Get Instant Help From 5000+ Experts For
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing:Proofread your work by experts and improve grade at Lowest cost

And Improve Your Grades
myassignmenthelp.com
loader
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!
Free Quote
wave

Explain the importance of External factors affecting an organization
Analyse the needs and expectations of stakeholders of an organisation
Analyse the major changes taking place in the external environment that will affect strategy

Use appropriate tools to analyse the effects of current business plans
Review the position of an organisation in its current market
Evaluate the competitive strengths and weaknesses of an organisation’s current business strategies

Use modelling tools to develop strategic options for an organization.
Develop a comparative understanding of activity from organisations in the market
Create options to form the basis of future organisational strategy

Propose a suitable structure for a strategy plan that ensures appropriate participation from all stakeholders of an organisation
Develop criteria for reviewing potential options for a strategy plan
Construct an agreed strategy plan that includes resource implications

Compare core organizational values (ethical, cultural, environmental, social and business) with the current business objectives of an organisation
Develop appropriate vision and mission statements for an organisation
Produce agreed future management objectives for an organisation
Develop measures for evaluating a strategy plan

Develop a schedule for implementing a strategy plan in an organisation 
Create appropriate dissemination processes to gain commitment from stakeholders in an organisation
Design monitoring and evaluation systems for the implementation of a strategy plan in an organisation

External Environment Analysis

Aldi is one of the biggest discount supermarket chains in the world. Across various countries in the Europe, China, Australia and USA, Aldi is a major supermarket, catering to a large market share. It is a brand of two German supermarket discount stores. In the year of 2017, the company earned €30,453 million gross revenue (Statista.com 2018). The stores were established in Germany in 1913. It was split into two parts, Aldi Nord and Aldi Süd in the year 1960. Currently it operates in 19 countries with more than 10000 locations and almost 1.5 million employees (Aldi.com 2018). The report will highlight the environment analysis of Aldi to recommend on strategic planning. The external environment analysis and its relevance for the company’s growth strategy, stakeholder analysis, market position analysis, strategic modelling based on the core values for Aldi will be discussed in this report to develop a competitive organizational strategy for the company. The report will also recommend key factors for constructing a strategy plan for Aldi that would include the stakeholders and develop monitoring and evolution systems to implement the strategic plans for it.

External environment refers to the exogenous factors that affect the operations of any business. Various external factors, such as, the economy and political condition of a nation, social status, technological changes, legal regulations, and environmental factors influence the business operations of any organization significantly. These factors are important as they control the business performance from external sources (Gollay et al. 2016). These also influence the industry trends and requirements, which the organizations need to adopt for sustaining in the industry. In case of Aldi, the political and economic stability of the nations in which it operates affect its business operations and profitability. Economic growth indicates that people have more disposable income, which they can spend on the retail market. Technological changes will have an impact if Aldi cannot introduce convenient shopping methods, like websites and mobile apps, and home delivery system, similar to its rivals in the retail industry. The legal and environmental regulations are also important as those allow it to operate if it applies sustainable practices in the respective locations.

According to Jensen (2017), stakeholders of an organisation are those independent people who take interest in an organization and affect and are also affected by the organizational performance. Directors, creditors, owners or shareholders, employees, unions, suppliers, government and customers are the stakeholders of any organization, including Aldi. To meet the needs and expectations of the stakeholders of Aldi, the stakeholder analysis is performed.

Stakeholder Analysis

The stakeholder analysis involves the stages of identifying the stakeholders of Aldi, documenting their needs and expectations, assessing their interest and influence, managing the expectations, taking appropriate actions and finally, reviewing the status (Missonier and Loufrani-Fedida 2014). Similar to any other business, Aldi has both the internal and external stakeholders.

Internal stakeholder analysis

  • Employees: The employees of Aldi need and expect monetary benefit from the company and thus, they expect a profitable business for Aldi.
  • Owners:Like the employees, they also want to establish a sustainable market position for Aldi with a profitable position.
  • Managers:They are also employees of Aldi and thus, need and expect monetary benefit.

External stakeholder analysis

  • Customers:They want ultimate value for money from high quality products. Hence, they are more concerned about the organizational performance regarding the quality of products and services and price of that.
  • Government:They need and expect Aldi to pay for the taxes timely and the rules and regulations regarding pollution and environment protection.
  • Society:The society wants Aldi to take care of the living environment and also contribute significantly to develop the community. This gives rise to the initiatives under corporate social responsibility. The society also wants as well as expects employment opportunity from Aldi.  
  • Suppliers:They need prompt and fair payments from Aldi as per the terms of contract. They do not expect delay in payments or too much squeezing on the deals. Aldi has both local and international suppliers and both expect Aldi to maintain the terms of business.
  • Creditors:They provide credit to the business and thus, they need the return from it in due time. They also expect the company to have a profitable business, so that they can repay the loans with interests. If Aldi faces loss for a long time, they could be a loan defaulter, which is not expected to the creditors.
  • Shareholders:The share prices of the company increases with a better performance, which increases the returns on shares. Thus, the shareholders expect a good dividend, which is a portion of the profit of Aldi, and as a result, they also want Aldi to earn profit.

