Strategic Analysis of Aldi: Deliberate, Emergent Strategies, PESTLE

This report provides a comprehensive strategic management analysis of Aldi, a prominent discount supermarket chain. It begins with an introduction to strategic management and Aldi's global presence, followed by an examination of deliberate and emergent strategy formulation approaches. The core of the report involves a detailed PESTLE analysis of Aldi, assessing political, economic, social, technological, legal, and environmental factors impacting the company's operations. The report also incorporates Porter's Value Chain to analyze Aldi's activities and identify sources of competitive advantage. Furthermore, it explores Aldi's past strategies using Porter's generic strategies and the Ansoff matrix. The report concludes with recommendations for Aldi, based on the analyses, and emphasizes the importance of adapting to the changing business environment.

STRATEGIC
MANAGEMENT
1

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Deliberate and emergent approaches to strategy formulation..................................................3
2. PESTLE analysis of Aldi.........................................................................................................6
3. Porter's Value chain.................................................................................................................8
It can be stated that this is a strategic management technique given by the Michael .....................8
porter that helps the organization in creating the competitive advantage, value by .......................8
Primary and Secondary activities.....................................................................................................8
4. Aldi's previous strategies using porter's generic strategy and Ansoff matrix........................12
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
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INTRODUCTION
Strategic management is a continuous procedure of planning, directing, controlling and
analysing all necessary requirements of the organization which helps them to achieve its pre-
defined goals and objectives (Reuer, J.J., 2017). Changes within the business environment
requires continuous changes in company strategies as well in order to achieve success.
Aldi is a brand owned by two German families and thus also known as discount
supermarket chains having approximately 10,000 stores in 20 countries with an estimated
turnover of more than €50 billion. The business activities was split into two separate groups in
1960, namely Aldi Nord having headquarter in Essen and Aldi Sud having their headquarter in
Mulheim (Griffith, G., 2019).
The report will include the knowledge about tools and methods used by Aldi for their
organizational preparation and decision-making. Assessment of macro environmental issues that
has been faced by Aldi in the past. The company picked for analysing the key points of this
report is Aldi stores Ltd trading in UK. The study will include the incorporation of porter's five
force model, theoretical structure of VRIO, SWOT and PESTLE. Apart from this, the study will
also highlight the concept of Aldi's strategies in order to generate recommendations for the
company.
MAIN BODY
1. Deliberate and emergent approaches to strategy formulation
Formal strategies is the visual sense towards important management preparation in Aldi
that emphasizes the benefits of intentional actions. Aldi is famous because they acknowledge the
need and demand of workers of extraordinary quality in order to built better environment of
consumer services to their customers according to their taste, preferences, purpose, dream, values
and priorities. The basic priority for the organization is that the Aldi provide their complete focus
towards the training and development of their workplace (Fadeyi, O., 2018). It endeavours to
provide their employees with the requisite skills and knowledge in order to fulfil their roles and
responsibilities in successful manner and thus also cultivate their workers within the
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organization for the total of their working time so that all the employees are able to maintain
their jobs and interests as well.
Decision-making and strategies adopted by Aldi
In addition to their own organizational attribute, companies have often scheduled their
functions around consumers and competitors. The strategy formulation done by company is
always according to their competition keeping in mind. The two key elements of strategic
planning differ from decision-making of the Aldi (Kanagal, N.B., 2017). Strategies that help the
organization to manage the length of service of company decisions in order to make them
effective even in their longer span of time.
Company utilize long term strategies which are not everyday task for their managers to
generate and take on the spot decisions and create long term approach in order to resolve
conflicts and preparation of profit margin or maximize profitability within the establishment.
However, it has been analysed that day to day continuous actions also affect an organization's
long term plan of action movements. Under such situation, the Aldi should design or implement
new growth strategies, at the time of planning for new strategies for the betterment of the
organization along with taking certain factors into consideration are: Workers: Employees or workers within the organization are treated by Aldi as their
investors as they can be referred as internal shareholders. Aldi support and require hard-
working candidates, sincere towards their roles and responsibilities along with their
fulfilment with complete loyalty and honesty. Root-age: Aldi's biggest strength are their resources and thus behave as driving force for
the company success and also utilize low cost and high quality strategy in order to
become successful in front of their competitors (Burgherr, P., 2018).
