The following report consists of the strategies that ALDI uses and will use to achieve the operational objectives. The purpose of the report is to derive understanding about the strategic choices including the strategic planning, strategic terminology, planning systems and other relevant techniques. The report starts with giving an evaluation of the degree to which Aldi’s mission, vision, objectives and competencies aligned to the set of the strategies. The report also sheds light on the factors considered by ALDI when developing their strategic plans. An environmental audit for ALDI traversing micro and macro environment has been discussed using a Porter’s five forces analysis tool. Likewise, the significance of stakeholders has been discussed with appropriate stakeholder analysis theories.
a) Extent to which Aldi’s mission, vision, objectives, goals and core competencies inform strategic planning
One significant approach of ALDI is to promote quality as well as value above everything. Major practice of Aldi is to create efficiencies at every level from development of store to in-store display. This practice ensures that price could be low and savings can be passed to customers. The most significant fact is that Aldi’ strategies are aligned considering mission, vision, objectives, goals and core competencies. How these elements are aligned to strategic plans of Aldi has been discussed in the following.
Mission
Mission statement is usually is treated as the commitment that a company expects to meet the expectation of the stakeholders. It explains how organization runs its business, identify their customers and identify the range of their products and services. For example, the mission statement of ALDI:
The mission of the supermarket giant ALDI is to provide value and quality to all customers. ALDI focuses on the comfort and safety of its customers. Modesty and undemonstrative functionality characterize its conduct.
This above-mentioned mission statement conveys the message that when developing a particular the strategic plan, the firm thinks of its customers’ value and benefits, which means the major stakeholder –customers are satisfied, business runs profitably.
Vision
As put forward by Morgan (2012), vision statement describes vital and sophisticated outlook of the firm in the future. It certainly implies growth, potential advantages of the organization to the stakeholders and investors.
ALDI’s vision is to become responsible and continue in a reliable manner to set standards in the retail food sector and persistently reinforce its market position.
Goals and objectives
The major goal of ALDI is to offer the customers the products that they make purchases of the goods on a regular basis and make sure that those items have high qualities at the lowest price. A simple objective that Aldi follows is to offer customers a smartest way to shop. The firm is looking for new suppliers to make this happen.
The mission, vision, goals, and objectives of ALDI are aligned with its stakeholders value and benefits. Customers’ value and benefits are highly considered in strategic goals and mission. Likewise, ALDI’s partners are also benefitted from the strategic plans, because even in the tough economic climate firm’s business continue to develop and when firm’s operation grows, so its partners can.
Core competency of ALDI
The core competency of ALDI is its stiff focus on price but following are some of effective criteria to ensure the same
Cost leadership: ALDI stocks a limited amount of goods, which are of high quality and provide them on competitive pricing. Most importantly, the organization tends to attain their leadership status on the basis of the price they provide to third buyers.
Focus on the brands: The official website of the organization indicates that they focus pay attention to their brands to remain independent, which enables them to ignore high marketing costs associated with the national and to prepare their own product, policies and price.
How these strategies informed ALDI’s strategic planning:
Cost leadership and focus on the brands help ALDI to decide on the cost of operation, which means the organization wanted to minimize the cost of operation to gain the competitive advantage. ALDI designed small stores, which are easy to find, as they are founded nearby to each other and saves the logistic cost. On the other side, it is certain that ADLI does not hire casual staff; the organization has less staff but salaries of the employees are comparable. They contribute a large amount on the supermarket design.
At the time of forming a new and effective strategy for a business, ALDI needs to consider some factors and issues that can influence the strategic planning of the firm.
