Strategy Failure: Causes, Examples, and Managerial Guidelines

This report delves into the multifaceted issue of strategy failure, examining its causes, consequences, and potential remedies. It begins by differentiating between strategy failure and organizational failure, providing a foundational understanding of the subject matter. The report then explores the drivers of failure, including strategic drift, managerial myopia, and the impact of competitive environments. It presents real-world examples of companies that have experienced strategic setbacks and outlines guidelines for managers to avoid similar pitfalls, including the importance of continuous strategic assessment and adaptability. The assignment also includes case studies, such as the analysis of Aldi's marketing strategy. The report concludes with a discussion of turnaround strategies and the importance of adapting to changing market conditions. The provided assignment brief includes lecture notes, articles and news reports that are used to identify the problems and provide the solutions.

Running head: MARKETING STRATEGY
Marketing strategy and plan
Name of the Student
Name of the University
Author Note

1MARKETING STRATEGY
Executive Summary
This report will highlight the strategic management issues of Aldi that is present in the UK
market. The company has been facing issues and challenges with respect to the loss of its
loyal base of customers. It is very important for the company to gain the trust of the
customers so that its level of profitability can be increased. This will also allow the company
in gaining a competitive advantage in the market over the rival companies that are present.
The report will be highlighting the different strategic models that are present so that the
internal and external environment can be analysed with the help of the tools. The external
environment has been analysed with the help of PEST and Porter’s 5 Forces analysis as well
as Ansoff matrix whereas the internal environment has been analysed with the help of SWOT
and Porter’s Generic Strategies. Apart from this, the strategy clock has also been included so
that it can help in understanding the strategies in a better way. After the strategic models have
been used, the recommendations have also been provided so that those strategies can be taken
up for the survival of the company.

2MARKETING STRATEGY
Table of Contents
Introduction................................................................................................................................3
Failed strategies..........................................................................................................................3
Strategic capabilities..................................................................................................................4
Strategic models.........................................................................................................................5
External analysis........................................................................................................................5
Porter’s Five Forces analysis.................................................................................................5
Ansoff matrix.........................................................................................................................7
PEST analysis.........................................................................................................................8
Internal analysis.......................................................................................................................10
Porter’s Generic strategies...................................................................................................10
SWOT analysis.....................................................................................................................11
Strategy Clock..........................................................................................................................13
Recommendation and Conclusion............................................................................................14
Reference List..........................................................................................................................16
Appendices...............................................................................................................................19
Appendix 1...........................................................................................................................19
Appendix 2...........................................................................................................................19
Appendix 3...........................................................................................................................20
Appendix 4...........................................................................................................................20
Appendix 5...........................................................................................................................20

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Appendix 6...........................................................................................................................21
Introduction
Aldi began its marketing in the year 1913 and has become a respected retailing chain
all over the world. This is due to the fact that the company has been providing greater value
and quality to its customers with respect to the products and services that are being offered to
them. The goal of the company is to provide the customers with the products that are
purchased by them on a frequent manner at the same time guarantee the highest quality at the
lowest possible prices to them. This has enabled the company in growing itself as a brand, as
the products are taken from a few suppliers and are sold under the brand name of the
company (van Rompay, Deterink and Fenko 2016).
The major objective of the company is to gain the maximum number of share in the
grocery market that is present in the United Kingdom. The crisis in the UK economy created
a higher demand of money in the hands of the customers and it was seen that the customer
base of Aldi were shopping from other supermarkets that decreased the level of loyalty
towards the company by the customers (Greenwood, Broadbent and Fuller-Tyszkiewicz
2014). The major strategy of the company is to increase its loyalty among the customers by
providing them the best quality products at a lower price. The other focus of the company is
that it provides products of equal quality of top brands like Fairy Liquid and Heinz at a
cheaper price to its customers. The ‘Like Brands’ that was introduced by the company helped
in increasing the share of the market from 2.3 to 2.5 percent (Chung 2015).
Failed strategies
It can be seen in the recent times that the company has been losing its loyal base of
customers due to the higher prices at which the products that are being given to them. This
has resulted in the shift of loyalty among the customers to the other supermarkets that are
present in the UK so that it can increase their savings on the purchases. The company needs
to understand the demand of the customers in the market so that it can provide them with the
best quality products (Blank 2013).
The strategy adopted by the company previously was to increase its level of profit by
maximizing its level of output. Recently, the company is not being able to maintain the
strategy and is lacking in its understanding as well. This has resulted in drop in the level of