 Deputation: Appropriate delegation of activities to each and every individual within the
organization is the strategy that has been adopted by Aldi so that every individual is able
to manage their work and task in appropriate manner. They follow delegation procedure
within the organization.
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BCG growth matrix of ALDI
The matrix is able to develop and examine product lines offered by Aldi in terms of
growth opportunities: Star stage: Aldi is acknowledged as the leader of the market because of their dedication
towards keeping their position high in terms of leadership in front of their competitors.
The company decides to continue their activities for longer span of time. Aldi is
positioned among the top 100 companies of United Kingdom and also known as the
leader of the market space (Lin, K.S., 2019). Question mark: The mark bring up to those products that has been offered by company
which have low market share and high rate of growth. The products are also profitable for
the firm but does affects the cash flow of Aldi. Cash cow: This stage includes those products produced by Aldi which requires low
investment but highly productive within the market space. Under such situations the
market growth and share also relatively high for the firm. According to complete
evaluation, it has been analysed that the excess or high amount of cash is required in star
stage products and query products.
 Dogs: Goods and products of Aldi those are not able to produce enough profits or market
share and further development for the company are comes under this phase (Kader, M.A.,
2020). So, the products that comes under such category should be emerged by the firm in
order to avoid further losses.
However, from the above evaluation, it has been analysed that the UK companies must
follow the laws that has been proposed by government in order to launch new legislation which
majorly impact the company Aldi. Non-compliance of activities should be fines up to £500,000
which results in loss of income of the organization and also damage the brand image within the
market space as well. Aldi had to keep their operating cost low in order to preserve their position
over their competitors in order to survive tax relief from government. The national minimum
wage level of UK is £6.70 and the others share their views that Aldi provides maximum wages to
their staff members (del Hoyo, A.F., 2019).
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Aldi maintains that high quality products which fulfil the requirements of consumers and
satisfy their needs. At the time execution of plan, Aldi provides great assistance to their
employees in order to fulfil their duties and responsibilities. Aldi utilize diagram related
approaches in order to give detailed information to their employees so that they are able to
complete their tasks and responsibilities in appropriate manner. With the help of this technique,
Aldi is able to resolve problems effectively and distribution of responsibilities to individuals. The
administration of Aldi is responsible for successful implementation of strategies.
The accessibility of key resources is an important variable in the implementation of new
plan within the organization. Aldi make sure about the involvement of their necessary resources
along with execution of tools for differential approaches such as availability of money, human
capital, loans, inventory, etc. Human capital plays an important role in the successful
implementation of skilled and efficient employees. For the implementation of new strategies,
Aldi ensures that all the necessary resources should be available.
2. PESTLE analysis of Aldi
The business tactics of has been analysed on the basis of PESTLE analysis which helps
the organization in order to examine various external factors such as political, social,
economical, technological, environmental and legal factors. This particular analysis highlight
different scenarios which affect the business of Aldi in term of external environment which are
not under control of the organization. It helps to analyse business dynamics in order to improve
business activities continuously (Luck, S., 2020). Political factors: Aldi is a German based supermarket chain having stores in over 20
countries. Conflicts between the countries globally affects the sustainability of the firm
within the market space. Even after Brexit effect, things got turned in favour of Aldi as
the prices of goods will rise, the supermarkets will transfer this rise into the products
which has been charged from the consumers force them to shift from them to discount
providing companies such as Aldi. However, Aldi faced threat from weakening of the
pound currency value and thus a price war has been started between the super marketers
in the UK due to Brexit effect which had become the major reason for dropping down the
profit margin of Aldi. Politically, the government of UL must concentrate on offering the
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best value products in the future through its effective policies and regulations as the level
of concern of packaged food items has been enhanced within the customers. Economic factors: In context of market share, Aldi became the fifth biggest supermarket
company. Aldi provides a lot of convenience services due to which the consumers
preferences had been transferred from other super marketers to the Aldi. However, Aldi
was also responsible for giving impact upon Australian economy (Bruijl, G.H.T., 2018).
