Strategic Management Report: Analysis of ALDI's Business Development

This report provides a strategic analysis of ALDI, a German-owned discount supermarket chain. It examines the company's ownership history, including its split and expansion, and analyzes its core business, including whether it should diversify into fresh, organic, and convenient product offerings. The report also assesses market forces, including competition and changing consumer preferences, and uses the Balanced Scorecard to evaluate ALDI's financial performance, customer perspective, and internal business processes, forecasting its future in the Australian market. The analysis covers key milestones in ALDI's Australian expansion, financial performance, and strategic recommendations for future growth, considering factors like vegan product demand and the need for improved customer service.

Research Analysis

Executive Summary
Strategic management effectively determines actions, processes and decisions that has
been undertaken by an organisation in order to lead towards pre determined growth and change.
There are different types of level that are included in strategic management process. Project has
been conducted on ALDI. In addition with this report include principle elements and issues that
affect organisational growth. Further report cover theoretical framework with the help of which
organisation can increase their workplace efficiency.
Table of Contents
Executive Summary ........................................................................................................................1
INTRODUCTION...........................................................................................................................3
Q1: Report on the company’s current ownership, previous ownership, the current share price,
and movements in the share price over the past ten (10) years...................................................4
Q2: Core business of the company. Should the company continue with this or should it
diversify?.....................................................................................................................................6
Q3: Market forces. Facing market pressures, what will be the future for the business ten (10)
years from now?..........................................................................................................................8
Q4: What are the “elephants” facing the company?.................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Strategic management effectively deal with organisation strategic decision that decide
company long term health. It is mainly termed as a comprehensive plan which is designed to set
actions as to effectively meet certain specified goals. In this report formative discussion has been
made on ALDI which a German family owned discounted supermarket chains. In this report
formative discussions has been made on ALDI current and previous ownership along with
market pressures and elephants that has been facing by company.
Q1: Report on the company’s current ownership, previous ownership, the current share price,
and movements in the share price over the past ten (10) years
In 1913, a small grocery was opened in Essen, Germany, by Anna Albrecht. In 1948,
Albrecht's sons Karl and Theo took over the business and expanded it to four stores throughout
Germany. The stores were called “ Albrecht Discount”. The name “ Albrecht Discount” was
eventually shortened to Aldi in the year 1962. In mid -1960's, Company was divided into half
due to the disagreement on whether company should sell cigarettes. Karl Albrecht controlled
stores those were located in south while Theo Albrecht controlled Stores those were located in
northern Germany (Sussman, McMahon and Neale, 2019). The two stores those were termed as
Aldi Nord sell cigarettes while Aldi Sud does not.
The foremost US Aldi store was opened just few years after in the year 1976 in south-
eastern lowa. The year 1979, Trader Joe's chain was purchased by Theo Albrecht. Aldi Nord still
operate Trader Joe's within US. By the year 1999, Aldi operate their business while having
locations situated in Ireland and Great Britain along with locations in Australia, Hungary and
Slovenia. Current there are more than 1600 stores of Aldi across 35 states. It shows that company
doubles their chain that they had a decade ago. As now company is having stores those who
operate their services in thousand of locations in all around the world. It has been seen that by
the end of the year 2022, Aldi plans to operate their business by having 2,500 stores in US. In
addition with this, it has been seen that company performance is on track that further lead them
towards becoming third-largest grocery in the world by store count by putting behind kroger and
Walmart.
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ALDI witnessed strong growth expansion form starting say after their first debut store in
the year 2001. Company build estimated number of 500 stores across ACT, VIC, NSW, WA,
QLD and SA. Within short span of time company place their position in top 10 Australian
retailers (Sussman, McMahon and Neale, 2019). It has been seen that ALDI effectively influence
grocery prices and improved the quality as well as perception of private label goods. In addition
with this, company effectively introduced market leading initiatives in Australia. It has been seen
that company constantly look towards new logistics, employee opportunities, property as well as
major investments in within new stores.
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Illustration 1: Sales forecast for ALDI 2010-2020

It has been seen that price range of Aldi is 25% cheaper as compared to price range of
Woolworths and Coles. In addition with this, company effectively expand their product range
from last few years.
