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Organizational Culture And Strategy Implementation

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Question:

Discuss about the Organizational Culture and Strategy Implementation.
 
 

Answer:

Introduction

With the increasing level of competition, it has become necessary for every business entities to focus on developing suitable strategies for achieving sustainable growth in the market. For that reason, organizations have tried to analyze possible internal and external factors that can have major impact on the business perspective. In this report, the focus will be on one of the popular organizations dealing in the retail sector namely Aldi Australia. The organization is among the most popular supermarket chain that has around 10,000 retail outlets in 18 countries. Theo Albrecht and Karl Albrecht established Aldi in 1946 with the objective of becoming superior brand in the retail market (aldi.com, 2017). The organization has focuses on different product segment including sanitary articles, food & beverage and household goods for increasing its popularity in the market. The mission statement of Aldi focuses on the global expansion perspective for reaching to maximum number of customers in an appropriate way. For that reason, it has always focused on evaluating the initiated internal and external strategies to create maximum impact on the market. In 2001, Aldi has opened its first store in Sydney area for realizing its global business expansion perspective. Initially, Aldi has tried to utilize discounted strategy for enhancing the popularity in the Australian market. In 2006, Aldi has able to capture around 12.6% of the total market share of the Australian market (Dauber, Fink & Yolles, 2012). It highlights the fact that Aldi has able to implement effective strategies for handling the business related challenges in an appropriate manner.       

Identify and evaluate the suitability of the organisation’s current strategy:

As highlighted by Paksoy, Pehlivan and Kahraman (2012) organizations need to focus on the development of the strategies to counter the market related challenges in an appropriate way. Therefore, it has to focus on evaluating the prime factors that can have major impact on the business perspective of the organization. Now, Porter generic strategies are considered as one of the most popular tools that can allow organizations to gain competitive advantage in the market. Aldi has evaluated different strategies for expanding the business in the global market. Porter generic strategies have highlighted the fact that organizations can able to gain two type of competitive advantages including lower cost and differentiation depends on the implemented strategies. The strategies highlighted in Porter generic approach are discussed as follows:

Cost leadership strategy:

As highlighted by Rothaermel (2015) cost leadership strategy focuses on capturing price sensitive or cost-conscious customers for gaining competitive advantage in the market. Now, the business strategy of Aldi has always focused on providing superior quality of groceries product at the cheapest price level. As a result, it has able to gain the attention of the customers in a major way. Now, cost leadership strategy has highlighted the fact that effective utilization of lower price strategy depends on the effective development of the low cost operational process. Otherwise, organizations will not able to achieve high return on investment. Now, business strategy of Aldi has tried to design products in such a way so that it can able to influence people from different cultural background. Moreover, Aldi has also tried to utilize cost-efficient marketing and promotional strategies for achieving maximum profit level.   

Differentiation strategy:

As opined by Mantere (2013) differentiation of products is another popular way of attracting more number of customers in the business segment. In the present competitive business structure, several prime retail organizations like Walmart and Tesco have included wide range of products within the business segment to get closer to more number of customers. However, Aldi has primarily focuses on the groceries segment to become the most popular supermarkets in the global market. However, Aldi has implemented different products like liquor and home appliances to capture all segment of the Australian market. For that reason, Aldi’s present tactics also goes with the differentiation strategy, which will create major impact on the business development perspective (Wilden et al., 2013). It has also tried to utilize shareholder model to creating maximum impact on the business perspectives.  

Focus strategies:  

Porter generic strategy model has also mentioned focus strategies that business entities can utilize for achieving competitive advantage in the market. It has been assessed that prime organizations that are focusing on utilizing differentiation strategies in conjunction with the focus strategies to create maximum impact on the market (Ahmadi et al., 2012). However, Aldi has focused on utilizing different product design to penetrate all areas of the market in an appropriate way. Thus, Aldi is actually utilizing broad marketing strategies, it will primarily focus on the cost effective strategies for fulfilling the business objectives in an appropriate manner.

 

Evaluation of the internal and external environment:

As per the article by Kalkan, Bozkurt and Arman (2014) effective evaluation of internal and external factors are necessary for the successful fulfilment of the business objectives. Therefore, Aldi also will have to focus on the proper analysis of the internal strengths and weaknesses so that it can able to create maximum impact on the market. As mentioned earlier, Aldi has able to reach its presence all across global market. As a result, it has able to create strong brand value, which will eventually create positive impact on the business perspective. On the other hand, Aldi also has focused on utilizing low-price strategy, which also has created positive impact on increasing the popularity in the global market. Moreover, Aldi has also focused on providing high quality grocery products to the customers so that it can able to add value to the business perspective. Aldi also has tried to utilize different type of product design to ensure that it remains acceptable for the people from different cultural and educational background (Baruah & Ward, 2015). As a result, these factors have provided major advantages in handling business activities effectively.

On the other hand, Aldi also have to face huge amount competition from several other prime retail chain organizations at the time of conducting business. For that reason, it will have to face threat of losing the market share to any other prime retail chain organizations. Moreover, competitors are looking to utilize effective strategies so that they can able to capture major share of the market (Jani?ijevi?, 2012). Moreover, business strategy of Aldi has focused primarily on the grocery products. As a result, it does not have as much differentiation advantage compared to other retail chain organizations like Woolworths, Tesco and Walmart. For that reason, it will enhance the threat level for the organization in order to achieve sustainable growth in the market.  

