Applying Strategy Development Tools: Aldi's Competitive Strategies

This essay explores the competitive strategy tools that Aldi can use to maintain a competitive edge in the market. It emphasizes the importance of assessing both the external and internal environments to understand the company's strengths, weaknesses, opportunities, and threats. The analysis includes a PESTLE analysis to evaluate political, economic, social, technological, legal, and environmental factors, a five forces analysis to understand competitive intensity, supplier and buyer power, and the threat of substitutes and new entrants, and a SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats. The application of these tools aims to help Aldi gain a competitive advantage and improve its market share by understanding and addressing the challenges and opportunities within its operating environment. Desklib provides a platform for students to access similar solved assignments and past papers.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student
Name of the University
Author Note

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Executive summary
This essay will be highlighting the competitive strategy tools that can be taken up by Aldi so that
they can be competitive in the market. It will help the company in assessing the external and the
internal environment so that the company can function in a proper manner. The strengths and the
weaknesses of the company needs to be analyzed in a proper manner so that the opportunities of
the firm can be understood. The external factors need to be taken in to account so that the
competitors that are present can be handled in a better manner. It will help the company in
gaining a competitive advantage in the market.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
PESTLE analysis.........................................................................................................................3
Five forces analysis......................................................................................................................4
SWOT analysis............................................................................................................................4
Conclusion.......................................................................................................................................5
Reference List..................................................................................................................................6

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Introduction
The essay will try to highlight the strategical tools that are required by the organizations
so that they can gain a competitive advantage in the market. It will also enable the organization
to understand the threats that are present internally and externally within the environment. A
clear understanding needs to be present within the organization regarding the threats and the
opportunities that may affect the overall performance of the company. In this essay, SWOT,
PESTLE and 5 Forces analysis will be highlighted by taking in to account the Aldi Company that
is present within the retailing industry so that the analysis can help the organization in gaining a
competitive advantage. It will also allow the company in getting a better share in the market so
that the attractiveness of the products can be increased within the customers.
Discussion
PESTLE analysis
It is an important strategy that needs to be taken in to account for measuring the external
environment of the company where they are performing so that it can understand the marketing
dynamics before they plan to launch a new product in the market. It stands for Political,
Economic, Social, Technological, Legal and Environmental (Ho 2014). The political aspects has
to be taken in to account by the company so that it can help them in understanding the policies
and procedures that are laid down by the government for the company to run smoothly in the
market. It will also result in following the rules so that the company can be in operation without
damaging the political scenario present within the country (Newton 2014). The economical
issues will help Aldi in understanding the growth in the country so that they can increase their
position in the market. The ability to increase the profits of the company will also depend on the
economic aspects that the country is facing. The social issues will enable Aldi in taking the
preferences of the customers in to account so that it can help in developing the products
accordingly (Markos 2015).
The technological aspects will enable the organization in using the latest technologies
that are available in the market so that the production can increase in the market. It will also
result in getting a competitive advantage in the market. The legal issues need to be considered so

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that Aldi can abide by the policies that will help them in working in an ethical way. The
environmental factors will allow the company to work by not polluting the environment, which
may affect the country as a whole (Kolios and Read 2013).
Five forces analysis
This tool helps Aldi in assessing the strengths and competitive position that they enjoy
within the retailing industry. The strength of the organization will help in identifying the actual
position of the company in the market, which will result in increasing the sales of the company.
The supplier power needs to be addressed by the company so that it can help in assessing the
impact that the suppliers will have within the industry. The power of the suppliers will enable the
company to understand the cost of switching within the retailing industry. The buyer power is an
important feature, as Aldi will get the information regarding the role of the buyers with respect to
the prices of the product. It will help them in understanding the price that the customers are
willing to pay to purchase the product of the company (Dobbs 2014).
The competitor rivalry will allow Aldi in gaining a better knowledge regarding the
competitors that are present in the market like Woolworths and Lidl that may hamper the sale of
the company. It may also result in reducing the product attractiveness in the market due to the
increase in the threats from the rivals. The threat of substitutes for Aldi is also very high and
needs to be assessed so that it can allow them in eliminating the substitutes and creating unique
products that will help them in gaining a competitive advantage (Fanek and Kresta 2013). The
substitute companies will also provide the products at a cheaper price in the market, which may
hamper the reputation of Aldi and decrease the sale of the units as well. The entry of the new
companies in the market also poses as a threat, as the profits f the company may decrease to a
great extent due to these entrances. The new companies will try to increase its volume of sales by
lowering the price of the products, which may also affect the reputation of Aldi. This strategical
tool will help the company in understanding the external environment in which the company is
operating so that they can identify the threats and the factors that are influencing the company in
losing its position in the market (Grant 2016).
SWOT analysis
This competitive strategical tool will allow Aldi in identify the strengths, weakness,
opportunities and threats that are present internally within the organization. The strengths of the

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company will enable the company in capitalizing on the resources that has been identified so that
the operations can be continued in a better manner. This will help the company in gaining a
competitive advantage in the market so that the level of profits for the company can be increased
(Bohari, Hin and Fuad 2017). The weaknesses of the company needs to be assessed so that that it
can help in evaluating the factors that are present within Aldi that needs to be changed so that
they can increase their production in an efficient manner. This will allow the company to gain a
better position in the market and reduce the number of competitors as well (Ng et al. 2013).
The opportunities of Aldi needs to b identified so that it can help in improving the overall
performance of the company with respect to its line of production and its position in the market
as well. The opportunities present within the company will help in reducing the loopholes so that
they can get a stand within the market and increase its rate of profits as well (Brooks, Heffner
and Henderson 2014). The threats that are present within the company needs to be eliminated so
that the opportunities can be capitalized, which will further enhance the capacity of producing
the items at a better quality. The threats that are present among the competitors is a major factor
for Aldi that needs to be identified so that it can enhance the uniqueness of the product and the
customers can be attracted by providing it at a competitive price (Ng et al. 2013).
Conclusion
Thus it can be concluded that the first and second competitive strategical tool will help
the company in analyzing the factors that are externally present to the organization. This will
help the company in understanding the level of competition that is present within the market so
that it can help in increasing the competitive advantage of the company. The third analysis has
been done to understand the internal environment of the company so that the core competency of
the company can be highlighted that will allow the company in functioning in an efficient
manner.

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Reference List
Bohari, A.M., Hin, C.W. and Fuad, N., 2017. The competitiveness of halal food industry in
Malaysia: A SWOT-ICT analysis. Geografia-Malaysian Journal of Society and Space, 9(1).
Brooks, G., Heffner, A. and Henderson, D., 2014. A SWOT analysis of competitive knowledge
from social media for a small start-up business. The Review of Business Information Systems
(Online), 18(1), p.23.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Franek, J. and Kresta, A., 2013. Competitive strategy decision making based on the five forces
analysis with AHP/ANP approach.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and
environmental (PESTLE) approach for risk identification of the tidal industry in the United
Kingdom. Energies, 6(10), pp.5023-5045.
Makos, J., 2015. An Overview of the PESTEL Framework. PESTLE Analysis, 18.
Newton, P., 2014. What is the PESTLE Analysis?.
Ng, K.B., Leung, G.K., Johnston, J.M. and Cowling, B.J., 2013. Factors affecting
implementation of accreditation programmes and the impact of the accreditation process on
quality improvement in hospitals: a SWOT analysis. Hong Kong Medical Journal.