Enhanced supermarket discounting led to reduction in prices of goods which makes it
more difficult for Australian reserve bank in order to raise from inflation situation. Due to
enhanced demand of Aldi, Other super marketers have to close their stores and others
might announced a merger. State intervention with protective initiatives for instance taxes
on the protection of goods could have particular importance for the growth of Aldi. Social factors: Aldi is the highest paying supermarket in the UK as they give raised pay
scale to around their 3000 staff members. High wages leads to better standard of living.
With the involvement of better services which will help the organization to enhance their
brand image such as teaching various children in the UK to prepare healthy food for them
and thus benefiting the society. Aldi believes in giving its consumers a satisfactory level
through their services and paying less than they will pay at any other place. However, the
company provides vary basic interior infrastructure with no fancy lights and spacious
rooms. Recently, Aldi is financially stable along with the high currency without facing
any kind of fluctuations. However, if the prices of fuel became higher than it will provide
negative impact on the low pricing strategy of company. Technological factors: In order to enhance their customer base, the company needs to be
updated in terms of technology. Customers are not at all interested to wait and stand in
longer queue and wait for their products to be delivered. So, in order to fulfil these
requirements company offers e-commerce platform which is designed in a way that
serves both online and offline consumers (Mclarney, C., 2017). With the help of internet,
company is able to approach various consumers with the help of variety of platforms such
as Facebook, Twitter, etc. which allows the organization to interact with their potential
customers. Aldi would do well with handling their business activities on online platform
along with the usage of internet while advertising their products.
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 Legal factors: Company has faced various copyright issues on its brand campaign. The
jurisdiction does now allow the company to use comparative advertising in their print
banners which creates problems for the organization and thus, the company had to stop
its comparative advertising. For this, Aldi also faces legal actions as well and had to see
those cases vary seriously in order to sustain their brand value or image within the market
space. Aldi has legal relations in order to ensure smooth functioning of their activities.
 Environmental factors: Aldi purchases their resources or products that has been utilized
by them during production process through local distributors or farmers in order to
maintain their low pricing strategy at higher quality. The company plans for using
recyclable packages, reusable or compostable by 2025 (Alpert, G.P., 2018). These
strategy will able to attract more environmental friendly consumers towards the business
activities of organization along with saving the outer environment . The Aldi is currently
working on reduction of waste production and emission of dangerous pollutants within
the environment. Aldi is an environmental friendly organization which attracts more
consumers as they opposed polythene bags in order to serve environmental purposes.
3. Porter's Value chain
It can be stated that this is a strategic management technique given by the Michael
porter that helps the organization in creating the competitive advantage, value by
Primary and Secondary activities.
Aldi Porter's Value Chain
Primary Activities:
It creates the competitive advantage and value for the Aldi by including essential five
Components. It involves all the selling and producing activities for there targeted customers.
1. Inbound logistics
Inbound logistics is the first stage for the product receiving, storing and disseminating for
manufacturing of the goods for that it purchase the material in bulk from the suppliers. To
receiving, storing and disseminating the product it requires warehouse for handling of material
and to store physical products. In inbound logistics includes customer data collection, customer
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access and services.(Buzatu, and et. al., 2019) It competes with the competitor and gain
competitive advantage in the market for that Aldi reduce its cost by purchasing their product
from their own brand.
2. Operations
Operations is the second stage it relates to the product life cycle and services and in this stage
shift of the raw material into finished goods. It includes component fabrication, branch operation
and assembly. Aldi have their own brand by that it retain their customer to offering new, the best
products and also not compromising with the quality of products.
3. Outbound logistics
Outbound logistics is the third stage it relates with the distribution of the finished good to their
end user with the helps of different modes of channels and methods such as retailer, wholesalers,
warehousing, report preparation, order processing and distribution network. Aldi have their own
transport facility so by that it supply their product to end user and through that it gain
competitive advantage.
4. Marketing and Sales
Marketing and sales is the fourth stage and it is the most important stage for every company
because converting the raw material into finished good and with the help of distribution channel
supply in the market is not created the value to Aldi. It has to invest in the sales and marketing
activities so that customer knows about the product and services for that they have to appoint
marketers and sales agent.
5. After sales Services
After sale services is the last stage and its help in the developing customer loyalty and in the
today's era customer prefer post-sale services rather than pre-sale services. After sales services
includes-maintenance of post sales, installation services, part supply and so on. Aldi provides
better support services, gain customer attention, customer loyalty and not harm their reputation
of brand.