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Strength · ALDI has the strength to serve high quality of products but they offer the products at very affordable price · Having more than 10,000 stores around the world contributing to brand image development (aldi.co.uk 2018) · The reputation of Aldi enables the brand to provide a comparable quality to the leading brands notably at the low price · Wide market acquisition helps ALDI to apply situation-based strategic plan |
Weaknesses · The firm is yet not able to impact globally because there are few other chain stores · Allegedly regarded as a store for cheap and low quality items by some media channels · Even though, ALDI experienced a high growth in 2017, it is still far behind the large four British supermarkets with respect to market share. (with Tesco having 28% share, Sainsbury a 16% share, ASDA a 15.1% and Morrison a 10.6% share) (Lehmann and Zetzsche 2016). |
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Opportunities · As the firm has a strong brand image, it has the opportunity for investing more in advertising to beat the competition. · ALDI has the opportunity to expand into the economically growing nations like Africa and Asia. |
Threats · The organization cannot cater to customers looking for a complete shopping experience · When Amazon took over American grocers Whole Food, the supermarket sector of UK is anxious that a takeover of market share by Amazon could take place. While Whole Food have only 9 UK subsidiaries and supermarkets are worried because the objectives of Amazon is to create a global domination of market, which indicates that ALDI could potentially lose some of its market share (Morel et al. 2016). |
Table 1: SWOT analysis
(Source: Anitsal, Anitsal and Girard 2012)
Market position- At the time of formulating a new strategic plan, the organization needs to focus on its current market positions. The analysis of current market positions will help ALDI to identify areas that need to e developed through the new strategic plan. As put forward by Grünig, and Kühnm (2011), existing organizations in the retail such as TESCO has a strong market position in the market. Thus, to remain active in the competition, ALDI needs to pay attention to its weak business segments. For example, the new strategic plan should be designed in way that it positively reflects on the market share.
Customer Demand- Customer demand is another significant aspect that ALDI must consider when formulating a strategic plan. For example, if the demands of ALDI’s grocery products are less compared to its competitors, selling existing products to the same market place will not provide any positive outcome. Thereby, by identifying the customer demands of the products, ALDI can develop a new product or modify the existing one, which would further strengthen the strategic place.
A strategic plan requires or includes a set of techniques and their implementation to accomplish the objectives of the plan. As put forward by Burns (2014), BCG growth-share matrix remains as the simplest way to portray ALDI’s portfolio of investment. It is identified that growth share matrix known for its cow and dog metaphor is widely used for resource allocation in a diversified firm.
Cash cow- The cash cow section of ALDI is the fresh meat section because the demand of these products remain high across different ALDI stores. However, one incident has been found regarding the regarding horsemeat has damaged the brand of image of ALDI (Morrisette and Hatfield 2013). Nonetheless, the management of the firm has taken the decision. The fresh meat section is certainly running in a developed or mature sector due to the presence f large retail firms offering fresh meat products, which indicates that the market environment is at the mature phase.
Stars- Besides the cash cow, ALDI also receives growth opportunities from some other business units and thereby, the market is usually identified by the opportunities for growth. Some products of ALDI such as the ALDI bank generate adequate amount of earning and generate the opportunity to increase. One such example derived from ALDI is ALDI bank, which has expanded its market presence by providing consumers with the current account facility service.
As the organization ALDI is running the operation in the global environment, it must consider the external environment to identify its strategic position in the market. The following factors determine the impact of the external environment on ALDI’s operation.
PESTLE analysis
Political-After the occurrence of Brexit, uncertainty remains in the future of Europe and UK. However, ALDI has been able to make an FDI in UK; thereby, it might have to go through the consequence just like the organizations involved in joint venture(Wright et al. 2016). The political relationship between UK and Germany has not been affective but these two nations are influential in Eurozone and this would probably present a set of difficulties to ALDI’s operation.
Economical –As an impact of Brexit, the prices have increased in UK and the value of pound has decreased but this goes on ALDI’s favor because the customers turn to discounts, which further leads to discounts. This happens because the outcome of price hike in other supermarket due to Brexit and the cost being pushed up (Seaton and Waterson 2013). In addition to this, inflation in the grocery market increased to 2.9% in May 2017, an increase from 2.6%, which means the shoppers have to spend £27 extra for the same product over the period (Chakraborty et al. 2014). Here, as ALDI is a discount supermarket; this remains favorable because customers could seek cheaper price.