From the analysis, it can be said, that stakeholders can influence the strategies of Aldi. For example, to fulfill the society’s and government’s expectation, Aldi takes welfare initiatives for the society under CSR activities. Based on the need of the society, the programs are planned and undertaken.

PESTLE analysis framework is used to examine and analyze the external environment of an organization. The PESTLE analysis for Aldi is presented below.

Political

· Aldi majorly operates in the European countries and in the USA, China, and Australia. These countries are usually free from political conflicts, domestically as well as internationally. Thus, Aldi does not face much political instability and uncertainty in its operations.

· With Britain voted for Brexit, there is some uncertainty in the political scenario of the UK, which may affect the Aldi stores in future.

Economical

· After Brexit, the GBP fell and prices increased for domestic and imported goods. This benefitted the Aldi as people are preferring the discount stores more. This helped Aldi to grow at fastest rate in more than two years (Davis 2017).

· The inflation in global economy has affected all the countries, which increased the demand for the discount stores, contributing in the growth of Aldi. According to experts, this trend will continue in the near future also, which will benefit stores like Aldi.

· Food price inflation has affected the sales of the grocery markets, which could grow only 0.2% in 2016-17, although the grocery production growth was 3.8% (Aldi.com 2018). This increased the demand for discount stores across the world.

Social

· As per the market trends, the customers are now preferring the one stop shops and bulk shopping. Thus, Aldi has started to offer non-food items also.

· Demographic changes, such as, rise in female workers, and aging population and decline in the home cooked food and risisng demand for organic food have contributed in bringing changes in the type of product offerings of the discount stores.

Technological

· Supermarkets have been introducing self-checkout systems to minimize the effort by the employees as well as saving the time of the customers, who wants a faster checkout for a few items (Orel and Kara 2014).

· The supermarkets are also developing mobile apps, which allow easy shopping for the customers along with home delivery of the products.

· Introduction of technology for Efficient Consumer Response (ECR) system and Radio Frequency Identification (RFID) system by the other discount stores, which are still not adopted by Aldi.

Legal

· In all the locations, Aldi has followed the country specific legislations regarding the business and licenses.  

· The countries also have regulations regarding health benefits of the citizens and thus, impose various types of restrictions on deliverable food items, which need to be followed strictly.

Environmental

· Sustainability of the local produce is a major challenge for the supermarkets and discount grocery stores.

· Regulations regarding mismanagement of resources and exhaustive cultivation in each operating countries are becoming quite strict to maintain sustainability.

· Production, distribution and supply must follow regulations regarding responsible consumption and reducing environmental impact, which Aldi needs to follow in every location.

Table 1: PESTLE analysis of Aldi

(Source: Author)

From the PESTLE analysis, it can be inferred that, technological changes and environmental issues are two major changes that are influencing the retail market for groceries and discount stores. Technology has been going through rapid transformation in the past few decades, and much like any other industry, the discount grocery business also needs to adopt the new technology to stay ahead of the competition. For example, Aldi needs to introduce the self-checkout systems to save the time of the customers with fewer products. It also needs to develop a smartphone app that would make shopping more convenient for the customers. Customer satisfaction in terms of product quality, price, variety and unique product choice, better customer service and smooth customer experience are all important to gain a significant market share. Thus, Aldi needs to improve its technological service for the customers to retain its market share. Apart from that, the environmental issues are a big challenge throughout the world for all type of industries. Aldi, like any other supermarket stores, must focus on getting the solution on sustainable production, distribution and supply. This requires sustainable resources as well as proper resource planning and implementation, procurement of which can be a big challenge in many countries.

SWOT analysis of Aldi

SWOT analysis is performed to analyze the internal environment of Aldi. It analyses the strength, weakness, opportunities and threat of Aldi that helps the company to achieve competitive advantage in the market.

Strength

· Lower pricing: Aldi is able to provide lowest price in the market which helps to increase market share

· Great savings: Due to the lowest price, customers enjoy great savings, which increases its popularity. Apart from advertised products, it also offers non-advertised brands at a low price.

· Loyal customers: Aldi enjoys a great number of loyal customers across all locations due to its lower prices.

· Wide product mix: Aldi offers a wide range of good quality products, along which, the fresh produced foods are sourced from local producers and some packaged food from international producers. Highly differentiated products and variety of local and imported brands make up their product mix.