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Secondary Activities
The secondary activity is support to primary activity it facilitates and coordinating primary
activity. There are four types of supportive or secondary activities are-
1. Firm Infrastructure.
The first supportive activity is manages firm infrastructure, Aldi permit to enhance the worth of
the entire chain by the effective management of infrastructure. It includes the accounting,
management of quality, planning, strategic management, general management, financing,
handling of legal matters. In the market it strong there competitive position by controlling on
overhead cost.
2. Human resources management
Human resources is the important asset for Aldi and in the success of the organizations it plays a
very vital role. It is a supportive activity for every organization and it includes people planning,
recruitment, development and training, selection, assessment of skill and hiring at corporate and
business level. The Aldi hire the talented people and provide proper training by that it fulfil their
targeted objective and achieve success. Its training cost and analysing hiring with the relative
return help in achieving the objective of cost minimization. It fully dependent on their employee
talent by that importance of supportive activity is increases.
3. Technology Development
In the advanced technological and modern technology development play an important and all the
activity of value chain depends on technology. In the upcoming and recent era all the thing
depends on the technology and ALDI understand the significance of technology in the activity of
human resources, manufacturing, production, marketing, distribution, field-testing, process
engineering, feature design. (Baviera-Puig, and et. al., 2017)The recent outbreak of COVID-19
hits badly the economy but during the biggest pandemic the digital technology very crucial role
in the every sector of the economy in the retail market it supply their product online to their
customer and fulfilling the needs of customer.
4. Procurement
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Procurement is the also an important supportive activity of the organization it generally means
purchase agreement between the company and supplier. It purchases input includes the
machinery, raw material, building equipment, equipment related to laboratory, machinery, office
equipment, supplies etc. ALDI made payment to supplier on time and purchase quality product
from supplier.
2. VRIO Framework- VIRO framework is a strategic management technique that provide
organization competitive advantage for the longer period of time and help in protect the
capabilities and resources. VRIO framework assess the sustainability of ALDI strategic
capabilities.
Resources Valuable Rare Imitable organization
Financial
Resources
YES Yes YES YES
Local food
products
YES NO NO YES
Patent YES Yes NO NO
Employee YES YES NO NO
Cost structure NO No YES YES
1.Valueable
The VRIO Analysis represent that financial resources of Aldi is very valuable it help in investing
the money for newer opportunity and also for expanding the Business. Its local food products are
valuable their customer give high value to their local food product because of product
differentiation and it helps in compete with the customer. (Miethlich, B.and Oldenburg, A.G.,
2019)The patent of ALDI is valuable so without the interference of competitor it allow the firm
to sell the product in the market. It employee is valuable resources and belief that it is important
asset of the organization their employee give productive output. Its cost structure is
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not valuable because the method of production is not proper
2. Rare
The VIRO Analysis of ALDI represent that financial resources is valuable and it a strong
financial resources. Its local food products is nor rare it can be easily available in the market. It
patent make rare from the other competitor so no one sell their same product in the market.
Emplyoyee is rare because its employee is highly skilled and trained and its cost structure is not
rare
3. Imitable
The VIRO Analysis that financial resources of ALDI is imitable and the its local food is not
imitable and are not costly products. Its patent is not imitable so no one can copy their product
without their permission. It employee is not imitable because firm properly train their employee
and the cost structure if the firm is not imitable.(Reinartz, Wiegand, and Imschloss, 2019)
4. Organization
The VIRO analysis of ALDI represent that financial resources is properly organized and its local
food products, employee is organized. Its patent and cost structure is not properly organized
4. Aldi's previous strategies using porter's generic strategy and Ansoff matrix
According to the porter's five force generic strategy, Aldi is investigated as follows: Risk of new entrants (Low): Due to the increased numbers of barriers between the way
of new retailers, the most appropriate aspect of super marketers is the fact that new
entrants are at lesser risk. Thus it is understood that, Aldi is a profitable enterprise and
huge profits in this business activity. However, it does face high amount of competition
from other existing competitors in similar industry. Risk of substitutes (Low to middle): At the time when the Aldi starts their business
activities, the organization have to face a competition risk, although it is small to
moderate but in their near future it will definitely likely to enhance as the rivalry
companies tries their maximum to beat them (Dawes, J., 2018). Aldi sustain their market
advantage from giving high quality of goods at lower cost. This is the main strategy in
which the competitors find it difficult for them to beat Aldi as the prices of their products
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are 20-30% less than other market prices. Aldi also introducing new strategies in order to
reduce threat of substitutes. Control for suppliers (Moderate): Aldi operates more than 10,000 shops globally,
purchase their material from suppliers in large quantity and then has their own purchasing
power. The company purchase from several countries in order to gain advantage of power
and price. Organization have their own bundle of delivery arrangements for their own
gain. The providers help them to manage costs and win the contests from their
competitors. Strength of buyers (High): The buyers is known as the king for the business as they have
the total control in their hands in order to give success to the business. The customers
have various choices as a lot of sellers has been available within the market space.