Social-ALDI gave a pay hike to 3000 staff in UK and has become the highest paying supermarket to lead over “German Discounter” Lidi with respect to wages paid (Clarke, Kirkup and Oppewal 2012). Certainly, ALDI contributes to the employment of the nations to a larger scale. It has also been identified that by 2020, ALDI aims to contribute to education of 1.2 million children in UK (aldi.co.uk 2018).
Technological-It has been identified that retail brands are increasingly turning to technology to reinforce their current market positions with the increasing number of customers demanding the effective self-service.
Legal- As put forward by Yamoah and Yawson (2014), the retail industry of UK is affected on a frequent basis by several scandals about ingredients of food products but the most notorious of these is the horsemeat scandal, which has widely affected the supermarket giant Tesco.
Environmental-ALDI increasingly stocks its goods from the local British producers and farmers, and due to this reasons the local producers find the sustainability in business (Macdonald 2011).
Apart from the political, environmental and legal environment, it is also essential to identify the market environment of ALDI, which also helps to determine the current market positions of ALDI. Therefore, the micro and macro environments have been analyzed with the strategic tool Porter’s five forces.
Bargaining power of the customers –High
The supermarket sector in which ALDI runs its operation is about selling goods at the least cost, where each brand trying to minimize the price of the goods (Dunne et al. 2011). It certainly increases the bargaining power of the customers. Most of the shops are situated close enough to each other; thereby, the buyers can easily switch to another brand with the least effort. Some of the stores have been observed to be providing additional discounts to retain the customers but ALDI do follow this policy. Thus, the firm is not supposed to increase the price or attempt to influence the market price of the goods.
Bargaining power of the suppliers- Low
As put forward by Shankar et al. (2011), the retail industry consists of many suppliers who are always available to supply the same products at the same time at least cost compared to present market price to the supermarket retailers like ALDI. Thus, these supermarkets then convince these suppliers to offer discounts and preferred terms with zero switching cost. As mentioned by Blythman, (2012), the suppliers tend to remain on the lock out for retailers with large order and they are comfortable in providing them with the discounts. Therefore, the suppliers are not supposed to increase the market price of the goods or convince the retailer to sell the products at the highest price. Thereby, the suppliers do not have much bargaining power over ALDI.
Competitive rivalry –High
The organizations in the retail sector observed fierce competition where all brands providing everything at almost the same cost like other brands in the sector. The major competitors of ALDI in UK is ASDA, Morrison, TESCO and Sainsbury while in the global market Wal-mart and Woolworths remains as the top competitors. The comparison of price remains as the actual activity and difference of even a few cents is highlighted by the rivals. As put forward by Morrisette and Hatfield (2013), the advertising as well as marketing cost increase but the price remains low. ALDI runs its operation on the principle of reducing the fixed cost just like all of its rivals; thereby, the overall competitive rivalry for ALDI is remains very high.
As mentioned by Fam et al. (2011), the requirement of a large foundation as well as the capital investment increases the challenges of entry in the industry. Establishing a new store, developing a brand and remain in the economical scale of stock requires a large investment and time. Shabanova et al. (2015) mentioned that small firms tend to get into the merger and acquisition. However, supermarkets belonging to the category of low cost or regional farmers selling homegrown fresh veg-items acquiring the market share of small and medium size cities. This could reduce the profit margin and sales of ALDI. Therefore, the treats of new entrants remain medium for ALDI.
Threats of substitute products –High
As put forward by Nesset, Nervik and Helgesen (2011), the goods sold by ALDI is different here and all large, small and regional retail store tend to sell the exact same product. Most of these products are branded and sold to everywhere. In addition, other players in the sector pay a significant attention on advertising, marketing and the reduction of price. Hence, the substitution remains very easy. Moreover, the products sold by ALDI can easily be brought from any other retail store. Thus, the threats of substitute products for ALDI remain high.