ALDI Business Information
Since its first stores opened in Marrickville and Bankstown Airport on January 25, 2001,
ALDI has grown to operate almost 500 stores across Australia. ALDI Australia now employs
over 11,000 people and partners with almost 1,000 Australian suppliers. Key milestones in
ALDI’s Australian expansion include: 2001: ALDI opens first stores in NSW (Marrickville and
Bankstown) 2003: Opens first stores in VIC (Heidelberg West and Chirnside Park) 2004: Opens
first stores in QLD (Chermside and Salisbury) 2005: Opens 100th store 2008: Opens 200th store
2013: Opens 300th store 2016: Opens first stores in WA and SA 2017: Opens 500th store.
Q2: Core business of the company. Should the company continue with this or should it
diversify?
ALDI is mainly a common brand with having estimated turnover of €50 billion and more.
Company have 10,000 stores within 20 countries around the world. ALDI perform their business
in retailing sector in private sector. Company was founded in the year 1946 and got split in two
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different parts. Main products of company include household essentials, beverages and food.
Company offer their services at discounted range. This lead them towards aggressive growth. In
order to effectively serve customers with best company announced their new product expansion
in order to offer more fresh products to consumer as per their needs and demands. By evidencing
this significant business growth ALDI may diversify their focus on easy to prepare, organic and
fresh products. Currently company is having 1800 and more than stores around the world and in
middle of accelerated growth plan. Thus, in order to effectively measure growth in upcoming
years company should required to make more further investment as to effectively remodel and
expand their store to 2,500 till 2022 end. In addition with this, ALDI can have feature of
additional refrigeration space within which they can offer more convenient, fresh and healthy
products (Sussman, McMahon and Neale, 2019). In this modern advanced world, it has been
seen that individuals usually lead busy lives, thus, in order to make their life easier company may
offer them more convenient services while saving their money. This will make company to
evidence more economic and prosperous growth.
Along with diversification, ALDI must focus on their present offerings. For this they can
introduce preferences for fresh items that will include organic meats, sliced fruits, salad bowls
and gourmet cheeses. It has been measured that ALDI nationwide product roll out. Thus for this,
company may effectively satisfy needs of Australian customers by increasing organisation fresh
food selection near-about 40% with more new items. There are many range within which
company may expand their range of service proficiency with the help of which they can further
able to satisfy needs of customers. Company can increase efficiency of their fresh food selection
such as in Fresh and healthy selection ALDI can offer more ready-to-cook as well as organic
fresh meats products as to make easy for customer to make meal preparation easier. It has been
seen that people in Australia in now a days are more tend towards Earth Grown Line, this lead
them towards consuming food items that have more vegetarian options. Thus, ALDI can increase
their product range in vegan segment in which they can offer food products like Kale, chicken
less tenders and patties and quinoa crunch burgers. While if it is seen in convenient section
company can offer their services while expanding refrigeration offering within which they can
offer grab-and-go convenience items that may also include, vegetable snack packs, single-serve
guacamole, plus fresh fruit and organic hummus. Thus, by offering more easy-to-prepare meal
starters company can effectively able to attract large amount of population base in Australia.
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This has been seen that ALDI now provide one of the largest selection of private milk
alternatives. Thus, in order to diversify this ALDI may offer organic almond milk, full range of
lactose-free and soya milk, coconut milk and soya milk (Liang and et. al., 2019). This has been
identified that ALDI receive 300 and more than awards for their exclusive product lines, wines
and cheeses. In addition with this, with having a recognized product that cover Little Journey
premium baby essentials and simple nature products. Thus, with having a trusted emblems ALDI
is leading towards one of the highest growing supermarket store for three consecutive years.
Q3: Market forces. Facing market pressures, what will be the future for the business ten (10)
years from now?
With increase in competition ALDI measure highly competitive year as to operate their
services in effective manner in Australia supermarket industry. As there are number of traditional
giants exists in market that provide strong and tough competitive pressure to products like Aldi.
