The Australian market environment is dynamic. Particularly, the customer demand and competitive strategies are highly flexible. This attribute has made the retail industry highly competitive. However, despite the changes being observed both from the customers and competitors, Aldi supermarket has remained as of the most stable and competitive industry player. With the market environment being flexible due to the globalization of business activities, Aldi has adopted several management strategies to survive in this erratic atmosphere. This report evaluates some of the management and business strategies that Aldi employs to fend-off competition from other retail supermarkets in the Australian market. Specifically, this report utilizes business theories and concept to analyse Aldi’s organizational purpose, external environment, corporate social responsibility, and internal culture. In business, an organization’s activities and stability are influenced by multiples factors. In this respect, it is the role of the management to regulate and manage these factors to their organization’s advantage. Despite the unpredictability of the present market environment, Aldi has effectively applied business and management concepts to remain competitive in Australia.
According to Pontefract (2016), an organization’s purpose is the reason why it exists. Notable, people in the business world tend to confuse a firm’s purpose with its vision or mission statement. However, as Pontefract (2016) points out, a company’s purpose is holistic. Furthermore, a firm derives its mission and vision from its purpose. Pontefract (2016) posits that managers should ensure that their organization’s statement is threaded with their vision and mission. Lack of a precise purpose which defines what a company stands for can affects its competitiveness. As Pontefract (2016) expounds, a positive connection between a firms purpose with its mission and vision should bring befits to the customers, employees, owners, organization and the society. This argument illustrates that business does not only exist to make profits but also to satisfy the need of the employees, customers and the society. In this respect, an organization’s purpose is what drives it to achieve its goals. According to Aldi (2017), the supermarket’s purpose is to offer quality products at an affordable cost. This purpose is closely tied to its mission which is to provide customers with “exceptionally high quality at impossibly low prices” (Aldi Australia, 2017). As Ponterfact (2016) points out, Aldi has effectively aligned its mission with the purpose. Additionally, the supermarket insists on quality in its purpose and mission statement to enhance its brand positioning. Aldi’s purpose also exhibits its profit and non-profit orientation. For profits, Aldi aims at providing quality services and products to meet their customers’ needs. On the other hand, for the non-profit orientation, the supermarket aims at conserving the environment to enhance sustainability.
Business operations are affected by internal and external environments. According to Robbins et al. (2016), an organization’s external environment are the ” factors, forces, situations, and events outside its reach that affect its operations. As Robbin et al. (2016) elaborate, the external setting is divided into the general and specific environment. The external specific environment is the “factors that have direct and immediate effects on an organization’s operations” (Robbins et al., 2016,p.37). Moreover, the specific external environment includes factors like the customers, suppliers, and competitors. In the current dynamic market, organizations need to follow any developments in their external specific environment closely. In fact, keeping a record of new developments on the external specific environment and responding to them appropriately is one of the important competitive strategies. Failure to address changes in the external specific environment can make a firm lower its competitive ability.
Customers are among the key external factors that affect organization operations. With Aldi outlining that it is committed to offering quality and cheaps services to their customers, it is vital that they satisfy the changing customer needs. The varying customer needs due to demographic changes and economic fluctuations significantly affected Aldi’s operations. According to Keane and Morschett (2016), consumer ethnocentrism is of particular interest to multinational retail stores like Aldi. Customer ethnocentrism is the belief of feeling immoral by purchasing foreign-made products. This feeling emanates from the tendency of the customers to feel special attachments to their the local products. In this respect, customer ethnocentrism makes it difficult for international brands like Aldi to sell foreign products. However, as Aldi (2017) points out, the supermarket has reacted to these customer perceptions by ensuring that they obtain their groceries from the local suppliers. In fact, Aldi claims that over 80% of its groceries are procured locally.
Additionally, the changing Australian demographics is another vital customer aspect that directly affects Aldi’s operations. According to Starr (2017), the millennials and ethnic Australians are becoming dominant in Australia’s population. These group of customers demands healthy food substances and convenient shopping techniques. Aldi has ensured that it has tackled the healthy and cheap foods as per the customer requirements. In fact, this is illustrated in the organization’s mission and purpose statement. However, the big test remains on the aspect of convenient shopping. The millennials are highly conversant with technology and demand for an efficient online shopping platform which also caters for delivery. In last two years, Aldi has struggled to maintain a reliable and efficient online shopping forum. According Starr (2017) Aldi has been struggling to integrate technology into its operations. With Aldi competitors like Woolworths and Coles performing well when it comes to technology, Aldi needs to redefine its operations to avoid losing clients.
