Business Strategy Frameworks and Their Application to Aldi

The case study focuses on understanding Aldi's approach towards crafting an effective business strategy in the retail industry. By leveraging tools like the Ansoff Matrix for growth opportunities, BCG matrix for evaluating product portfolios, and SMART objectives for clear goal setting, Aldi has been able to navigate the complexities of market expansion successfully. The assignment delves into how these strategies are influenced by both internal capabilities and external factors such as competition and changing consumer demands. It discusses the importance of strategic planning in ensuring long-term growth and sustainability. Furthermore, the study highlights how Aldi's adaptation of its business model, in response to global trends and challenges, showcases a proactive approach towards maintaining a competitive advantage. Ultimately, this analysis provides insights into the critical role of strategic management in driving retail success, exemplified by Aldi’s journey.

BUSINESS STRATEGY

INTRODUCTION
Business strategy are made by superiors and managers in order to perform their activities
in proper order. It act as a road map to company according to which employees and other staff
members perform their tasks (Acquaah, 2013). These are made with the purpose of achieving
business goals and strategies and desired success for company. Aldi is one of the leading
discounted supermarket which was established by brothers in 1946. It is Germany based
company and operates in more than 18 countries with thousands of stores . This assignment will
focus on vision, mission, goals of Aldi and various techniques used by them to analyse external
environment. Analysis of appropriate market areas and strategies for growth of business. It also
describes roles and responsibilities of personnels in implementation of strategy and analysis if
resource requirements.
PART 1 – Evaluation of strategy
AC 1.1 Assess how business missions, visions, objectives, goals and core competencies inform
strategic planning
Strategic management is a regular process which is established by superiors of
organisation. They apply strategies in order to achieve set business vision and missions. It is an
essential part for organisation as all its operation are performed according to strategies made by
company. To make a strong position in market and to maintain its position, it is necessary to
make effective corporative strategy (Astrachan, 2010). Aldi is a leading discounted supermarket
and operate in more than 18 countries. Due to their effective strategies and management, they
have achieved desired success in their business. Following are some crucial elements which help
Aldi to achieve its success:
Mission: This is prepared by Aldi's managers in order to plan their business activities and
tasks in proper order. It provides definite direction to company which help them to achieve its
ultimate vision statement. Mission of Aldi is to provide affordable ad economic goods with high
quality to its customers(Campbell, Edgar and Stonehouse, 2011). It is basically a shot statement
or a paragraph which is made by company in order to describe purpose of company in concise
manner. It also help employees to stay focused towards their task and also encourage them to
produce innovative ideas in which company can achieve more profits and revenues.
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Vision: It is an ultimate statement prepared by higher authorities. It reflects the future
goals of company. Vision of Aldi is “to revolutionize the industry with unique business model”.
According to this, company prepare their short term as well as long term mission and act in that
direction.
Goals and objectives: They are important aspects of organisation, goal is basically
defined as the purpose towards which the business is started whereas objectives are referred to
more clear and measurable targets. Aldi's main aim is to increase its market share within United
Kingdom grocery market.
Core competencies: These are referred to strengths or strategic advantage of an
organisation and includes knowledge, skills and technical capacities that increases the efficiency
of business operations. Core competence of Aldi is that, they mainly focuses on offering quality
of products at low and affordable prices to its customer. Managers ensures easy, simple and
efficient business operations so that they can offer low prices for products.
AC 1.2 Analysis of the factors which is to be considered while formulating strategic plans
There are many factors which are considered by managers of Aldi while formulating their
strategies. They ensure that every strategies they make should be efficient so that they can help
them in achieving their business goals and objectives. Following are some factors:
Resources: They are the essential part for carrying out any activity. Resources help
company to carry out business activities or tasks in smooth manner. Managers should focus on
their human capital, equipment, finance and technology and mange them wisely, so they don't
have to face shortages of resources (Bharadwaj and et al, 2013). Aldi can develop best strategies
with its available resources in specified time limit.
Environmental factors: It is crucial to consider all micro as well as macro environment
in order to formulate effective strategies because it pose great effects on business success and
profitability. Some of the external factors are political, legal, technological, economical, threats,
opportunities, etc. Aldi is effective in measuring the impact of external factors and designs
efficient strategy in accordance to these factors. This help them to revive tough situation and
maintain its position against all odds.