Weakness

· Low profit margins: Due to low prices, Aldi experiences very low margin and thus, highly depends on sales volume. Hence, bulk purchase is often encouraged.

· Poor level of employee satisfaction: To survive in the market, Aldi requires very high productivity, but due to lower margin, employees are sometimes paid less. Thus, satisfaction level is poor and attrition rate is high.

· Lack of popularity in high-income group: Aldi gets majority of its customers from low and middle income group and almost none from high-income group. It could not penetrate the higher income market segments.

Opportunities

· Improved preferences of customers: As the income level of the customers is increasing, they are willing pay a higher price for better quality products.

· Expansion in growing economies in Asia and Middle East: The economies of Asia and Middle East are growing rapidly and Aldi can expand its market in those countries.

Threats

· Online business by competitors

· Whole Foods takeover by Amazon

· Competition from Lidl and big players like Walmart, Costco, Tesco, Woolworths etc.

· Global economic fluctuations

· Lack of other departments, such as, clothing, electronics, baby products, house appliances, hardware, accessories etc.

Table 2: SWOT analysis of Aldi

(Source: Author)

This analytical framework is useful in measuring the position of a company in the market and its competitiveness. The Porter’s five forces analysis for Aldi is presented below.

Industry rivalry

Competition in the retail industry in all the locations of Aldi is quite high. The competition is based on price. Although, there are very few supermarkets who provide discount prices, yet, the supermarkets and groceries in all the locations give competition to Aldi in terms of quality of products, and much broader range of known brands at a comparatively lower prices.

Lower level of promotional activities also creates high competition for Aldi.

Threat of new entrants

The big brands in the food retail industry including Aldi are established in the market for a long time, and thus already have loyal customer base. Along with that, the factors, like, entry cost, access to the distribution channels, capital for establishment, economies of scale, capturing the correct target market, achieving the differentiation point and offering lowest price create high barriers to entry for the new entrants. Thus, threat of new entrants is low.

Threat of substitutes

The smaller convenience stores in all countries provide substitutes for the products of Aldi, although the variety of products and brands are less in those stores. Thus, Aldi has moderate threat of substitutes.

Bargaining power of buyers

The customers have a high bargaining power for Aldi. It targets the lower and middle income group and they prefer to achieve the maximum value for money. Price-insensitive customers prefers quality over price and there is very low switching cost as there are multiple chain stores of these supermarkets in accessible locations along with wide variety of differentiated products with higher quality.

Bargaining power of suppliers

The suppliers of Aldi have low bargaining power, as Aldi is a big brand name in the food retail market across the countries and association with Aldi benefits the suppliers.

PESTLE Analysis of Aldi

Table 3: Porter’s five forces analysis of Aldi

(Source: Author)

Aldi has built its business model on the basis of the following three core values, namely, consistency, simplicity and responsibility. According to Aldi (2018), it does not provide special or seasonal discounts unlike the other supermarkets; rather it provides products at a discounted price throughout the year. Moreover, Aldi has focused on no-frills shopping experience for the customers at a lower than average market price. It does not have huge stores with infinite number of products; rather it sells limited number of products that have good demand. It also encourages the customers to reuse their shopping bags and hence, charge a minimal amount for the new shopping bags. They do not use credit cards to avoid interest charges and operate for limited hours to reduce the electricity and manpower wastage. Moreover, it does not sell products from very well known or popular or big brands, as that would increase their operational cost and the product price will be increased. Aldi partners with local producers in every location to reduce the supply cost and sells private labels, which enables it to negotiate the price and reduce the marketing costs. The brand also does not spend on digital media commercials for promotion, they only publish fliers, which helps to reduce marketing costs.

From the above analyses, it can be inferred that, Aldi has some strengths as well as weaknesses. On one hand, the brand has loyal customers belonging to lower and middle income groups, who are mostly price sensitive, on the other hand, it does not spend much on promotional activities, which creates competitive advantage for the competitors of Aldi. The company also lacks market share for the departmental product categories, such as, clothing, accessories, electronics, hardware and construction, photographic elements, baby products etc. The current market share for Aldi in the UK and Australia market are given below.

In 2017, it is seen that in both the markets, Aldi faces competition from only big departmental stores, but not from any other discount stores. In both UK and Australia, Aldi has been successful in their business strategies and has been able to capture a significant market share by 2017. The trend is similar in other countries also. Thus, reducing product cost by making partnerships with local producer and keeping the prices low all throughout the year is the competitive strength of Aldi, while, the lack of product departments, and less promotional activities are the competitive weakness of the company.