With the business world shifting towards a digital market, Aldi also needs to move with the trend. It is absurd to find customers queueing to make payments in the modern world. However, long queues have been observed at several Aldi outlets in Australia, especially during special offers. With Aldi competitors treating their customer with online purchase which is convenient, the retailer needs to adapt to the new alterations. However, Aldi has compensated its technological shortcoming by selling their products cheaply. According to Starr (2017), Aldi offers their products approximately 50% cheaper than it competitors. Since price is one the key factors the shape customer purchasing decisions, Aldi have managed to maintain profitability. However, Pontefract (2016) warns that organizations must change their mode of operations according to the changing customer preferences. Otherwise, failure to change can render firms competitive abilities. In this respect, Aldi needs to improve their online platform to satisfy the customers’ shopping preferences.
In the modern commercial environment, business is about profits and image. However, the society takes an ardent interest in the image prospect than the profit side. In this respect, the contemporary world values an organization based on its ability to relate well with society in which it operates and its ethical standards. According to Kotler and Lee (2011, p. 1990), corporate social responsibility is “a commitment to improving community well-being through discretionary business practices and contribution of corporate resources. Furthermore, it is vital to note that corporate social responsibility actions are initiatives that are initiated by firms as a way of giving back to the society and are not demanded by law. On the other hand, ethics address the proper way of behaving. There are set business principles that organizations need to follow. The adherence to these principles defines the ethics of an entity. According to Kotler and Lee (2011), corporate social responsibility and ethics are the modern competitive strategies. In fact, clients prefer to purchase products from organizations which have a positive social image. This positive image can only be achieved by offering services that improve the quality of life in the society.
Moreover, Kotler and Lee (2011) posit that corporate social responsibility is an effective public relation strategy. In this respect, initiating projects that improve the community’s life is an excellent way of marketing one business operations. For instance, activities like reducing pollution levels, supporting local children home, or promoting wildlife conservation, are ideal ways of connecting a brand to its clients. Additionally, complying with the established business principle is also an effective way of maintaining a positive investment image. Customers tend to dislike products from companies which are involved in legal battles relating to issues like child labor, employees oppression, or poor environmental management.
Aldi supermarket acknowledges the importance of corporate social responsibility in the sustainability of its operations in Australia. The organization utilizes models like the stakeholder theory and the triple line perspective to design its activities. With corporate social responsibility concept directing that organizations to be responsible for their economic, ethics, legal, and philanthropic aspects, Aldi has illustrated commitment in meeting these directives. According to Ald (2017), the organization’s corporate responsibility principles provides a binding framework defining how their employees, business partners, and suppliers behave in their operations. In legal and ethical term, Aldi complies with all the major consumption policies in Australia. For instance, the supermarket states on its website that it does not sell alcohol to clients below eighteen years.
Furthermore, Aldi supports several philanthropic initiatives in various parts of Australia. According to Aldi (2017), the firm donates quality and nutritious food products to charity organizations like Foodbank and OzHarvest that deal with hunger mitigation. Apart from food donations, Aldi has also supported the Barnardos child initiative for twelve years. According to Aldi (2017), Barnardos support children from different cultural backgrounds by protecting them from any forms of abuse. Additionally, Aldi has been applauded for its environmentally friendly production approach. The organization’s lean production strategy limits waste materials deposition into the environment. Apart from enhancing Aldi’s profitability, the lean production method has enhanced the supermarket’s competitive advantage in Australia.