Following is the Ansoff Matrix which describes the analysis of growth opportunities in
market. It gives an idea about implication of growth through existing and new products in
existing an new markets.
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Source 1: Ansoff Matrix, 2015.
Ansoff matrix consider four main elements and are mentioned below:
 Market penetration.
 Product development.
 Market development.
 Diversification.
Market penetration: In this, Aldi focuses on selling existing products on existing market
with the purpose of increasing market share, increase usage by existing customers, etc. In order
to achieve the purpose, Aldi focus on pricing strategies, sales promotions, advertising, etc.
Product development: In this, company introduce new product in to existing market. Aldi
focuses on developing new and unique product by applying new competencies and launch in
existing market (Gandolfi and Hansson, 2010). Before developing new product, company focus
on some crucial factors like, research on market as well as consumer needs, innovative ideas,
pricing f products, etc.
Market development: In this, company focuses on selling existing products into new
market. Aldi uses different ways in order to approach this strategy like, they finds out new
geographical market and export their products to different countries, new product dimension or
packaging, identifying new distribution channels, etc.
Diversification: Here company introduce new products into new markets. Aldi identifies
different and new markets where they can sell their new products. For this they have to identify
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Illustration 1: Ansoff Matrix

the scope of growth in new markets, trends, risk, opportunities before launching new products in
market.
AC 1.3 Evaluate the effectiveness of techniques used when developing strategic business plans
For developing effective strategic business plans, following techniques can be used:
Boston Consulting Group (BCG) Matrix: It help companies to evaluate position of the
business in terms of brand portfolio and its prospects. This matrix basically classifies business
portfolio into four categories based on two dimensions, industry attractiveness (growth rate of
that industry) and relative market share (Gollakota, Gupta and Bork, 2010). This matrix help
business to understand in which sector the firm should invest in and which one is to be divested.
BCG Matrix have four sectors and are explained below:
Star: It represent those products which have high growth rate and require huge
investment to maintain the position of that product in market. It also has high market share.
Cash cow: It represent the situation in which business unit have high market share but
has slow growth. This requires less investment and produce steady cash inflow which can be
invested in other business unit.
Question marks: It indicate those product which possess a low market share in a high
growth market. It requires heavy investment to maintain position of product and its market share.
Dogs: In this business unit have low market share and growth rate. In this business units
have weak positions due to less return on products. Owner can eliminate the business or sell out
due to loss in the business.
This is an effective business tool which help managers to manage their products and get
to know about market areas where they can invest their money in order to get high return and
where they can liquidate their business units in order to prevent further loss.
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Source: BCG Matrix, 2017.
AC 2.1 Organisational audit for ALDI and provide an analysation of their actual strategical
position
In order to determine about existing strategic orientation of ALDI, it is important to carry
on SWOT analysis. This aids in identifying about their own abilities, weakness, threats and
opportunities of ALDI which is described as follows :
Strengths:
 It used to offer best quality services to
their expected users in order to feel
them satisfied.
 In addition to deliver quality based
merchandises, Aldi is catering their
goods or services at reasonable costs so
that each section of people either they
are poor or rich could acquire the same
in effective manner.
 ALDI is having nearly more than 8000
outlets in Europe and various another
nations.
 They are doing commercial activities in
approx. over fifteen countries at global
level.
Weaknesses:
 They are yet considered as small in
comparison to many another popular
brands.
 Some of the users understand that
products as well as services which is
being supplied by them are of bad
quality. This is impacting negatively on
their brand image , thus, it is vital to
improve exiting condition of
merchandises regrading its quality.
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Illustration 2: BCG Matrix

Threats:
 Large number of entrepreneurs are
attempting to take entry in sector of
retail. At the same time, already several
other famous companies such as Tesco,
Asda, Sainsbury's ,LIDL, etc. are
delivering similar kinds of services to
numerous of consumers. This as a bad
result, lowering the overall amount of
user base of Aldi. Hence influencing
adversely on its selling and could be
treated as great threat.
 This is found that privately labelled
brands of mentioned enterprise may be
thrown away by other existent
established corporations.