SWOT Analysis of Aldi

As seen from the above matrix, Aldi can go for diversification strategy that will cater to new markets by offering new products. In other words, since the company is already operating in the retail food industry with cheaper products, it should take on the competitors in the retail industry by offering diversified products, like clothing, electronics, accessories, toys and many more retail segments. Thus, new market will be developed as well as new products will be added in its portfolio.

Porter’s generic strategy framework

Following the porter’s generic strategy framework, it can be said that to compete with the retail market giants like Walmart, Aldi can adopt the differentiation strategy. In this strategy, Aldi can introduce more brands and more product categories to increase its market share. Aldi can target the higher income group and introduce more product categories, such as, accessories, electronics, medicines and essentials etc. from well known popular brands. It can also introduce more brands on differentiated products under the existing product lines. This would increase market share by attracting the higher income group. Through branding, superior quality product, and promotional activities, Aldi can implement the differentiation strategy.

A comparative analysis of Aldi with another major player in the retail market of the USA, Walmart, has been conducted to form a foundation of the future strategies of Aldi.

Attributes

Aldi

Walmart (USA)

Origin

German

American  

Organizational type

Multinational discount retail store chain

American supermarket and grocery store chain

Marketing activities

Only fliers and newspaper advertisements

Advertisements in all types of platforms

Pricing strategy

Lowest price throughout the year

Flash sales and Seasonal sales are given, during occasions like, Thanksgiving, Black Friday, Christmas, new Years etc.

Target market

Lower and middle income group

Higher, middle and lower: all income groups

Business strategy

Providing good quality food item and kitchen appliances at lowest price in the market under limited number of brands

Providing a huge variety of differentiated products, under various price ranges, under a huge number of product categories

Product sourcing

Local grown produce in every location

Local as well as international products

Use of technology

No provision for online shopping (Website/mobile apps)

Online shopping and home delivery options are available

Payment method

Only cash and debit cards

Cash, debit, credit and Walmart’s own credit card

Membership provisions

No membership provision

Membership provisions with Walmart credit card

Table 4: Comparative activity analysis of Aldi with Walmart

(Source: Author)

From the above analysis, it can be suggested that, Aldi lacks in terms of variety of product categories or departments, economies of scale, lack of technological innovations, lack of well known brands and product differentiation. Currently, the company has been operating by following Cost Focus strategy. Porter’s generic strategy framework can be applied to analyze Aldi’s business strategy and recommend on their future strategy. Aldi followed the cost focus strategy, in which it attained lower cost advantage in a small market segment. It offers limited number of specific products targeted towards the lower and middle income group.  However, following the above two strategy framework, it can be said that diversification or differentiation strategy would be most beneficial for Aldi to enter the bigger retail industry and take on the competition.

The key factors of strategic planning for any organization include mission, vision, values and strategies. Aldi’s mission is to provide comfort and safety to the customers and its vision is to set standards in the food retail industry across the world (Aldi.com 2018). The core values of Aldi, namely, simplicity, responsibility and reliability will also be considered for strategic planning, which is majorly based on the nature of the leadership and organizational culture, complexity of the environment, size and efficiency and expertise of the planners. The company should make strategic planning that integrates all these factors as well as all the stakeholders to get the maximum benefits, which are aligning the mission and vision of Aldi with departmental goals and business goals and enabling transparent communication system with stakeholders and team members.

Aldi can use matrix organizational structure to ensure active and appropriate participation from all the stakeholders. Under this organizational structure, the authority of the functional managers flow vertically downwards and that of the project managers flow horizontally sideways (Csaszar 2012). This stricture includes the benefits of project based structure, function based structure and geographical structure. By applying this organizational structure, Aldi can ensure the involvement of all the stakeholders. Division of workers is possible as per the available tasks and a person can be appointed for supervising the members of different teams. As Aldi works in a dynamic retail environment, matrix structure is most suitable.

The combination of multiple structures increases the efficiency of the company, its readiness for market changes and quick market change adaptation. This structure will enable Aldi to respond faster to customer demands and reduce the lead time of producing or supplying a new product in the market. Hence, this proposed structure will serve the end markets of Aldi in a much faster way due to the internal dependencies of the departments. As Aldi will be following the differentiation strategy for expanding the business, it will require more people and more departments to introduce new product lines in a quicker manner, thereby involving all type of stakeholder. The benefits can be derived in the following manner:

  • Key people handle more projects and responsibilities, resulting in minimized project cost
  • Hierarchical decisions are made faster with minimal conflicts
  • Time, cost and performance are efficiently balanced
  • Responsibility and authority for new and existing departments will be shared, reducing wastage of efforts
  • Increased access to more resources through geographical structure and old functional structure
  • Faster decision in decentralized manner
  • Improved coordination on the shared technologies across the entire organizations
  • More access to diverse perspectives and skills from all types of stakeholders
  • Improved communication across all the departments

Thus, through matrix organization structure, Aldi will be able to involve all its stakeholders to participate in their strategy plan. This will benefit the company to know about the market trends and make strategies to address those accordingly.