4MARKETING STRATEGY
sales hampering the level of profit as well (Killing 2013). The company needs to market the
products and brands that are available in its stores in a proper manner so that the customers
can be aware of it. The company has to reshape and rebuild its strategies so that it can
increase its identity in the market as well as the market share. This will help in increasing the
level of loyalty among the customers thus affecting the level of profits in a positive manner
(Gamble, Thompson and Peteraf 2013).
Strategic capabilities
This model allows in understanding the ability of the business to employ the
competitive strategies in the market so that it can increase the chances of survival as well as
its value in the market. The resources, position in the market as well as the assets that are
present within the organization allows them to use the strategies in a successful manner. The
significance of this strategy is that it will allow the business to understand its financial
position and the competitors that are present in the market (Tidd and Bessant 2014).
The company maintains a good position in the market as it was established long ago
and the products that were being offered by the company to the customers were of the best
quality as well. The price of the products was also cheaper than the other supermarkets,
which has allowed them in enjoying a premium position in the retailing market of UK. This
had resulted in increasing the level of loyalty among the customers (Piller et al. 2014). They
also the resources that will allow them in maintaining a superior position in the market when
it is used in a proper manner. The growth of the company has become stagnant in the market,
as it is not being able to diversify its strategies that will allow them in gaining a competitive
advantage over the rival firms. The resources need to be utilized in a proper manner so that it
can help the company in running in an efficient manner (Palola et al. 2013).

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Strategic models
External analysis
Porter’s Five Forces analysis
Figure 1: Five Forces Analysis
Competitive rivalry
There is a higher level of competitive rivalry in the supermarket industry in UK, as
most of the companies provide the products at a similar price. Coles, Walmart and
Woolworths are some of the major competitors of Aldi and are very much sensitive to the
change in the prices of the products that is happening in the market. They try to snatch the
share of the market to a great extent from each other by continuously updating its pricing
strategy on the products so that more number of customers get attracted towards the company
(Dobbs 2014). They market the products and services in an aggressive manner so that it can
create a shift in the preferences of the customers. Aldi follows the principle of keeping the
fixed cost at a lower level so that it can enjoy a competitive advantage in the market. This has
resulted in the increase of competitive rivalry (Burns and Dewhurst 2016).
Threat of new entrants
There is a low to medium level of threat from the new entrants in the market, as the
new companies need to have an initial investment of huge capital so that the establishment
can attract customers. It will take time for the new companies to have a better level of
economies of scale for which there needs to be an investment of large capital. The smaller
companies end up being merged with the big companies. However, the local supermarkets
Competitive
Rivalry- High
Threat of new
entrants- Low
Bargaining
power of
suppliers- Low
Bargaining
power of
buyers- High
Threat of
substitutes-
Low

6MARKETING STRATEGY
attract more number of customers, as the price of the products are kept very low. This may
result in the shift of the market share for Aldi to a great extent (Jarzabkowski and Kaplan
2015).
Bargaining power of suppliers
The suppliers have a low level of power to bargain, as they are providing the same
products to different supermarket stores at the price that is fixed for all the retailers. The
retailers try to pester the suppliers in providing extra discounts so that they can get it at a
cheaper price and make more profits. There is no presence of cost of switching for the
retailers to other suppliers. Most of the suppliers try to look for the retailers who can provide
them with large orders so that better level of discounts can be given to them. This results in
no control by the suppliers in influencing the price of the products in the market. Similarly,
the suppliers who supply the products to Aldi has very little bargaining power over the
company (Rajasekar and Al Raee 2013).
Bargaining power of buyers
The company operates in such a market where most of the supermarkets try to provide
the products at a cheaper rate than the other companies that are present. This results in a
constant pressure over the companies in reducing the prices to a great extent so that
customers can be attracted towards it. This results in a greater level of bargaining power in
the hands of the buyers. Most of the competing firms offer loyalty schemes to the customers
by providing them with discounts so that the customers can be loyal to the company. Aldi
does not provide any loyalty schemes, which results in the loss of its customer base. Thus
Aldi is in no position to influence the price of the products or its customers with the products
that they are providing (Aithal 2016).
Threat of substitutes
The products that are provided by Aldi are not unique in the market that would lead
the customers in repeated purchases. Most of the supermarkets that are present in the UK
deals with the same kind of products and services, as the market research allows them in
understanding the needs and demands of the customers. Most of the other companies spend
extensively on advertising their brands so that the customers can get attracted to its services
in an easy manner. The reduction in the prices of the products make it easy for the companies
to substitute it so that it can increase the level of profits as well. Thus, Aldi has a higher level