 Sudden change in nature like heavy rain
fall, disasters such as earth quake,
drought, cyclone, etc. could causes
huge loss to this venture; since its
numerous of stocks might get
completely destroyed from occurrence
of such types of alteration in climatic
condition of different places whereby
their stocks are present.
Opportunity:
 ALDI is required spend more sum of
money of revenues in the area of
promotion in order to improve current
performance, as via this more and more
person will come to know about newer
deliverables which may presented by
organisation in market place.
 They are having golden chance to
explore their businesses in new locations
like Asia and Africa.
2.2 Environmental audit for ALDI
The macro environmental factors in context to ALDI can be easily determined by
applying conception of Porter five forces (Jocovic and et al, 2014). This is explained as follows :
Bargaining power of suppliers : The negotiating ability of providers is reported to be quite low as
large number of suppliers are existing in the sector of retail. For example, Aldi is working at
different nations such as China, Austria, Germany, France , etc. Therefore, lots of caterers are
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existed for supplying them goods and services or raw components. Hence, bargaining power for
ALDI is minimum in nature.
Threats of substitute : It is also treated as high as quantity of small as well as medium
sized organisation dealing in retail domain are increasing day by day in all over world which
may provide similar services to people as Aldi does.
Industry rivalry : This has been recognised to be high because there are large number of
firms which are delivering identical productions and facilities to civilians living in UK and
another territories. Some of the key rivals of referred organisation is LIDL, Sainsbury's, Tesco,
Asda, etc.
Bargaining power of buyers : This is observed to be extremely higher in nature since
citizens are having lots of option regarding domestic goods and food stuffs. So, they are
expecting to buy supreme quality merchandises at minimum prices. For this, they would migrate
to other ventures as per their wish in order to find services at low cost.
Threats of new entrants : It is very complex task to take entry or establish strong
position in market of retailing since huge sum of investment is needed, but no new small
entrepreneurs are able to spend such a high sum of money. Thus, it can be stated that risks
regrading entrance of some new company is extremely low.
Pestle analysis of ALDI is used for knowing about impacts of macro factors. This is described
below :
Political factor & legal factor : Government of different nations or states used to impose
high taxation rates on business actions, thus impacting negatively on the performance of Aldi
since more sum of funds earned by them would go in paying these taxes. At the same time
period, governing bodies of several countries are forming variants norms and regulations that is
very strict. Therefore, Aldi is being adversely effected from this as it is not an easy task to obey
each and every legislation. Besides this, higher authorities of specific regions are also supporting
to given organisation. For example, financial funds has been provided by governmental banks
which is assisting fiscally to ALDI.
Economical factor & Social factor : The inflation degree in terms of marketing has
raised by 2.9 % in may and keeps on increasing on continuous basis. Because of this, shoppers
must have to invest around £27 for identical goods which in turn making same products and
services more expensive. Thereby, this is impacting in antagonistic manner for Aldi as customers
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are expecting more cheaper goods which they are not able to supply. On the other hand,
requirements and demands of common public are changing on regular basis which is considered
as challenge for mentioned company.
Technological factor & environmental factors : Growth and development of modern
technology is giving positive implications on entire working of ALDI as it is helping in
designing innovational goods and services in huge quantity by taking minimum time frame. But
from the use of such contemporary machineries ; external environs is being polluted at greater
extent which is increasing whole level of global warming (Köseoglu and et al, 2013). This is
giving bad consequences directly to all world and also indirectly to Aldi. For instance, random
modifications are occurring in nature that is giving occurrence of earthy disasters.
AC 2.3 Significance of stakeholder analysis for formulating the strategy.
Stakeholder plays an important role while formulating decision making and strategy
planning. They give their valuable views and ideas to the decision maker, which can be
implemented in strategies. This become easy for maker to decide best ideas from all options and
implement them in business operations. Same is the case with Aldi. They also have important
stakeholders from which they take advices which can be beneficial for company. Various
stakeholders of company are managers, employees, government, customers, suppliers, owners,
competitors, trade unions, shareholders and financial institutions. Significance of various
stakeholders are mentioned below:
Managers: They are considered as important internal stakeholders whose ideas are very
important because they are directly related to strategy formulation. They generate creative ideas
and activities and implement the in their working as they themselves are decision makers.