The new strategic plan for Aldi needs some potential options to be successful. It must be considered that the best strategy should take into account the size and capacity of Aldi, its technical capability, governing framework, and environment. Aldi is operating at a multinational level and therefore, its strategic plan must address the options existing at the international level. However, the proposed strategy must avoid the technical uncertainties, and should be able to reduce the bottlenecks efficiently. At the same time, implementation of new strategies will incur a big amount of cost to Aldi and hence, to improve efficiency and cost effectiveness, it must make sure that the operational cost is reduced. To evaluate the strategies of Aldi, the Rumelt evaluation method can be applied. This method consists of four criteria, namely, consistency, consonance, feasibility and advantage (Forsell 2012). According to Rumelt, a strategy can be successful if it is consistent across all departments of the operational units. Consonance refers to the alignment of external changes and strategies with their internal trends and strategies. Feasibility implies that the strategies formulated are flexible and the firm has capability to implement those. Lastly, advantage refers to the implementation of those strategies that can bring the firm competitive advantage in the market (Molodchik, Shakina and Bykova 2012).

As Aldi will be adopting the differentiation strategy, the firm needs to develop the four criteria to review the potential options.

Factors

Developing criteria

Evaluation reasons

Consistency

· Reviewing short term goals and objectives for supporting long term strategies

· Measuring inconsistency between mission, vision and objectives

· Evaluating the levels of matrix organization structure

· Aldi focuses on long term strategic changes in its business ideology

· Vision, mission and objectives are essential for implementing new strategies.

· From functional levels, Aldi will change the organizational structure to the matrix structure.

Consonance

· Determining how efficiently and effectively the differentiation strategy adapts to the environment

· Key external and internal factors must be combined together to bring the best results.

· Aldi’s financial capacity must be evaluated to check if its able to integrate both type of environment.

· SWOT and PESTLE analysis must be conducted before developing any strategy

Feasibility

· Identifying the financial limitations of Aldi during strategy implementation.

· Investigating its employees to check their level of acceptance of the strategic changes

· Investigating the requirement of the resources and skills and knowledge of the human resources for achieving long term goals

· Financial ability is one of the most important factors that make the strategy implementation possible.

· Aldi must introduce rewards and benefits to encourage the employees to accept the changes.

· Training needs analysis is performed to identify the training requirement of the employees to enhance their skills.

Advantage

· The strategy should be aligned with the organization’s competitive advantage and should be able to promote those.

· Development of specialized resources for effective implementation of strategies, resulting in competitive advantage.

· Differentiation strategy gives Aldi a scope to compete with existing players in the market, however, discounting price along with differentiation is expected to give competitive advantage.

· Specialized resources are often beneficial while implementing new strategies, such as, marketing experts introduce new promotional strategies, bringing competitive advantage.

Table 5: Rumelt evaluation method

Thus, it can be said that, the differentiation strategy plan of Aldi will be effective as it helps to innovate its existing strategies of discount pricing with differentiating product lines.

Resource implications are important during any new strategy plan. Since, new strategy implementation incurs heavy cost; it has consequent implications on the other resources as well.

  • Human resource:this resource is one of the main pillars of any organization. As Aldi is adopting differentiation strategy, the recruitment and selection process is required to employ more expert management consultants along with IT experts and marketing experts. Thus, Aldi must be prepared to invest a lump sum on the new recruitments. The existing human resources should be given training to adapt to new changes.
  • Tangible or physical resources:Aldi will require a new set of hardware components and internet connections to support the new business strategy.
  • Financial resources:Aldi needs to calculate the estimated budget of the new strategy implementation and must take measures to increase its capital stock to sponsor the new strategies.
  • Technological advancement:This is highly important for Aldi. It should use various channels, like, social media, to know the customer feedback about launching their new products and the customers’ acceptance level. The existing technology should be upgraded to adapt the new systems.

The three core values of Aldi are:

  1. Simplicity
  2. Responsibility
  3. Reliability (Aldi.com 2018)

Aldi implements simplicity in every aspect of its business, such as, structures, efficient process, and offering high quality products at a lower price. Aldi maintains undemonstrative functionality and simple rules of business with all its stakeholders. Clarity is achieved through simplicity in the business strategy of Aldi.

Aldi has always promised to deliver quality and over the years it maintained that responsibility, which made Aldi a household name in its operating markets. By quality, Aldi focused on health and safety of the customers along with fulfilling the welfare of the community through responsible production and consumption in its production and supply chain. Aldi is a considerate and responsible employer and an honest business partner to its suppliers.

