Arden University BUS6002: Strategic Management Case Study on Aldi

This report provides a comprehensive strategic management analysis of Aldi, a prominent supermarket chain. It begins with an introduction to strategic management and its application to Aldi, followed by an examination of emergent approaches to strategy formulation, particularly focusing on maintaining organizational balance and adapting to market changes. The report delves into the impact of macro and comparative environmental issues, utilizing PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors affecting Aldi's performance. Task 3 analyzes Aldi's strategic capabilities through Porter's value chain framework and VRIO framework. The report also explores Porter's generic strategies and the Ansoff matrix, examining Aldi's approach to internationalization. The analysis includes recommendations for future strategic directions and concludes with a synthesis of the key findings and implications for Aldi's long-term success.

Strategic Management

Contents
Introduction......................................................................................................................................3
Main body........................................................................................................................................3
Emergent approaches to strategy formulation and recommendation of how balance should be
transformed for future.............................................................................................................3
Impact of macro and comparative environmental issues and challenges faced by Aldi
company.................................................................................................................................5
Task 3...............................................................................................................................................7
Analyse Aldi strategic capability by using Porter’s value chain framework.........................7
VRIO Framework...................................................................................................................9
Task 4.............................................................................................................................................10
Porter’s generic strategy framework....................................................................................10
Ansoff matrix........................................................................................................................11
Approach to internationalisation that Aldi has adopted.......................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

Introduction
Strategic management is considered to be the continuous process of planning, monitoring
and controlling of business activities in such a manner which can helps the company in achieving
its goals and objectives. It included formation of strategy for gaining competitive advantage in
the market. In this report there is an analysis of internal and external environment actor which
can affect the business performances. It helps in achieving organisational gaols short term and
long-term goals. There is a strategic management provides direction to the company so that
which strategies they should have to follow and what changes they have to do in their company
so that customers are being attracted towards their products and services (Afanasieva, and et.al.,
2020). This results in optimum utilisation of resources in company. In this report the organisation
which is chosen is Aldi organisation. This was founded in the year 1946. Company deals in
providing variety of products a service to the customers like retailing sector, groceries etc. this
report includes details of strategic approaches which is used by Aldi organisation. Also, there is a
strategic plan which is maintained for balance in an enterprise. There is a it also covers analysis
of macro environment factors that company faces. At it includes Porter’s model, VRIO and
Ansoff matrix for increasing knowledge of sustainability.
Main body
Emergent approaches to strategy formulation and recommendation of how balance should be
transformed for future.
After the recession of Britain, it is seen on customer shopping. As people have decrease their
shopping habits due to more expenses. Due to this Britain recessions, Aldi company has started
to produce and sell high quality of products and services to the customers at low prices.
However, after selling these products to the customer, they think that low prices products can be
results in low quality products. In the previous stage of company, they target potentials customer
which are ready to buy. To change this situation, company has made certain strategies to target
potential customers in order to maintain organisational balance (Allison, 2019). They have lot
tries to improve their quality of products a service. Company is mainly focusing on their cost of
operation and their quality of services and products. By conducting this they can attract more
customers and satisfy them more. Consumer always searching for high quality of products and
services. So, for maintain that balance Aldi organisation is improving its services. Also, by this

they can gain competitive advantage in the market and build customer loyalty. Company mainly
focusses on this control over cost.
For maintain cost of controls on operations of company, Aldi has adopted some strategic
approaches and strategies that are working lean system. This is one of the effective ways of
achieving their cost of control. By this strategy company can invest less in company and achieve
less.
Lean working system: This is the system in which company can reduce its waste operation by
not affecting productivity of company. Customers always wants value of that products which
they are paying for. By having lean working system, company can able to reduce its waste
material and also save its cost. This method helps continuously in eliminating waste material,
flexible continues improving and maintaining relationship with suppliers (Andreeva, and et.al.,
2019). So, the balancing between productivity, operating cost and profitability is mange by
company through lean working system. There are some of the elements which are discussed
below:
Just in time: This is the first element which is used in Lean working system as in this
company purchases that much raw material which is needed for the product development
because it is so much expensive. However, there is a negative side also because it requires lot of
time and efforts.
Total quality management: These methods build good bonds between suppliers so this
automatically results in improvement in the quality of product and services. In this company
mainly focus on providing quality of goods and services it the customers.
Time based management: To reduce time in operating activities employees must have skills
to perform them in effective manner. For this Aldi company makes continuous improvements in
providing training development sessions to its employees and staff members so that they can
work effectively in the organisation and results in saving time and efforts of them.
Continuous improvements: Employees of a company engage in the regular activities too
improve quality of products and services. This will help the company in retaining for long run
and also its employees retain for long time. Also, company execute and monitor all its
employee’s performance on regular basis (Ateba, and Prinsloo, 2019).
Now there are some of the recommendations which are used by Aldi organisation in order to
maintain its balance of profitability and cosy of operations in future. Company should focus on

