Strategy Evaluation Report: Aldi's Strategic Direction Analysis

This report provides a comprehensive strategy evaluation of Aldi, examining its strategic direction, competitive advantages, and the impact of external factors. The report begins by evaluating the importance of clear purpose, vision, mission, and objectives in setting the strategic direction of organizations, using Aldi as a case study. It then assesses Aldi's competitive advantages using the VRIO framework, analyzing its valuable, rare, inimitable, and organized resources and capabilities. The report also analyzes the external environment impacting Aldi's business using the PESTLE framework, considering political, economic, social, technological, environmental, and legal factors. Furthermore, it applies Porter's Five Forces model to assess the competitive intensity within Aldi's industry. Finally, the report reviews Aldi's overall strategy, offering a critical analysis of its approach to achieve sustainable competitive advantages. The report concludes with a summary of the key findings and recommendations.

STRATEGY EVALUATION

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
1) evaluation of clear value, vision, mission in setting the strategic directions of the company.1
2) Asses the competitive advantages of the company.................................................................2
3) Impact of external environment on the Business.....................................................................4
Application of Porter five forces for selected enterprise.............................................................5
Description on review of chosen organization strategy...............................................................7
CONCLUSION ...............................................................................................................................8

INTRODUCTION
Business strategy is the firm's working plan for achieving its vision, prioritizing
objectives, competing successfully, and optimizing financial performance with its business
model. Company make the business strategies to gain competitive advantages and it also helps to
achieve goals and objectives of the company.
This report will take the case study of ALDI company which is owned by the two
German families. They are having more than 10000 stores in 20 plus countries and last year
company has created revenue over 53 billion.
This report will evaluate the clear value , vision and mission of the company to know
their strategic direction. It will also use the VRIO framework to access the competitive
advantages of the company. This report will analyze external factors and internal factors which
affect the business strategies of the ALDI comp-any. It will include Pastel and Swot to study
about all the internal and external factors.
MAIN BODY
1) evaluation of clear value, vision, mission in setting the strategic directions of the company
A strategic direction within a department or business as a whole allows you as a business
owner or manager to focus your employees on specific goals. Employees should understand how
each task fits into the larger business goal to gain a greater sense of importance in the larger
project (Ariyani and Daryanto., 2018). ALDI company is one of the top retailer company in, and
they are having good reputation in all around the world. To take the comparative advantages in
the market it is necessary for the company to make their strategic direction which can be
possible by setting their goals, objectives vision and mission. Company have to make their own
strategies direction, so they can have specific direction to achieve their business goals. Superiors
of the company such as companies leaders and managers are responsible to set the goals and
direction for the company. They make s the vision and mission for the company which is
followed by the employees who are working in the company. They get the set targets, and they
how what they have to achieve and gain. Without having the Strategic direction ALDI company
cannot be successful in their business . Their superiors have to make the proper direction which
can be followed by the other employees of the company. Clear purpose of the strategic direction
for the company provide the right path and company work and run their day to day activities to
achieve their daily goals. But the Vision and vision of the company are set for the years and they
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set the target that they have to achieve till this or that year. Superiors of the company also
responsible to bring the changes in the companies strategic direction if they need to changes.
They make the strategic direction through the decision making process in which leaders and
managers make the strategies for the company so they can run their business effectively and
achieve their goals (Arqawi, Abu-Naser and Al Shobaki., 2019). ALDI company have their own
strategies direction and their vision is “to enable Australian shoppers to live richer lives for
less.” and their mission is “to continually set standards for food retailing and to further expand
the market position of the ALDI North Group.”. This shows that what they have to achieve and
what their vision for the company and what they have to achieve to make their business
successful and effective.
To achieve their goals and their objectives company has implemented different different
strategies to achieve their goals and their objective. ALDI company is using advance technology
at their workplace to increase their production. The new IT technology at their workplace has
increased their production and they are able to boost up their production. This is affecting their
growth in the market, and they are gaining competitive advantages. They are having skillful
employees who have skills to gain the loyalty of the customers through their quality services.
This is because they get proper training buy the management of the ALDI company, and they
provide their employees proper training, so they can implement new skills and increase their
potential to work (Bohórquez and et.al., 2020). This also helps in the employee's motivation, and
they give their best to achieve companies goals and their objectives.
2) Asses the competitive advantages of the company
To access the competitive advantages for the ALDI company VRIO analysis will be the
best. VRIO is an initialism for the four question framework asked about a resource or capability
to determine its competitive potential: the question of Value, the question of Rarity, the question
of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the
resource or capability).