Over the years, Aldi was successful in creating trust among the customers through reliability. They do not compromise their quality requirement for lower cost and make a good relationship with the suppliers and business partners. Offering the value proposition to the customers is one of the main business objectives of Aldi, and that helped in the business growth over the years. It is a reliable employer to more than 50,000 employees across all the locations. Aldi focuses on providing the reliable compliance and service to all the stakeholders to achieve sustained position in the market (Aldi.com 2018).

The current business objectives of Aldi are to set high quality standards in the retail food industry across the world and continuously strengthen their market position by offering safety and comfort to their customers (Aldi.com 2018). The demand for discounted retail food products has increased over the years and popularity of Aldi has increased significantly, implying that the customers have trust on Aldi. The simple business structure of lowest price and highest quality, responsibility towards maintaining its promise of delivering the best quality and reliability has helped Aldi to gain competitive advantage in the retail food market. With this strategy, Aldi is expected to be able to capture a bigger market share when implementing the new differentiation strategy in every other type of retail consumer goods.

The mission and vision statements are designed to align with the implementation of the differentiation strategy of Aldi.

  • Mission:“To provide the best quality in a large variety of retail products at lowest prices to the valuable customers to make them enjoy larger savings as well as health and comfort while shopping from us.”
  • Vision: “To be the market leader in the retail industry by offering the best quality products at lowest price and thereby improving the quality of life of the people through better health and greater savings and building a stronger relationship with a larger number of customers.”

Both these statements aim to address the implementation of the new business strategy, that is, differentiation strategy for increasing the market share by 25% in the next 3 years, while keeping the core values unchanged.

The future management objectives of Aldi are to increase the market share by 25% in the next 3 years and building a reliable relationship with all the stakeholders by providing them the confidence of responsibility, honesty and a promise to maintain ethics, sustainability and integrity in their services. Differentiation or diversification strategy will enable the company to increase its business operations into multiple product categories under retail, thereby increasing the scope for building a relationship with large number of customers. The sustainable and ethical practices to be adopted while expanding its business will enable it to achieve a reputation and goodwill in the society and it can maintain its promise to look after the health and comfort of the consumers through the new product categories. Thus, the new objectives will not only follow the new mission and vision of Aldi, but will also be aligned with its core values of providing the highest quality products at lowest price and ensuring better health, comfort and safety of the customers.

Various techniques and measures can be adopted to evaluate the strategy plans of Aldi. The company can implement measures for evaluating financial performance, production performance, supply chain performance, human resource performance, contingency planning, and return on investment (ROI) or return on equity (ROE). Aldi should focus on developing some efficiency measures, outcome measures, quality measures and project measures.

Measures

Parameters for evaluation

Financial measures

Improvements in:

· Net profit margin

· Operating profit margin

· Increase in ROI/ROE

· Reduction in operating cost

International businesses

Increase and improvements in:

· New insurances

· Online business

· Effective marking

· Claim operating activities

· Global supply of products

Customer and stakeholders satisfaction

Increase in:

· Market share

· Number of suppliers

· Number of store locations

· Reduction in policy issues and damage claims

Human resource performance

Increase in:

· Number of training

· KPI scores

Table 6: Measures to evaluate the strategy plan

(Source: Author)

By evaluating the above factors, Aldi can evaluate the new strategy, that is, the differentiation strategy, after one financial year from the implementation time. If the factors display considerable improvement, then it can be said that the new business strategy of Aldi was successful.

Developing and implementing a new strategy requires some time. Implementation consists of various steps, which require their own time. Thus, Aldi must have a schedule for the strategy and its implementation, which will help it to stay in track and set the deadlines for finishing the tasks within time. The firm aims to adopt differentiation strategy for expanding its business into the retail industry, apart from only the retail food market and increase the market share by 25% in the next 3 years.

Strategies

  • To develop and supply various retail consumer goods other than only food.
  • To develop new marketing strategies to compete with the retail giants in consumer goods industry
  • To expand business in emerging markets
  • To gain competitive advantage in the new market through lowest prices

 

2018

2019

2020

Strategy implementation plan

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Develop new products under own brand line

Partnerships with other suppliers for consumer goods products at a lower price

Getting finances

Recruitment of new skilled and unskilled employees

Advertisements in various print and digital channels about new product categories

Direct marketing (in-person marketing in stores, telemarketing )

Planning for international expansion

Renovating some existing stores

Procuring few new places to open new stores

Procuring new technology

Table 7: Schedule of strategy implementation

(Source: Author)

To gain commitment from the stakeholders, Aldi can adopt various processes. Some of the appropriate and effective ways of dissemination are: meetings, workshops, group facilitation, presentations, digital and social media, face-to-face interaction, newsletter subscriptions etc.