Thus, in order to have effective understanding of market issues it is important for company to
have both negative as well as positive perception related to Australian market segment. There are
number of challenges that has been faced by ALDI such as lengthy checkout queues which is
mainly caused by large number of consumer. As per according to UBS analyst Ben Gilbert,
entrance of ALDI in Australia has been a overwhelming success. With the increase in market
demand of vegan products there is a significant challenge in front of ALDI as they are required
to offer more vegetarian food products as to attract large base of customers. In addition with this,
company is facing challenges related to out-of-stock items, checkout services, and product range.
Thus, for this, in order to attract large base of customer segment ALDI is required to add more
vegan items as well as more sophisticated bread offer in their older stores. Thus, by making
improvement in they key essential areas company can effectively have focused approach towards
attracting large base of customers.
In relation with this, Balanced Scorecard acts as a strategic performance model with the help of
which ALDI can effectively able to translate their organisation vision as well as mission into a
actual and real base actions with strategic planning (Phillipov, 2019). In addition with this, it will
also help in providing information related to managing feedback along with determining target
figures. In this model company can effectively able to set measurable indicators that will
simultaneously aid them to support and adjust chosen strategy. With the help of balance
scoreboard company can effectively able to operate their business while having organized vision
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and strategy. In this company is required to measure activities by considering four perspectives
that include the consumer perspective, the financial perspective, learning & growth and the
internal business process.
Financial Perspective:
It is important for an organisation to consider financial perspective as it is essential from
the point of view of financial bankers as well as shareholders. In this ALDI is required to
evaluate those activities and measures with the help of which they can effectively able to satisfy
needs and demands of shareholders. It has been seen in balanced scorecard that where there is
higher added value profit is also higher (Grimmer, 2019). In addition with this, by undertaking
this factor ALDI can effectively able to take an reliable insight into their sustainable and
operational management strategy that will further lead towards financial success. Thus, by
considering this ALDI can able to evaluate the factor which is required by them to identify the
attractiveness which is required by them in front of financial backers and shareholders.
Customer Perspective:
Each and every business organisation sustain in a marketplace as to serve a particular
need. This is mainly done with the assistance of targeting particular set of customer group in
mind. With the help of this company can effectively able to determine service, quality and price
of a product and a service. Thus, by considering this ALDI can able to set acceptable margin of
their products and services those were offered by them in Australian marketplace. It is important
for an organisation to effectively consider and try to fulfil expectations of customers with
changing time (Kim and et. al., 2019). This will lead them towards gaining more competitive
advantages while fulfilling need and expectations of large base of customers. Therefore, with
consideration of this factor ALDI can able to evaluate the possible attractiveness which is
required by company to showcase their customers.
Internal Business Process:
In this ALDI is required to evaluate their internal processes as to effectively identify
those internal processes that actually added value in their organisation. With the help of this they
can effectively able to evaluate those activities which are required to be carry out. In this added
value is basically related with performance geared towards consumer that results from alignment
in between decisions, processes and activities. By considering this, ALDI can effectively able to
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evaluate those activities which are required by them to excel as to effectively offer immense
level of satisfaction to consumers as well as shareholders.
Learning and Growth:
In this it is essential for ALDI to evaluate efficiency of their management and workforce
as to increase their learning abilities. As with the help of this they can effectively direct
continuous improvement of organisational activities. In addition with this, it is essential for
ALDI to undertake regular innovation as with the help of this they can effectively able to
challenge factor that are prevailing in dynamic environment (Brinkley and et. al., 2019). Some of
the factors include economic changes, new legislations and increase in competition. Thus,
considering this, ALDI can effectively able to sustain with their chosen strategy.
Balanced Scorecard Implementation
There are different types of steps that are mainly included in implementation of balanced
scorecard. In this the first step focused towards, management and setting up of strategy, mission
and vision by senior management. This form of strategy is mainly related with different types of
objectives that are termed as strategic objectives. In this, it is important to inform about
organisation strategic objectives, mission and vision with ALDI middle management. In addition
with this, managers are required to express their opinions as to effectively monitor future. While
if it is seen in customer as well as financial perspective ALDI with the reference to balanced
scorecard are required to conduct survey and can further conduct interview with customers as
well as potential stakeholder as to identify their actual expectations from them (Brandes and
Brandes, 2019). While, ALDI is required consult strategy with their senior as well as middle
management within which there are diverse range of critical success factors included as per
according to objective. Thus, in order to effectively implement balanced scorecard ALDI is
required to effectively consider all the above mentioned measures and then translate objectives
into operational activities as to operate their organisational activities in best effective manner.
