environmental audit. There are two factors that needs to be
managed by organisation: Internal factors: These are the controllable factors which can be changed as per
requirements by company management. To monitor the impact of these factors on the
business operations of the company, the management of ALDi can use SWOT analysis to
determine the influence of micro factor.
 External factors: These are the uncontrollable factors that needs to be managed by
company by adjusting or changing its plans and polices. For this, the management of the
firm can applied PESTEL analysis which help in determining the impact of macro factors
on the business operations and activities of the company.
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Source 2: Sales growth, 2016

There are different methods that can be used by the company for analysing these factors
and understand level of impact of different factors: Porters Five Forces Model: It is a framework that is used for analysing level of
competition within an industry and assist in developing business strategy (Peteraf,
Gamble and Thompson Jr, 2014). It also aids company in managing and adapting various
changes that are taking place within environment. There are 5 factors that draw attention
in this model, they are stated below:
◦ Bargaining power of consumers: The United Kingdom market is led by Tesco which
has huge customer base in country as it is a company that is able to gain even when
most of the retailers are suffering from losses (Reich, and Benbasat, 2013). The
consumer bargaining power is very high in the country and they act as a dominating
force in country. ALDI needs to offer higher demanded products so that it can cater to
consumers need in a effective manner.
◦ Bargaining power of suppliers: There are many suppliers in UK so the bargaining
power of suppliers is low which lessen up any impact on company. Basically
company has many option which it can exploit as to maximise the margin of profit. It
can change the suppliers if they are not able to provide qualitative products at a lower
rate.
◦ Threat of new entrants: Retailing sector do not have a higher level of threat of any
new entrant as it requires huge amount of investment for establishing a company
equal to the giants (Scholes, 2015). Also they need to gain credibility and make a
image in the mind of consumer which is only possible if they invest huge sum of
money in their promotional activities. So the threat of new entrant is very low.
◦ Threat of substitutes: There are many substitutes for ALDI and many of them are a
major threat to the company. Small retailers as well as giants of industry are operating
in UK who are a major threat to organisation growth. Company needs to offer better
discount on various products so that customers are more attracted towards it.
◦ Rivalry: The competition in the industry is at very intense level and there are many
companies who pose a threat to ALDI and its market share as well as profitability. So
the threat of rivalry among existing competitors is high.
There are certain advantages and disadvantages of this method to the company:
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ADVANTAGES DISADVANTAGES
 It assist in getting data and knowledge
regarding various forces existing in
environment.
 Aims to gain competitive advantage
 There is huge cost active in process
 Every changing factors are
unforeseeable
2.3 The significance of stakeholder analysis
Stakeholders are individuals who have a stake in organisation and its functioning. There
are various types of people who are impacted by operations and functions of organisation. Every
person or any party that has any interest or stake in the organisation are known as stakeholder.
They assist company by providing their valuable advices and resources which boost their
functioning and overall productivity. All the stakeholders are stated below:
 Customers: They are the prime stakeholders whose needs and wants need to be fulfilled.
It is very important for company to grow their customer base and boost their sales
(Schrader, Freimann and Seuring, 2012). ALDI keeps on assessing various needs and
wants of customers as to ensure that it is able to pup various products in its shelf's.
 Employees: They are the one who undertake various task for achieving different
objectives and goals of organisation. ALDI needs to provide them a positive environment
and give rewards for their performance.
 Suppliers: They are the one who provide qualitative products to company at lower rates
which assist ALDI in increasing sales and margin of profit.
 Government: It is the final authority that looks after the market and prepares various laws
as well as legislations for protecting consumers and sellers from any happening.
 Investors: They provide funds to organisation which enables it in functioning in a proper
manner. Investors expect that their investment will provide higher results.
Basically management of ALDI has to conduct stakeholder analysis for gaining
knowledge about managing various types of individual and party who have some interest in
organisation and its profitability.
KEEP SATISFIED
(most interested, most power)
They need to be fully satisfied because they are
MANAGE CLOSELY
(less interested, more power)
They need to be continuously given data
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totally involved in the activities of the
business.
 Shareholders
 Employee's
satisfied but the satisfaction must be at a level
the person should not be bored.
 Suppliers
 Government
MONITOR
(more interest, less power)
They need to be informed with adequate data
and should be assured that there is no major
issues arising.
 Customers
 Financiers
KEEP INFORMED
(less interested, less power)
Just need to be informed but do not irritate
them by continuous messages.
 Local Community
Stakeholder analysis assist company in identifying ways in which it can manage different
parties in a effective way.
2.4 New strategy for ALDI
Whenever there are changes in the environment of company, it have impact on its
capability as well as effectiveness. Developing new strategy or updating an old one enables
organisation in overcoming various issues that were hindering it from functioning in a more
effective way (Meskendahl, 2010). It is developed on the basis of vision, mission, goals and
objectives of company. The most effective strategy for company is to use market penetration
approach and offer more discounts on products which will attract more customers towards its
stores. ALDI has to utilise its resources in a effective and efficient manner as to gain more
market share and increase customer base. It will also result in higher level of profitability.
Bold strategy will assist in gaining more market share and for that it needs to use
substantive growth strategy where company will plan to merge or acquire other market players
and achieve its required level of growth. The company is much larger in global aspect and it can
use those resources in growing its capability in UK. With the help of penetration strategy, the
company can gaining competitive advantages by making change in its existing products and
services through innovation. If the management of the company use penetration for the future
development then they can use different pricing strategies and others so that they can make
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