7MARKETING STRATEGY
of substitution of the products that are available in their stores (Jarzabkowski and Kaplan
2015).
Ansoff matrix
The Ansoff matrix is used by Aldi to understand the market in which they are
operating so that it can result in increasing the flow of products in the market. The use of the
matrix also enable the company in understanding the different expansion strategies that they
can take up so that the rate of attractiveness of the products can be increased in the market.
Market penetration
The company has penetrated in the UK market in a proper manner by providing all
the necessary products and services that are required by the customers. This has enabled them
in increasing their level of profit, which has in turn led to the opening of many stores within
the region. The huge range of products that are available in the company has allowed them in
gaining a competitive advantage due to the positive attraction of the customers. This has
resulted in increasing the level of market penetration for the company as well. The company
also uses various campaigning methods so that the level of awareness among the customers
can be increased (Zhu, Wang and Zhang 2014).
Market development
The main intention of the company is to expand its current business by introducing
new line of products that will result in increasing the loyalty among the customers as well.
The company will take up new strategies and distribution channels that will result in
attracting the customers within the new market as well. The use of this strategy will have a
positive impact on the company, as most of the suppliers are from UK who can provide the
insights of the market to them. This will also result in increasing the sale of the existing and
new products and services as well (Ho 2014).
Product development
There are countless number of risks associated with the introduction of new products
in the UK market due to the increased level of competition. The company has developed its
food ranges so that it can allow the customers of different income levels in satisfying their
needs and demands. The company has a good Research and Development (R&D) team that
allows them in surveying the market in a proper manner so that the products can be
developed in an appropriate way. The analysis of the market allows the company in

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increasing its penetration by analysing the different promotional strategies that are present.
This will also result in increasing the rate of profits for the company (Mahara 2013).
Diversification
Diversification plays an important role in gaining a competitive advantage in the
market due to the changes in its products and services. The increase in the product portfolio
will help Aldi in increasing the rate of profits as more number of customers will be attracted
towards the stores in the UK market. The company has diversified its product portfolio to a
great extent by entering in to oil and gas as well so that the customers can use the services as
well (Robson 2015).
PEST analysis
Political
The elections that had taken place in the UK in 2015 had resulted in the change of
government, which saw a new type of market conditions as well as tax and legislative
changes. This has led to a change in the level of sustainability of the foreign firms that are
operating in the market. Most of the Aldi stores are present in the European nation, which
does not have any conflict with other nation with respect to trading. However, a German
company carrying out its operations in the UK is a factor of risk that needs to be addressed
properly. The employment legislation has also seen changes in the recent years after 2015
and the parental leaves have been introduced, which may cause greater risks to the business
due to the frequent rise of absenteeism. Since most of the employees in Aldi are working for
a long period of time and are married, the issue of parental leave will affect the company in a
negative manner. The company is operating within the European nation where these
legislative factors will have a direct impact on the well-being of the organization (Ho 2014).
Economic
The country is moving out of recession in the recent times, which has seen a change
in the buying pattern of the customers from the cheap stores to the supermarkets. This change
in the pattern of customer buying may have a negative impact on Aldi due to its increased
rate of competition. On the other hand, it can be seen that the suppliers have created an
opportunity for Aldi to perform better by offering the products at a cheaper price to the
customers so that it can grow in the market. The changes in the government has also resulted
in new tax legislation that will hamper the economy of the company to a great extent. This