In the moderns society, there is a consensus that organizational culture is crucial in shaping a firm’s activities. However, there are discrepancies on what organizational culture means. According to Hogan and Coote (2014), an organization’s culture refers to a system of shared meanings held by members of that organization. Specifically, these shared meanings entail organization’s values, ways of doing things, behaviors and rituals that manipulate its social and psychological environment. On the other hand, Robbins et al. (2016, p. 42) define organizational culture as the shared values, principles, traditions, and ways of doing things that define the behavior of a firm’s members. In fact, organization culture summarizes what a company advocates for in its operations. According to Hogan and Coote (2014), culture should be reflected in all the activities of a firm. Currently, it is easy to tell the culture of an organization by looking at its purpose, mission, or vision statement. In this respect, it is vital to a have culture that promotes human, social, ethical, and environmental development and sustainability.
According to Hogan and Coote (2014), an organization’ s culture does influence not only profitability but also the type of employees the firm attracts. Employees want companies that have progressive culture. Progressive human resource cultures are the ones that promote employee’s professional growth and development. On the other hand, customers prefer organizations with a culture of quality and sustainability. These are the firms which mind the welfare of the customers and that of the society in which they operate. For instance, Google has been in the spotlight in last few months over its treatment of female workers. This example illustrates how the contemporary society is sensitive when it comes to issues of organizational culture.
Over the years, Aldi has been hailed for its exceptional culture which is aimed at providing quality services and products to their customers as well as enhancing environmental sustainability. Particularly, Aldi’s lean production strategy has been described as one of the most effective initiatives for environmental conservation. According to Aldi (2017), the supermarket’s culture is summarized in three words which are simplicity, consistency, and responsibility. Aldi has successfully integrated this culture into its operations. In fact, Aldi’s culture is reflected all its activities starting from the procurement stage to its corporate social responsibility actions. According to Hogan and Coote (2014), the move by organizations such as Aldi to incorporate its culture in all of its activities is essential in creating a positive image for the society and clients. Additionally, it is a sign of being an organization that follows its set principles.
After partaking the personal insight test on organization culture outlined by Robbins et al. (2016,p. 46), I attained a score of 26. According to Robbins et al. (2016), this that indicates that I prefer informal, humanistic, flexible, and innovative cultures. This type of culture is present in informal institutions like Aldi. The scores prove that my attributes and professional preferences fit the dynamic culture of Aldi. As Hogan and Coote (2014) insist, it vital for individuals to work in organizations with cultures that align with their attributes. In this respect, it is vital to conduct background study on a given organization before making an application to establish if one will fit into their culture. Addtionally, Hogan and Coote (2014) explain that unsatisfaction with one’s job can emanate from being a culture misfit. In this view, it is vital to analyze the fundamental concepts of motivational theories before making an employment decision.
Conclusion
Aldi’s business strategy is one which aims at achieving sustainability and positive societal relations. With the application of lean production stratagem, Aldi ensures that they minimize wastage and losses without compromising on quality. However, the supermarket needs to improve their online market platform. The current generation values online shopping as it makes purchasing activities convenient. Consequently, Aldi needs to align their products with the changing client needs. The customers do not only want quality products, but they also demand goods that uphold their health requirements. In the respect, Aldi is likely to prioritize healthy food materials in their stores in the future. Finally, the organization’s culture matches with my attributes. In this respect, Aldi will be the perfect working environment for me.
References
Aldi Australia, 2017. Aldi Australia. [Online]
Available at: https://www.aldi.com.au/en/about-aldi/customer-information/
[Accessed 23 August 2017].
Hogan, S. J. & Coote, L. V., 2014. Organizational culture, innovation, and performance: A test of Schein’s model. Journal of Business Research, 67(8), pp. 1609-1621.
Keane, M. & Morschett, D., 2016. Reducing the Negative Effect of Consumer Ethnocentrism on Patronage Behaviour at Foreign Retailers. Marketing ZFP, 38(4), pp. 228-242.
Kotler, P. & Lee, N., 2011. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New Jersey: John Wiley & Sons.
Pontefract, D., 2016. The Purpose Effect: Building Meaning in Yourself, Your Role and Your Organization. Boise: Elevate Publishing.
Robbins, S., Cenzo, D. D., Coulter, M. & Woods, M., 2016. Management: The Essentials. 3rd Ed. Melbourne: Pearson Education Australia.
Starr, K., 2017. Coriolis Consulting. [Online]
Available at: https://coriolisconsulting.com.au/supermarket-wars-aldi-approach/
[Accessed 23 August 2017].
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