Thus, by considering this performance measurement approach ALDI can effectively able
to underway related activities which are required by them to consider while conducting their
business in Australian marketplace. In addition with this, it will also aid company to measure
their cross-functional integration, global scale, customer-supplier partnerships and continuous
improvement rather than accountability of an individual (Brinkley and et. al., 2019). Thus, with
the help of Balance Score card ALDI manager can effectively able to understand and combine
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customer, organisational learning perspectives, innovation, financial and internal process. This
will further aid managers to improve their problem solving and decision making process as lead
towards more sustainable growth.
Q4: What are the “elephants” facing the company?
There are diverse range of challenges that has been faced by ALDI. Some of that include
changes in legislations or Australian government, Increase in currency fluctuations, economic
slowdown and dynamic change in needs and demands of customers (Aldi to step up challenge to
supermarket giants Coles and Woolies. 2019). In addition with this, it has been seen that
individual now a days are more preferred towards vegan diet. This is also the one the most
challenging elephants that has been facing by company (Azeem and et. al., 2019). Thus, for this
it is essential for company to consider some related required and effective measures as to
overcome them in best effective manner. In addition with this, ALDI is effectively required to
evaluate each and every customer segment within Australia as to offer products and services as
per according to their needs and demands.
CONCLUSION
As per the above mentioned report, it has been concluded that in order to effectively
increase business efficiency company is required to undertake measures with the help of which
they can increase work productivity. In addition with this, report include balanced score card
implementation with the help of which organisation can identify every required prospective .
Thus, by considering this performance measurement approach ALDI can effectively able to
underway related activities which are required by them to consider while conducting their
business in Australian marketplace.
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REFERENCES
Books and Journals
Azeem, M. M. and et. al., 2019. Response to stockout in grocery stores: A small city case in a
changing competitive environment. Journal of Retailing and Consumer Services, 49,
pp.242-252.
Brandes, D. and Brandes, N., 2019. Bare Essentials: The ALDI Story. Linde Verlag GmbH.
Brinkley, C., Glennie, C., Chrisinger, B. and Flores, J., 2019. “If you Build it with them, they
will come”: What makes a supermarket intervention successful in a food
desert?. Journal of Public Affairs, p.e1863.
Brinkley, C. and et. al., 2019. “If you Build it with them, they will come”: What makes a
supermarket intervention successful in a food desert?. Journal of Public Affairs,
p.e1863.
Grimmer, L., 2019. Disrupting the giants: How independent grocers respond to the supermarket
duopoly in Tasmania, Australia. In Case Studies in Food Retailing and Distribution(pp.
13-24). Woodhead Publishing.
Kim, D. H. and et. al., 2019. A comparison of the Health Star Rating and nutrient profiles of
branded and generic food products in Sydney supermarkets, Australia. Public health
nutrition, pp.1-8.
Liang, S. and et. al., 2019. Comparison between serving sizes of cakes and muffins sold in
Australian supermarkets and coffee shop chains. Nutrition & Dietetics.
Phillipov, M., 2019. Supermarkets, television cooking shows, and integrated advertising: New
approaches to strategic marketing and consumer engagement. In Case Studies in Food
Retailing and Distribution (pp. 255-265). Woodhead Publishing.
Sussman, R. L., McMahon, A. T. and Neale, E. P., 2019. An Audit of the Nutrition and Health
Claims on Breakfast Cereals in Supermarkets in the Illawarra Region of
Australia. Nutrients, 11(7), p.1604.
Online
ALDI New Store Growth and Remodels Fuel Fresh Product Expansion. 2019. [Online].
Available Through:<https://www.prnewswire.com/news-releases/aldi-new-store-
growth-and-remodels-fuel-fresh-product-expansion-300694197.html>.
Aldi to step up challenge to supermarket giants Coles and Woolies. 2019. [Online]. Available
Through:<https://www.smh.com.au/business/companies/aldi-to-step-up-challenge-to-
supermarket-giants-coles-and-woolies-20140815-104cml.html>.
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