Aldi can implement the following dissemination processes for the stakeholders:

  • Newsletter:Aldi can send newsletters about launching their new product categories to their loyal customers, via email. People, who have subscribed to Aldi’s newsletters to stay updated about their operations, can be intimated about the new ventures of Aldi through an announcement in the newsletters.
  • Workshop:this is for the skilled and unskilled employees of Aldi to let them become familiar with the new strategies. Knowledge transfer is the main agenda of these workshops and these are usually very effective as a large number of employees can be educated at a sngle time, thereby reducing the wastage of time and cost.
  • Meeting:Aldi should arrange meetings for the key stakeholders. It involves clear communication, and efficient decision making. The stakeholders can participate and give suggestions and feedbacks to the company regarding their demand. Meeting is an effective dissemination process as it is less time consuming and direct communication between the firm and stakeholder can happen. Thus, it is easier to gain commitment from the stakeholder. As a corporate strategy, Aldi can arrange a monthly meeting with the stakeholders to influence them. Through meetings, the stakeholders come together and discuss about the future plans and strategies.
  • Presentation:This is a very effective dissemination process. The future goals and objectives of the company can very well be presented through presentations to the stakeholders. Even the company performance for the past financial years is also subject matters of presentation to the stakeholders. Thus, Aldi can prepare a presentation on the implementation of the new strategy, its costs and benefits and how it can be used to enter the retail market and gain a bigger market share. After the presentation, feedback from the stakeholders can be taken and applied to make changes in the strategies accordingly. Hence, this method entails active participation from the company and its stakeholders.
  • Media:This medium includes all types of print and digital media communication, such as, newspaper advertisements, billboards and hoardings, fliers, social media campaign, radio and television campaigns, emails, text messages, voice calls, and company publications and press releases. Aldi can adopt any or few of these techniques to announce their new move into the retail market. All types of stakeholders of Aldi can be easily informed about their new strategies through these techniques.

Once a strategy is planned and implemented, a monitoring and evaluation system should be developed to measure its effectiveness. Aldi will evaluate all the aspects of the new strategy twice a year and it will be monitored and evaluated through strategy-evaluation matrix. The process of strategy evaluation consists of four major steps, that is, setting the benchmarks for the performance, measurement of the performance, analysis of the variance and requirement of corrective actions (Punt et al. 2016). In other words, the strategy evaluation matrix will assess how well Aldi has performed after implementing the new strategy, whether the assets, profit, sales, productivity and profit margins have increased. If the answers are yes, then the strategy seems to be appropriate. Aldi will follow this matrix to monitor and evaluate its new strategy.

Have major changes occurred in Aldi’s internal strategic position?

Have major changes occurred in Aldi’s external strategic position?

Has Aldi progressed satisfactorily toward achieving the stated objective?

Result

No

No

No

Corrective actions

Yes

Yes

Yes

Corrective actions

Yes

Yes

No

Corrective actions

Yes

No

Yes

Corrective actions

Yes

No

No

Corrective actions

No

Yes

Yes

Corrective actions

No

Yes

No

Corrective actions

No

No

Yes

Continue course

Table 8: Strategy-evaluation matrix

(Source: Punt et al. 2016)

Thus, it can be inferred, that if the result shows to take corrective actions, then the strategy is not working well for Aldi, and if it shows the result of continuing the course, then Aldi can move further ahead with this strategy.

However, before following this evaluation matrix, Aldi must follow the strategy evaluation framework.

As per the framework, Aldi first needs to develop evaluation matrices for internal and external factors to review the underlying foundation of the new strategy. Once the matrices are developed, Aldi should compare the revised factors with the existing factors to evaluate the changes in the performances. If the result is significantly different, Aldi needs to take corrective actions. Otherwise, it should move to step two, which is, measuring the organizational performance. In this step, Aldi should compare the actual progress with the targeted objective. again, a significant difference in the outcome leads to corrective actions to modify the strategy actions, and otherwise, Aldi should continue with the current course of the strategy. This way, Aldi should monitor and evaluate its new differentiation strategy to capture a bigger market in the retail industry.

Conclusion 

It can be concluded that strategic planning is a critical factor for any business success. It includes mission and vision of a company, which need to be aligned with the objectives as well as resources of the company. Through strategic planning, a company can set its direction and plan its ways to move in that direction for its business growth. In this report, it can be inferred that Aldi, the discount supermarket store for retail food industry, can take on the retail market with differentiation strategy to compete with the retail giants like Wal-Mart, Costco, and supermarkets and grocery stores like Woolworths, Coles, Tesco and many more across the locations in which Aldi operates. With the new strategy, it can also enter new emerging markets, like in Asia, Africa and Middle East. Apart from introducing the new strategy, Aldi should also implement various measures for active participation from the stakeholders, to evaluate the strategy plan, prepare a schedule, and develop a strategy evaluation framework and matrix for monitoring and evaluation of the strategy. Thus, it can be said that for effectiveness of a new strategy, Aldi must take measures to monitor and evaluate the performances at a regular interval so that corrective actions can be taken immediately.