Supervisors: It is crucial to overlook and manages all the activities and give advices for
improvement. They are closely related to business activities and thus can produce innovative
ideas in order to increase benefits to the company.
AC 2.4 New strategy for organization
It is necessary for company to develop new and innovative strategies time to time in
order to hold strong position in market and also retain its position. Strategies is like a road map
which give directions to company to run their business operation according to that road map.
Aldi is a leading company in United Kingdom with thosusands of stores situated in many
countries. It is in growing phase and this is the crucial or peak time for company to develop and
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implement new and unique strategies which can result in outstanding result and success. They
should manage their resources wisely so they don't face any shortage and also manage their
funds and invest in growing market and shares. Company has huge opportunities in those market
which have high market share and can expand their business in such markets (Martin and Rice,
2010).
Aldi is one of the most leading discounters in Europe. In order to achieve the competitive
advantage it is focussing on providing range of products for its customers. Its mission is to
become best in its field by spending less and live a lot. Effective attention is given towards
providing quality products so that differentiation is maintained.
Part 2 – Making a strategic choice
AC 3.1 Alternative strategies for ALDI
Aldi can use different strategies and alternates which can help them to achieve desired
goals and objectives. These alternative strategies are described as below:
Retrenchment: It is an important strategy which can be used by comppany art the time of
recession and declining stage of product. In order to prevent company from losses, comapny cut
down the prices of products and services and this activity increases dales of company. If
organisation face loss after implementing this strategy, then they can use retrenchment strategy
to overcome form loss (Montgomery, 2011). As Aldi is a leading and growing company and
have good past records, this strategy is not applicable to them.
Substantive Growth Strategy: This strategy is basically a growth strategy that an
organization can implement by involving in the vertical or horizontal integration with other
business for encouraging their firm. The horizontal integration can be the outcome of the merger
of two firms. It helps in improving market position of company in competitive world. On the
other hand, vertical integration is a process by which company adds its distributor and other
organization under its control. Growth strategy initiates diversification and market development
of company. This strategy can be helpful to Aldi, as it is growing company. They are focusing
more on vertical integration by opening new stores in different countries. They can expand their
business in such countries and maximise their profits. This strategy help Aldi to achieve
substantial growth. Aldi can also use strategy of market penetration to penetrate in different
markets of United Kingdom and access their business. They can also plan joint ventures with
other business.
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Limited Growth Strategy: This strategy confine growth limit of company. Most of the
successful organizations have implemented this strategy in order to provide consideration that is
more specific and achieve the niche marketing. Company can implement this strategy for long-
term sustainability and significant growth. Limited growth strategy cannot be feasible for ALDI
to limit itself up to a specific market.
AC 3.2 Justify the selection of a strategy
Aldi have all necessary requirement to lead a growing business like skilled labour force,
strong financial position, and other resources. From above strategies, it can be summarise that
Aldi can opt for joint ventures and merger to increase it market share. They can establish new
stores in those areas or market where they don't have any stores available, such as Qatar. To
establish a successful business in new target, they need to fulfil demands and requirement of
people living in those regions in order to increase its profits and to retain there for long time
period (Peteraf, Gamble and Thompson, 2014). This will help company with increase in
turnovers, market share, powerful consumer base, competitive advantage and many other
benefits. In order to attract customers in Qatar, they can use effective promotion and advertising
techniques and offering their products as lower prices with high quality. Manager of company
can recruit highly talented candidates which can make this happen in efficient way. Aldi can
focus on expanding their business to other countries as well where they see high growth
opportunities. By making effective plans and arrangement, they can make their expansion
happen. By devising, formulating and managing different procedure, activities and plans of
organisation, company can achieve the business objectives in more significant manner.
Part 3 – Implementing the strategy
AC 4.1 Role and responsibility of personnel
There are different personnels in organisation which have certain roles and
responsibilities which they have to follow. Following are some roles and responsibilities of
personnels:
Finance manager: Finance department is crucial part of an organisation. Finance
managers plays crucial roles like:
 They help company to prepare their budgets.
 Provide effective strategies to manages funds and investment of companies.
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