9MARKETING STRATEGY
may lead to the products become costlier in the market for which the customers may shift
their priorities to other supermarkets (Zhu, Wang and Zhang 2014).
Social
The discount offers that are given to the customers creates a social stigma, as there is
a rise in the economy due to more number of individuals willing to purchase large amount of
products. Companies like Sainsbury’s and Tesco provide such discounts to the customers that
results in mass selling of the products. The population of the country is ageing and there is a
huge expenditure with respect to health and sickness. This present a problem to the
employers due to the various schemes such as pension has to be given to the employees. This
results in the rising cost of the organization as well (Koumparoulis 2013). Most of the
supermarkets like Tesco and Asda has introduced different types of product range, which has
resulted in a shift of the customers towards these stores. The competitors are providing 24
hours of service to the customers so that they can gain the maximum share in the market. Aldi
needs to review their strategy with respect to this so that it can help in increasing the base of
customers to a great extent. The company has streamlined its range of products that has
narrowed down the choices of the customers with respect to their purchasing pattern (Mahara
2013).
Technological
Aldi does not provide mobile and online shopping, which is a huge drawback among
the customers, as they would prefer the delivery of the products at their convenient places.
This strategy needs to be considered by the company so that the sales can be increased. They
also need to provide other technologies such as self-checkout, Wi-Fi facilities and in-store
media to the customers so that it can add more value to the purchase that they make. The
technological changes also results in the shift of the supply chain by having an intelligent
stock management so that the products can be identified within the warehouses in an
automated manner (Aithal 2016). The company offers traditional conveyor belt systems to
the customers and the point of sale system is also not operational. The company does not
provide a self-service system to the customers, which is a huge disadvantage as well. The
services towards the customers also need to be enhanced so that it can result in creating a
better level of experience for them within the stores and the average time of shopping for the
customers will also increase to a great extent (Ho 2014).

10MARKETING STRATEGY
Internal analysis
Porter’s Generic strategies
Figure 2: Generic Strategies
This strategic model helps the business to gain its competitive advantage in the
market over the rivals that are present. The strategies has to be taken up according to the
business scope so that its activities and products can be differentiated in the market. The
major challenge for the businesses is to find a suitable strategy that will help the business to
be sustainable with respect to competition in the market. The generic strategies of the model
are divided in three parts that is cost leadership, differentiation and focus (Robson 2015).
Aldi mainly follows a cost leadership strategy by reducing its operating cost so that it
can run its store in an efficient manner. The company tries to buy the lands that are based
outside the city so that the price of the land can be less. The cost of the infrastructure on these
lands are also less due to the location of the plots. The company stocks almost 700 products,
which is less compared to other supermarket that are present in the area. It allows the
company in analysing the demands of the customers before the products are kept in the
warehouse (Paiola et al. 2013). This has a direct impact on the size of the stores, which are
smaller in nature due to the less number of products that are being stored by the company.
The company employs less number of employees to manage the stores so that the cost can be
decreased to a great extent. The customers are also not provided with shopping bags so that
they can bring their own or purchase it from the store. The shopping carts that are provided to
the customers need to be taken with a deposit of $2 so that it can be refunded back when the
trolley is kept back in the store. This results in reducing the cost of labour and fuel to a great
extent so that the operating cost can be kept at a minimum level (Piller et al. 2014).
Cost
Leadership Differentiation
Cost Focus Differentiation
Focus

11MARKETING STRATEGY
The company also sets themselves apart from the competitors by following the
differentiation strategy. The products along with the process of distribution is different than
the other companies that are present in the market. The unique thing about Aldi is that it
follows a process that helps in reducing the cost to a great extent but provides the products
that are of superior quality. The customers get better quality of products, which is also
beneficial for the employees, as they are paid in a better way (Koumparoulis 2013). The store
manager of the company is paid on an hourly basis along with a bonus that is equivalent to
the industry award. This helps in retaining the employees and motivating them as well. The
prices of the products are less than the other supermarkets that are operating in the market,
which gives them a competitive advantage as well. The major strategy that is adopted by the
company is that it provides the customers with premium quality products at a cheaper price
than the rest of the supermarkets, which can result in increasing the loyalty of the customers.
The loyalty among the customers result in discouraging the threat of potential entrants within
the market (Mahara 2013).
The focus of the company is mainly to smoothen its rate of operation in the market so
that the products can be made available to the customers in an efficient manner. The
operational excellence of the company will allow them in being capable of managing the
acquisition of inventory along with cross docking of logistics and supply chain. It will also
increase its level of focus on the customers who are sensitive to price so that they can be
catered in a better manner (Robson 2015). The efficient operations of the company needs to
be supported by the capabilities so that the resources can be utilized to the maximum extent.
This will allow the operation of the company to be efficient in nature. The major role within
the company needs to be played by the human resources department, as it will help them in
efficiently segregating the resources that will lead to the operational excellence (Yuan 2013).
SWOT analysis
Strengths
The major strength of the company is that it provides the products at a discount to the
customers, which enables them to be successful in the supermarket industry of UK. The
customers are mostly loyal towards the brands that are being offered due to its premium
quality that are provided at a cheaper rate. This allows the business to become mainstream
retailers due to the lower prices at which the products and services are offered to the
customers (Robson 2015). Another strength of the company is that it does not only compete