As put forward by Aaltonen (2011), at the time of achieving organizational goals and objective, the organizations’ require stakeholder support and they also help to gain success. Stakeholder analysis is significant for ALDI as it can help the business to differentiate the interest of stakeholders who could be affected by the business (Sedereviciute and Valentini 2011). ALDI has wide stakeholder network and it has developed a close, long-term relationship with its suppliers with the belief that longevity and trust and in its business relationship are essential to provide and maintain high quality as well as reliable products. Full engagement of stakeholders in strategic plans and implementation is a key to success but not a guarantee of success.
It is certain that participation of stakeholders gives people say over how projects or policies could affect their lives or job profile (Missonier and Loufrani-Fedida 2014).It is observed that ALDI’s key internal stakeholders is its employees and the firm wants every employees to have a rewarding career with increasing opportunities to increase and grow. When ALDI develops the strategy of maximizing its return on investment (ROI) from Britain’s store, the production has to be high. To implement this ALDI expects its people to remain committed, hard-working as well as take the ownership of the responsibilities. On the contrary, the employees receive marketing salaries and unrivalled growth opportunities within the retail store. On the contrary, ALDI also needs to fulfill the demands of its external stakeholders such as the customers. ALDI is able to provide an outstanding customer service because of its highly motivated as well as skilled workforce.
ALDI prefer to nourish the belief that high quality products should be produced responsibly and the firm developed the commitment and the base of ethical supply chain, which further means developing the products that appear to be effective to the market or environment where it happens. This also increase the regards for the employees and human rights. The organization makes sure that the products it sells are grown and consisted with care for the environment. Thus, all employees are considered fairly and the firm develops an effective relationship with the suppliers to accomplish shared goals and objectives.
As discussed above, the ALDI’s strategies are incorporated with mission, goals and objectives. ALDI’s aim is to “offer value and quality to the customers” as corporate purpose as well as to meet its business objectives by keeping the cost low and working effectively. It certainly allows the firm to reinvest profits back to the organization. Persistent improvement supported by lean thinking is key tool for ALDI to prolong growth by allowing new store development, suppliers and employment. By developing a lean process during the low stock process, the organization’s capital increases through repurchase more stock to maximize benefits.
Just-in-time approach for gaining competitive advantages
All store of ALDI should share the same outlay with the warehouse designed smaller than the store and this design should work for organizational advantages and keep the level of stock to a minimum range by keeping the staffing level low, which enables the organization to increase and maintain the low cost.
a) A new market and analyzing the appropriateness of suitable strategy for ALDI
Even though, ALDI is performing tremendously both in domestic and international market, after the occurrence of Brexit, European and UK market has been affected; thereby, the organization ALDI could pay attention to the growing economies like Asia. It is certain that Asian nations UAE, Maldives, Singapore, India, etc have growing in a rapid pace. The organization could open up a new store in any of the growing Asian nations.
Appropriateness of the suitable strategy
It is observed that there are several retail brands are running the operation in Asian nations. Therefore, in order to get in such new market, ALDI needs to apply some new and unique strategy, which would help the firm to run the operation actively. ALDI needs to apply the technique of finding out, anticipating and meeting the consumer needs. This strategy helps to keep the customers on the top of the organization. The new strategy -marketing mix could help the marketers to select the right product for the consumers and sell them at the right place through promotional elements incorporated in marketing mix. ALDI could focus on offering standard quality products but less expensive. Marketing mix of ALDI should include Product, Price, place and Promotion.
ALDI should follow the strategy of delivering top quality products to the most popular brands. Here, the marketing mix of ALDI Product, Price, Place and Promotion.
Product- High quality “Like Brands”
Price-ALDI should offer lower price compared to its competitors in the new market without compromising on quality of the items.
Place-ALDI outlets are expanding globally due to its quality of service and brand image.
Promotion- ALDI could use a combination of above the line and below the line promotion with the focus on its “Like Brand” and “Swap and Save” campaign.