cost leaderships style and differentiation strategy. They should focus on development of
production. Along with this company needs to make store layout which can attract more
customers. Then customers will feel happy to shop from their organisation.
Differentiation strategy: Differentiation strategy is used by company in order to innovate
something new or introduce some new product in the market. This can be in the form of any
products or services in which company is dealing. In this strategy, company introduce new
products in new market area. By using this strategy company can able to make new products and
by this they can attract new customers. This will result in increasing their customer base and
their profitability. By tis strategy company can extent their share of market a result in increasing
of their profitability and revenues (Barney, 2017). In addition, also by this company can gain
competitive advantage in the market among its competitors.
Cost leadership: Cost leadership is the strategy in which company cut out its cost of
operation and save more from the value of products and services. Also, company use this
strategy to control on its cost and save from their operations cost. By applying this company can
able to save its cost and can lead the market by increasing or decreasing the cost of products and
services. By having this strategy, company can able to compete better with its competitors and
results in increasing their profits and revenues. Further, but this they can hire skilled employees
and improved the structure of company.
Store layout: In this the recent store structure is not properly structured. So, it feels like so
much untidy and messed up. For that company needs to improve its structure of setting nd
keeping their product line in effective manner. This will help the customers in feeling happy and
purchasing more from the store. Eventually this results in increasing customer satisfaction.
Impact of macro and comparative environmental issues and challenges faced by Aldi company.
The macro environment analysis can be done by using PESTLE analysis. This analysis is
conducted by company in order to identify those factors which can affect the business
environment (Barney, 2020). these extremal environment factors are political, economic, social,
technological, environmental and legal factors which can directly or indirectly affect the business
performance. This analysis is discussed below:
 Political factors: Political factors are those factors which can affect the business
performance by their rules and regulations. Aldi is one the biggest supermarket of UK
and it is operating in more than 20 countries. So, if there are any conflicts between the

countries. This can affect the overall sustainability of company. But somethings have
changed by the presence of Brexit because prices of fresh goods and products are rise,
and supermarkets transfer this rise in prices to the customers. They are charging a greater
number of products and services to the customers. So, this becomes an opportunity for
company. But on the other hand, there is a threat for company as from weaking of ponds
and there was a price war between various supermarkets running in UK due to Brexit.
 Economic factors: By the need of 2018, Aldi company has 7.3% of UK grocery market.
At that time demand of customers have shifted towards Aldi because this is said to be a
discounter for customers (Cavicchi, and Vagnoni, 2018). As increased in discounting can
results in decreasing prices of products and services provided by company which
becomes difficult to Australian Reserve bank to boost inflation for years. Due to
increasing demand in Aldi, most of the company has slow down their business and some
companies have merged with Aldi to get profits. This creates opportunity for company to
gain competitive advantage in the market and getting more share in the market.
 Social factors: Recently Aldi is one the biggest supermarket of UK after paying to its
3000 staff members. As high employment wages can result in maintain high standard of
living to the people. By having this, people will more care about themselves and results
in paying more for their healthcare facilities and better foods. Company believes in
increasing its customer satisfaction by providing them quality of products. The rise in
Aldi supermarket shows that people are more attracted towards their products and
services and this creates for them. But on the next side, the threat for company is that
there are certain competitors of company which at the same time are perming better and
making strategies to attract their customers.
 Technological factors: Being a global supermarket chain company needs to update its
according to the changing nature of environment and customer demands. Customer
expect convince to them rather than standing in a long queue for few products and
services (Ignatiev, and et.al., 2018). For that company has provided the facility of
ecommerce which helps the customers in doing online shopping through company
application. This creates opportunity for them at the time of Covid 19 pandemic as most
the customer has done online shopping that time. Then threat for the company is that
there is an emergence of daily technologies in the market. So, for making use of new