Competitors are trying their maximum to copy the products from each other and provide
them at competitive prices. This thing strengthens the influence of consumers and Aldi
cope up with all such things by providing high quality at low cost.
 Existing rivalry threat (Medium): Aldi have medium range of threat from their
competitors since there are several retailers worldwide in the similar industry but Aldi
remains a competitor by providing or maintaining low cost strategy while giving high
quality. For its special and effective strategies, Aldi is gaining more and more
performance.
Ansoff matrix of Aldi
Aldi should implement the below described approaches for better performance in the
future with the help of Ansoff matrix method are: Market penetration: Aldi should open more retail stores and thus focus on developing
various customer types. The company is able to attract lower middle level customers
along with the introduction of loyalty cards within their business activity. Aldi has to
provide adequate publicity in their future in order to promote local supporting team. Product development: In order to detect expansion of business opportunities, Aldi
requires to keep its cost margin relatively low. In order to achieve significant sales for the
future, Aldi will offer new products and services into their product line. Aldi is also able
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to introduce new delivery procedure through which they are able to meet the customers
desires along with quality of goods. Market development: Aldi will broaden its activities in future terms and thus create a
global role. Aldi can not only focus on expansion of their business activities in various
sectors of economy but also widen its company in the grocery retail chain providers.
 Diversification: Aldi must modify its products portfolio as the success of the company is
completely dependent upon the products and services offered by them to their consumers.
Moreover, the organization needs to be focused on delivering broader range of products
in order to attract more consumers and capture potential market share.
Strategic assessment of Aldi
Aldi's success came with the distribution of products at lower costs offered to different
sectors of people. However, the company has worked hard to improve the quality of goods and
services and reach the situation of profitability. Keeping the cost low along with the high quality
is the competitive objective of the firm through which company enhances their market share
(Loredana, E.M., 2017). Customers want high quality brand items along with effective customer
services through which the consumers are able to trust them. Currently, Aldi is at position which
will enhance their market share and will sustain if the company strengthen their strategies and
maintain customer loyalty.
The policies adopt by Aldi in order to retain their prices so that operating costs can also managed
effectively are: Continuous improvement: All staff members must ensure continuous changes in order to
sustain efficiency. Members should understand the importance of continuous
improvements within the organization and ensure smooth functioning of the organization.
Aldi defines their strategies in efficient manner and thus implement them.
 Just in time delivery: Aldi just have the requirement of stock available at right time in
order to maintain their supply and demand of goods and services offered to them. This
strategy helps the organization to manage their inventory as due to negligence of this, the
company have to wait for longer duration of time for goods and thus waste time and also
drop down the sales volume of the company.
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On the basis of above analysis, it has been identified that Aldi have to proposed new products
such as organic vegetable and fruits as well as other services has to be released within the Asian
market.
CONCLUSION
From the above report it has been concluded that Aldi Ltd stores uses variety of
approaches. Consumers change and low price level is the main strength which helps the Aldi to
become separate them from other competitors. It has been analysed during the complete
evaluation of study that Aldi is a strategically stable company. The company utilizes cost control
strategy and competitiveness as combination of strategy in order to grow their business and
expansion of the market to ensure the market success and could expect further improvements
through effective or improved strategies. For future perspective, Aldi should start customer
loyalty schemes which introduce a loyalty system and encourage customers to remain with the
organization.
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