Hence, the organization could use AIDA model to exemplify the aim of any promotional activity (Rawal 2013). The organization needs to create awareness among the customers through social media. Likewise, the firm could generate interest of customers for the products and so is the desire to have the products. Implementation of these elements could help the brand to lead the customers in taking actions to purchase.
The strategy discussed above is suitable for the organization ALDI, because Asia is one of the fastest economically growing nations. Moreover, the market environment in Asia has become competitive due to the entry of some large international brands like Mark & Spencer and Wal-Mart, the new international firm has to make or implement a new strategy with the existing concept. Thus, in the marketing mix, “above the line and below the line” promotional activities are justified because in order to achieve the objective of increasing the market share, ALDI has to ensure its promotional activities. For example, in order to maximize customer loyalty, it has to communicate its potential quality and value based messages. Thereby, here the above the line promotion certainly contribute to the growth of awareness, enhance the brand recognition, and maximize the demand for the products. On the contrary, below the line promotional activities suggested with the marketing mix include social media, targeted emails to customers, public relations and media relations. Social media tools for promotional activities in the new market are justified because the Asian nations are technologically developed; thereby, ALDI would find it easy to reach the customers in the wide market.
a) Providing an assessment of the roles and responsibilities of personnel who are involved with the implementation of the strategy
In order to implement strategy, the organization as a whole would apply contributes to the execution. However, the individuals of few managerial positions would have to take the responsibilities of the strategies. The assessment of the roles and responsibilities are provided in the following.
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Personnel involved |
Roles and responsibilities to be conducted |
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Market Analysts |
The market analysts would help to identify the current market positions of the new market. The major roles and responsibilities of the analysts is to identify customer needs, market demands, trends, influential elements, competitors’ positions and influence. The market analysts would provide an audit for these essential elements. |
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Human Resource managers |
Human resource managers play a great role in implementing a new strategy as HRM managers have to supervise or provide the resource required for implementing the strategy. Hence, HR managers take the responsibilities of providing the finance, providing the worker required for promoting the service among the mass population. |
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Operational managers |
The market analysts and human resource managers would report to the operational mangers about the market requirements and cost required for the strategy implementation. Moreover, the operational managers would supervise the entire operation. |
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Marketing managers |
Marketing managers have the roles of promoting the brands through social media and other communication channels. The marketing managers of ALDI would also report to the operational managers and human resource managers about the resources required and activities need to be implemented. In addition to this, the marketing managers will also decide in which the new strategy will be implemented and who would be the audience. |
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Production managers |
Production managers will keep a track of production of the existing services and the services after the implementation of marketing mix strategy. |
Table 2: Role and responsibilities of the personnel involved
The organization has to pay a significant amount of attention to its resource at the time of implementing a new strategy. It is certain that opening up a new store in a new market certainly requires a large amount of resource. As discussed above, in order to remain competitive in a new market ALDI requires implementing marketing mix, which would help the company itself to reach the audiences of the large market in a faster way through technology. Thus, the major resource that ALDI requires is technological resource, people resource as well as initial start-up cost. People resource is one of the essential requirements because in order to develop its customer service in the new market, as the strategy of attracting the customers, the organization requires human resource. In addition, the financial resource is required for hiring people, buying the store along with decoration. Likewise, social media investment is a separate investment, which ALDI needs to invest.
The major objectives of the strategies are:
The above-mentioned objectives are effective and could help to achieve the strategic goals, as each objective is linked with SMART targets; thereby the implementations of the strategies become easy.
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Attributes (SMART) |
Why |
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S- Specific |
It is specific because increasing the customer base is a clear and concise activity, which can be done. Likewise, if the customer base is large, the sales margin could go up, which is also specific. |
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M-Measurable |
The objectives are measurable because the increase of customer base can be measured just as the revenue and sales margin. |
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A-Attainable |
The strategic objectives are achievable if they are implemented appropriately. For example, the customer base can be increased if a new store is established in a new market. |
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Realistic |
All the objectives are realistic as sales revenue, customer base can be strategically improved. |
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Time |
The implementation of all those strategies can take six months |
Table 3: SMART objectives
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