technology, the cist of operations becomes high and this results in increasing price of
products and services.
 Legal factors: Aldi company is facing brand issue in its brand campaign which is “like
brand. Only cheaper”. The government does not allow company to make comparative
advertisements in print which became a problem for them. As a results company has to
stop this advertisement to display. So, this becomes a threat for company. as there is a
loss of company as customer could not be connected with the company products and
services. Company is also facing certain legal actions from small business. So, if they
win then this will impact products and services company is selling to customers. This
creates opportunity for them (Leiblein, Reuer, and Zenger, 2018).
 Environmental factors: Aldi company is purchasing their raw materials and stock from
local producers and farmers to make sustainable development in the country. It is
planning to convert its all-private labelling packages to reusable, recycling and
composable by the year 2025. This will help them in creating opportunity to attract
environment friendly customers. Company will charge for the paper bags and encourage
customers to bring their own bags. They are mainly working on reducing waste material
from home delivery packaging.
These are the certain challenges and issues which are being faced by company in order to
sustain development in the market. Company needs to works on those threats and turn them in
opportunities. This will help them in bring a lot of customers attracted towards their product and
services.
Task 3
Analyse Aldi strategic capability by using Porter’s value chain framework.
Porter’s value chain analysis is done by the company to generate value for its potential
customers. This model helps the company and organisation to evaluate their set of activities and
how they build their connection towards potential customers (Mahsud, Imanaka, and Prussia,
2018). This model is used to identify what are the company operating cost and profits. It results
sin understanding of valuable products and sources of an organisation. Aldi company’s is
performing Porter’s value chain framework in their working environment:

Primary activities: Primary value chain analyses is depending on the activities which are
directly serve to the customers. There are certain activities which comes in primary activities:
Inbound logistics: It is most essential to build relationship with suppliers of the company
because they are the one who are giving them raw materials. Analysis of inbound logistics
requires a company to focus on every task of bring transforming from raw materials to finished
goods. There are some of the examples of inbound logistic is retrieving raw materials, storing
inputs and distributing raw materials.
Operations: The importance of analysing the operational activities starts when raw
materials come into the factory. Then Aldi company starts it transforming of its raw material into
the finished goods.it involves both manufacturing and service operations. Analysis of operational
activity results in improving of the productivity and maximising its efficiency. And overall
results in increasing profitability of company (Napshin, and Marchisio, 2017).
Outbound logistics: Outbound logistic are the activities that transfer products to the
customers by passing through several intermediaries. These consist of warehousing, scheduling
and transporting of material to the destination. There’s Aldi can analyses the outbound logistics
to explore competitive advantage and can achieve its business goals and objectives.
Marketing and sales: in this stage, Aldi company display the benefits of products and
services they are selling to the customers. Only investing on high quality of products and
services at affordable prices is not enough, unless company will not invest on its product
marketing and promotional strategy. Aldi marketing strategy are pricing, advertising, sales
promotion and direct marketing to the customers. Effectively using of marketing strategy can
results in developing their brand name and standing in the competition.
Services: Services like pre sales and post sales are offered by company which is the most
important part of company to develop its customers loyalty. Now a day’s modern customers are
considering post sales services better for marketing and promotional activities (Okumus, and
et.al., 2017). So, the company must analyse the support activities to avoid damaging brand
reputation.
Secondary activities: These activities play essential role in coordinating and facilitating
the primary value chain activities. These activities are mentioned below:
Firm infrastructure: This denotes a range of activities like legal matters, quality handling,
planning and strategic management etc. Analysis of these activities are results in optimising the

value of value chain. Also, can control infrastructure activities which helps them to strengthen in
gaining competitive advantage among its competitors.
Human resource management: Aldi company is analysing it human resource department
by evaluating various aspect of HR these are recruiting, selection, rewarding and performance
management. Effective management HR can reduce competitive pressure based on motivation
and skills of its staff members (Regent, and et.al., 2019). The heavy dependence on employee’s
talent will increases the value chain support activity.
Technology development: Value chain analyse is depends on technological support. The
technological integration which is in production, marketing, distribution and human resource
activities which require Aldi to realises the importance of technological development. Some of
the examples of technology development are automation, software and technology supported
customer service.
Procurement: The procurement activity says that it is a process that is range from
equipment, raw material, machinery and supplies and other products which are required at the
time of finished products. Due to link with various value chain activity, Aldi company is
carefully considering its procurement activities to optimise the inbound and operational value
chain.
So, here are some of the linkages of value chain analysis which company should have to
focus upon. There is a reduction in growth and sales of a company which is not good for the
company and not a positive sign for value chain. For that company have to decrease its prices in
order to increase it sales of products and services. The technologies company is using should be
latest and should be save time and efforts which will helps both employees and company both in
analysing their profitability and revenues (Richard, and et.al., 2019). Human resource department
should have to recruit new and talented employees for the company so that they could innovate
something new strategy or any idea which helps the company in increasing their customer
satisfaction.
VRIO Framework
For being a sustainable in the market globally Aldi company is using VRIO model as in this
model they analyse the internal sources of company. The VRIO analysis also helps the company
in analysing competitive advantages in the market of company. There are certain resources of
company which are being used in a company. these are discussed below:

Valuable: The Adli VRIO analysis shows that company financial resources are highly
valuable because these helps the company to invest into various external opportunities. Also,
they help the company in compacting from various threats. According the company its food
product is highly valuable because these are highly differentiating from other companies.
Employees are valuable resource to them because their employees are highly trained and this
helps them in gaining productivity of company.
Rare: Financial resource are being rare to the firm because strong financial resource is being
possessed by only few firms. Food product are not being rare because it is easily provided by
other competitors of company (Rodríguez-Labajos, Thomson, and O’Brien, 2018). Employees
are rare resources because they are highly trained skilled which are not being found in other
company.
Imitable: Financial resources are costly to imitate because these resources are being acquired
by company though their profits and revenue. Food products re not that much costly to imitate as
these can be acquired by competitors and they can invest that amount in research md
development process. Then employees are also not costly to initiate because other companies can
also train their employees in effective manner.
Organisation: Financial resources are considered to be organised because they are being
used by company to invest in right places. Patents are not well organised and distribution
network is also organised because it uses network to reach out to customers.
Task 4
Porter’s generic strategy framework
This model is used by a company to gain competitive advantage in the market. It consists
of various strategies which are discussed below:
 Cost leadership: Aldi company usually focus on lower cost of production which helps
them in cutting cost of operations. They cut cost of transportation and manufacturing
(Thorén, and Vendel, 2019). This will help them in reducing cost of products and
services and gaining competitive advantage.
 Differentiation: In this company try to introduce new products into the market which is
unique from others. It will help them in attracting customers their brad and earning
competitive advantage.

 Focus strategy: in this strategy company focus on any one aspect that can be cost
leadership or differentiation strategy.
Ansoff matrix
This is a model which helps Aldi company in formulating policy and enhancing market
growth for future. It contains certain strategies discussed below:
 Market penetration: In this strategy company has sell more products in the existing
market. As, they have provided certain discounts and offers on their products a service
which are being selling to the customers. By this their existing customer base also
increases (Tumidei, Alexiou, and Bourne, 2020).
 Market development: in this strategy company target new market with their existing
products and services. As in previous time Aldi company has opened its branches in
certain countries which help them in increasing their customer base and targeting more
customers.
 Product and development: then in this company provide exiting products and services
in the new market. As Aldi company has buyed someone else products and sell them in
the existing market. This will help them in providing unique products to the customers
and this results in attracting them towards their brand.
 Diversification: This strategy is considered to be the riskiest stage because in this stage
company introduce new products or service in new market. This strategy helps the
company target more audience and results in expansion of their businesses and increasing
their customer base. This overall results in increasing profitability or revenue of the
company. In this stage company invest more in research work and checking feasibility of
new market so this is considered to be try most costly and risky stage (Fernandes and
et.al., 2017).
Approach to internationalisation that Aldi has adopted
Aldi company has established international presence in last many years. They have
successfully managed their retail sector at international level. They introduced themselves in
international market and gain a lot from them. Company has adopted the market penetration
strategy instead of market development strategy. Company focusses on dealing their products a
service in international and foreign market. Company has expanded its branch in Belgium,
Australia and other countries. By this they have maintained their reputation in other countries

also and increase their customer base both. Now company is running in about 20 countries very
well. The purchasing and supplier power is higher because there are many new companies re
opening in the market which are offering new schemes to suppliers. They have pushed many
efforts in domestic market and results in being successful in the country. They are applying many
strategies like marketing mix, STP approach and many other to target potential customers
towards their product and services and this has helped the company in increasing satisfaction of
customers and fulfilling their needs and demands (Venkateswaran and Ojha, 2017). And this
overall resulting ion increasing in profitability of company.
Conclusion
From the above report it has been concluded that internal and external analysis is important
for tec company to access their success and suitability in the market and among its competitors.
For analyses of these factors company has done macro and micro analysis. This will help them in
understanding about the factors which can affect their business performance. For this company
has chosen PESTLE analysis and VRIO and Value analysis. These factors help them in
analysing their situation in the market. Another company is using Ansoff matrix and Porter
generic strategy to compete with its competitors. All of these matrix are related with the growth
of company and sustainability for company. This will help them in analysing market situation
and customers taste and preferences. Company needs to Focus on these changes and factors and
make their marketing strategy accordingly.

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