VRIO Analysis of ALDI company
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Valuable- Financial resources of the ALDI company is strong which shows the companies
financial resources are the highly valuable for hem to take the competitive advantages (de la
Rosa And et.al., 2019). This resources also enable them to invest in their companies technology,
operational activities etc, so they can take competitive advantages and achieve higher growth in
the market. Employees of the ALDI group are highly valuable for them because they are having
necessary skills to provide the goals and objectives of the company. They get training every 2-3
moth which makes them highly valuable for the this company. Employees are loyal with the
firm and the retention level for the company is high. Distribution network for the company is
valuable resource, this help them out in the research of the more and more customers. This also
ensure grater revenue for the ALDI company.
RARE- Financial resources of the ALDI group is rare because their only few companies in this
industry who have this much strong financial reprocess (Hernández, Lemus, and Medrano.,
2020). This makes their financial resources rare. Employees the ALDI company is rare because
its very rare to found skillful employees for the business who can achieve the goals and
objectives of the company but the training programs by the management makes their employees
rare and their working efficiency improved because of the training and development programs in
company. The patents of the ALDI group are very rare resources , because this patents are not
available this much easily and not possessed for the competitors. This allows this firm to use
them without any inflation from their competitors
Imitable- The financial resources of the company costly to the Imitate, this resources are gained
by the company through the prolonged profits over the years. New entrants and the competitors
would need similar profit for the years to accomplish these amount of the financial resources.
The local food products of the company are not that costly to imitate, this can be acquired by the
competitors as well if they spend some money on the researches and the development. This also
does not required any long period of time, that's why the local food product of the ALDI group
provide it with the temporary competitive advantages to acquire them in the long run.
Employees of the ALDI group are not that costly because the training provided by the company
used by the other firms to create good skill in their employees and the another reason is that the
employees can join the other companies if they will be good salaries from them.
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Organization- Financial resources of the company are used to invest on the operational
activities of the ALDI group (Nam and Yi., 2020). They use their financial resources and ensure
to use them properly, so they can achieve the opportunities and overcome from their threats.
Therefore, this resources prove to be the source of the sustained competitive advantages .The
patents of the ALDI group are not well and properly organized by them which means that the
company is not using their patents to their full limits . If they will use this at the full potential
then they can achieve the comparative advantages and create new opportunity for their business.
3) Impact of external environment on the Business.
External environmental factors has huge impact of the business f the ALDI group .
There are some factors such as political factors, environmental factors, social factors ,
environmental factors, technological factors and legal factors (Nurmi and Niemelä., 2018). This
impact on the companies strategic management and it can bring the change for the company ad
they have to make new strategies for their business.
PESTEL Analysis of ALDI group
Political- Political factors are having huge impact on the ALDI group because they are operating
their business in the all over the world and every country has their own tax structure which affect
the profitability of the company. But on the other side some of the countries invite them to
expand their business in their country because ALDI group is creating employment for their
society and people can be employees through the companies expansion in their country. After
the Brexit movement uncertainty remains in the future of European firms in the UK. While Aldi
made a foreign direct investment into the UK, and thus should not be affected as much as a firm
with a joint venture or import/export business model, the regulations and political relationships
between the UK and Germany specifically as one of the most influential countries in the Euro
zone is likely to present difficulties to Aldi’s UK operations
Economical- After the Brexit memorandum prices of the product in the UK increase and the
customers of the other companies turned toward the discount stores. Al Di is an Discount stores
so customers approach their product and this affect on the companies growth and their business .
In just a two years they have make huge revenue. Increase in the unemployment rate in the
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country also affect on the business of the ALDI Group because people are ready to work in the
less wages which is beneficial for them, and they can some of the money to develop their
products.
Social- company provide training to their employees, so they get chance implement new skills in
themselves. This result in the employees performance and company can achieve their objectives
and their goals. They are having good relationship with their supplier, so they are able to add
some discount for their customers, and they satisfy the demand and needs of their loyal
customers by providing them discount on the products.
Technological- Technology implementation in the workplace of the ALDI Group provide the
competitive advantages to them because it helps to increase their business more better and they
were able to achieve their business goals and their objectives (Pan, Chen and Zhan., 2019). It is
necessary for the company to update their technology on the particular times otherwise
competitors can overtake them anytime, so they should implement new technology, so they can
stay in the competition and they will able to show their present in the market as the emerging
discount supermarket chain or retail store.
Environmental- AldI Group increasingly stock their products from local British producers and
farmers, helping to support local producers and ensure the sustainability of the local areas that
they operate in. this create good image among their customers and they are able to provide their
support and contribution to the environment.
Legal- In the past years, the grocery store industry of the U.K. has been often affected by
scandals concerning the contented with the food products, with perhaps the most disreputable of
these scandals being the horse-meat scandal that struck primarily Tesco In 2016, Aldi also found
itself in legal disputes as a result of misrepresenting its sales of herbs, with watchdogs finding
olive leaves in oregano products (Verweire, Letens and De Prins., 2019).