References 

Aldi.com, 2018. Welcome to ALDI. [online] Aldi.com. Available at: https://www.aldi.com/ [Accessed 8 Sep. 2018].

Csaszar, F.A., 2012. Organizational structure as a determinant of performance: Evidence from mutual funds. Strategic Management Journal, 33(6), pp.611-632.

Curtis, J., 2017. Discount supermarkets sell record share of UK's groceries. [online] Mail Online. Available at: https://www.dailymail.co.uk/news/article-4289876/Discount-supermarkets-sell-record-share-UK-s-groceries.html [Accessed 8 Sep. 2018].

Davies, R., 2017. Aldi to become highest-paying supermarket in UK. [online] the Guardian. Available at: https://www.theguardian.com/business/2017/jan/05/aldi-to-become-highest-paying-supermarket-in-uk [Accessed 10 Sep. 2018].

Forsell, M., 2012, May. Strategy tetrad for evaluating strategic choice. In Paper delivered at Business and Management (International Scientific Conference) (pp. 10-11).

Gollay, I.N., Gollay, A.V., Shindina, T.A., Salimonenko, E.N. and Chuvashova, A.D., 2016. Priority areas of analysis of the external environment of a company-innovator depending on a type of introduced innovations. Polish journal of management studies, 13.

Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-206.

Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.

Jensen, M.C., 2017. Value maximisation, stakeholder theory and the corporate objective function. In Unfolding stakeholder thinking (pp. 65-84). Routledge.

Missonier, S. and Loufrani-Fedida, S., 2014. Stakeholder analysis and engagement in projects: From stakeholder relational perspective to stakeholder relational ontology. International Journal of Project Management, 32(7), pp.1108-1122.

Molodchik, M., Shakina, E. and Bykova, A., 2012. Intellectual capital transformation evaluating model. Journal of Intellectual Capital, 13(4), pp.444-461.

Orel, F. and Kara, A., 2014. Supermarket self-checkout service quality, customer satisfaction, and loyalty: Empirical evidence from an emerging market. Journal of Retailing and Consumer Services, [online] 21(2), pp.118-129. Available at: https://www.sciencedirect.com/science/article/pii/S0969698913000829 [Accessed 10 Sep. 2018].

Punt, A.E., Butterworth, D.S., de Moor, C.L., De Oliveira, J.A. and Haddon, M., 2016. Management strategy evaluation: best practices. Fish and Fisheries, 17(2), pp.303-334.

Roymorgan.com, 2017. Aldi hits new high in supermarket wars. [online] Roy Morgan. Available at: https://www.roymorgan.com/findings/7234-woolworths-coles-aldi-iga-supermarket-market-shares-australia-march-2017-201705171406 [Accessed 8 Sep. 2018].

Statista.com, 2018. Aldi Group revenue in Germany 2017 | Statistic. [online] Statista. Available at: https://www.statista.com/statistics/505695/aldi-group-revenue-germany/ [Accessed 8 Sep. 2018].

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2021). Strategic Planning For Aldi: Analysis Of External Environment, Stakeholders, SWOT Essay.. Retrieved from https://myassignmenthelp.com/free-samples/mgmt615-strategic-planning/management-and-administrative-sciences.html.

"Strategic Planning For Aldi: Analysis Of External Environment, Stakeholders, SWOT Essay.." My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/mgmt615-strategic-planning/management-and-administrative-sciences.html.

My Assignment Help (2021) Strategic Planning For Aldi: Analysis Of External Environment, Stakeholders, SWOT Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/mgmt615-strategic-planning/management-and-administrative-sciences.html
[Accessed 16 July 2024].

My Assignment Help. 'Strategic Planning For Aldi: Analysis Of External Environment, Stakeholders, SWOT Essay.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/mgmt615-strategic-planning/management-and-administrative-sciences.html> accessed 16 July 2024.

My Assignment Help. Strategic Planning For Aldi: Analysis Of External Environment, Stakeholders, SWOT Essay. [Internet]. My Assignment Help. 2021 [cited 16 July 2024]. Available from: https://myassignmenthelp.com/free-samples/mgmt615-strategic-planning/management-and-administrative-sciences.html.

Get instant help from 5000+ experts for
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing: Proofread your work by experts and improve grade at Lowest cost

loader
250 words
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Plagiarism checker
Verify originality of an essay
essay
Generate unique essays in a jiffy
Plagiarism checker
Cite sources with ease
support
Whatsapp
callback
sales
sales chat
Whatsapp
callback
sales chat
close