Application of Porter five forces for selected enterprise.
Porter five forces analysis helps to conduct inter contentedness of different aspect of the
competitive forces so that overall impact over the industry so that business activities can be
conducted in proficient aspect (Bohórquez and et.al., 2020). These are outlined as-:
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Competitive rivalry- In the retail enterprise, the competition is at the fierce level as all the
payers of this market has similar offerings to customers. Additionally, Tesco, coles, wool-worth
and Walmart are some of the competitors of Aldi. In order to cope up with the competition, the
entity needs to keep their product prices at the low level. However, the cost of advertising and
marketing needs to be enhanced to gather the attraction of customers. Thus, quoted entity
operates its business activities on the principle of minimizing the fixed cost just like the other
rivalries. Hence, this can be stated that the overall competitive rivalry for Aldi is very high.
Threat of new entrants- In this, it can be stated that the need of the large establishments and
capital investment has enhanced the entry barriers in the industry. Additionally, the
establishments of new brand, opening up of new store and to reaching at the economy of scale
needs time and investment. Therefore, local markets and local farmer sells fresh products such
as vegetables, eggs can take up the Aldi market share in small or medium sized town. Hence, it
will decrease the profit and sales of Aldi. In addition to this, the threat of new entrant is medium
for chosen enterprise.
Bargaining power of suppliers- The retail industries in UK are ready to supplies same
commodities at the same and even less price in current market. In addition to this, these are the
retailers that works as to push these suppliers and offer discount on commodities to attract the
customers. Hence, there is no Switching cost. Also, the number of suppliers to the industry are
lot of as compared to the buyers. It means that suppliers has the less control over the price and
this make the bargaining power of supplier the weaker force (.Arqawi, Abu-Naser and Al
Shobaki, 2019). In order to cope up with it, the chosen entity must purchase raw material from
suppliers at lower cost. If the commodities and cost are not suitable than Aldi can switch its
suppliers because switching cost are low.
Bargaining power of buyer- The retail enterprise in which Aldi undertake its business activities
revolves around the selling commodities at the least cost with each player attempting to further
reduction of cost of commodities. Due to this, buyers get the great bargaining power. In order to
cope up with it, the most the entities offers loyalty scheme and gives discount to customer so
that they comes to store on repetitive basis. In terms ti tackle thins situation. Chosen entity must
come in market with help of undertaking innovation to commodities and services. This
differentiation can assist to develop brand reputation in market. Therefore, the chosen entity
takes the advancement of economies of scale by developing the cost advancement.
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Threat of substitute- The commodities sold by the quoted entity are not unique. All kind of the
giant retailers and local entities sell the similar commodities and services. Henceforth, the others
players of industry lay great focus stress on advertising, marketing and reduction in price and
substitution in very easy. However, threat of substitution for chosen entity is high. In order to
cope up with this kind of the situation, Aldi needs to put consideration on greater quality of the
commodities by offering it in affordable rates.
Description on review of chosen organization strategy.
Organization strategy termed out as dynamic long term plan that map the route towards
the realization of firm goals and vision. On the other hand, strategic planning process is
developing organization wide strategies to undertake the business activities in effective and
efficient mode. However, the main focus of the Aldi is to offer the high quality product at the
lower price rates. However, food retail industry is highly competitive. In addition to this, the
organizations need to offer customers value for money (Ariyani and Daryanto, 2018. ). Also,
Customers want the best quality products at the lowest possible prices rates. In this tough
competition this is vital for organizations to understand what their customers wants.
Thus, chosen strategy for the enterprise is competitive advancement that can be attend by
offering commodities at fair prices. However, it enables the Aldi to develop an ambitious
investment program to develop new properties and suppliers to offer benefits for employees. To
deal with it, the organization has undertake lean production approach and the main purpose of
this is to cut down the quantity of resources used in providing goods and services for consumers.
At the same time, it is about making the organization more cost-efficient. Lean production
involves get rid of waste and therefore using less labor, materials,space and time. It turns into the
reduces costs. This leads to bring don following measures such as-:
Continuous improvement – This is culture in which all employees are perpetually involved in
making improvements to quality.
Just-in-time production – In this, the materials are received just as they are required, get rid of
the need to maintain large stock levels.
Time based management – This aims to reduce the time wasted in business operations. For this
there is needs hire the multi-skilled and flexible workforce.
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CONCLUSION
As per the report has been evaluated the clear value, vision and mission of the company
to know their strategic direction. It also has been use the VRIO framework to access the
competitive advantages of the company. This report has been analyzed external factors and
internal factors which affect the business strategies of the ALDI company. In the end of this
report has been included Pastel and SWOT to study about all the internal and external factors.
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