Value chain activities:

As opined by Selznick (2014) effective utilization of value chain activities is necessary for the business entities to achieve sustainable growth in the market. For that reason, Aldi has also focused on the effective development long-term relationship with all the suppliers so that they can able to receive products with lower price level. Specifically, as Aldi is trying to utilize low-cost strategy, it is necessary for them to gather superior quality of raw materials at cheaper prices than its competitors. Otherwise, it will found very tough in maintain desired profit level for the organization. Aldi has also focused on developing retail outlets in all the prime areas with excellent quality of logistic system, which ensure that required amount of products is always available at all the outlets (Agha, Alrubaiee & Jamhour, 2012). As a result, it will definitely help Aldi to add value to the provided quality of services. Moreover, Aldi’s business strategy includes different product design so that it can be acceptable for all community people. Thus, it will also help to provide value added services to the customers.

Effectiveness of the present strategies:

From the above discussion, it can be assessed that Aldi has tried to utilize different strategies for achieving sustainable growth in the market. For instance, the organization has initiated a constant effort in enhancing its global reach so that it can able to access maximum number of customers. As a result, Aldi has able to expand in 18 countries in a very short span of time, which also has created major positive impact on the overall revenue level as well (Fiss, Cambré & Marx, 2013). On the other hand, Aldi’s business strategy also includes keeping the price level lower than all its competitors, which also have greater impact in developing popularity across the geographical boundaries. For that reason, it can be mentioned that Aldi’s initiated strategies has helped the organization to fulfil all its business aim and objectives in an appropriate manner.

Justification of the present strategies:

As highlighted by Steensen (2014) business strategies play a crucial part in the success of any organization. Therefore, it is necessary for all the business entities to focus on continues evaluation process of the business strategy so that they can able to achieve sustainable growth in the market. Now, Aldi’s low-cost strategy is extremely useful in enhancing the popularity level in the global market. Moreover, it has also helped the organization to achieve competitive advantage in the market. However, it is also necessary for Aldi to maintain such price level for the products that can provide desired profit level. For that reason, Aldi will have to focus more on the operational process to minimize the cost associated with it. On the other hand, Aldi also have tried to include talent from the host countries so that the entire business procedures can be completed with limited budget. However, it Aldi will also have to consider of providing more opportunity for the people of other countries to represent itself as a responsible corporate citizen.

 

Evaluation of current strategy through Hubbard’s strategy implementation model:

Aten and Thomas (2016) have highlighted the fact that effectiveness of the implemented business strategies depend on several factors. Therefore, it is necessary for the organizations to analyze all the factors effectively to identify best possible strategy for fulfilling all the business objectives. Many studies have recommended different strategies for analyzing the implemented business strategies of the organization. However, for the evaluation of the implemented strategy of Aldi, the report will focus on Hubbard’s strategy implementation model. The Hubbard model have highlighted several factors including system, structure, culture, people and leadership that can have major impact on the overall performance level of the organization. Specifically, as Aldi is conducting business in global platform, it has become necessary for the organization to consider the impact of environmental changes on the overall business perspective. As per the article by Bharadwaj et al. (2013) customers from different countries have different values, cultures, believes and education. As a result, it is more likely to create change in preferences. Therefore, it is up to the organization to focus on formulating such business strategies that can cover all business aspects in an effective way. The factors mentioned in the Hubbard’s model are described as follows:

As mentioned by Santos-Vijande, López-Sánchez and Trespalacios (2012) systems or technology plays a critical role in maintaining the business level in an appropriate way. Specifically, as Aldi has its presence in different parts of the world, it has to focus on maintaining effective coordination with all the business units. Moreover, management of the organization also need to have proper access of all the relevant information required for handling the business activities in an appropriate manner. For that reason, Aldi has always considered best available technologies to minimize the barriers associated with the business processes. Moreover, it has also tried to utilize different advance technological platforms like for conducting marketing and promotional campaign in an effective manner (Hitt, Ireland & Hoskisson, 2012). Business strategy of Aldi also includes effective utilization of advance system for resolving all the customers’ issues. As a result, it has able to make a great impact on the overall performance level of the organization. 

In the present competitive business environment, effective utilization of organizational structure is important for performing all the responsibilities of the operational processes. In fact, effective utilization of organizational hierarchy is necessary for the minimizing the amount obstacles that a business entity will have to face at the time of performing operational responsibilities (Lee, Olson & Trimi, 2012). Now, business strategy of Aldi focuses on the effective utilization of matrix organizational structure so that it can able to fulfil all the business objectives in an appropriate manner. As a result, it has allowed Aldi to utilize both functional and divisional structure, which has created positive impact on the overall business performances. It has also helped Aldi to develop clear and effective communicational network so that employees do not have face any type of confusion regarding their roles and responsibilities. As a result, it will help to create maximum impact on the effectiveness of the operational process.

Organizational culture refers to the norms that businesses try to utilize to maintain healthy working atmosphere. In the complex business situation, it has become necessary for the organizations to develop culture in such a way so that it can able to perform all its responsibilities (Shirey, 2012). For that reason, Aldi has tried to utilize culture with extensive controls. It strictly focuses on maintaining all the rules and regulation so that all the activities associated with the business process can be completed within given timeframe. Moreover, organizational culture of Aldi also focuses on maintaining strong relationship with the external parties like distributors and retailers so that it can able to fulfil all the business objectives in an appropriate way. Aldi also focuses on formulating ethical values among the employees, as it will ensure effective team or group performances. 

As per the article by Benitez-Amado and Walczuch (2012), effective utilization of the employees is necessary for enhancing the performance level of the organization. For that reason, Aldi has tried to formulate different strategies in maintain the talent base at the desired level. In fact, HR management of Aldi has tried to analyze the kind of benefits and other facilities that are provided by the competitors so that it can able to formulate effective counter strategies. Aldi has tried to maintain proper benefit and remuneration strategy to keep employees motivated towards their roles and responsibilities. In fact, Aldi has also focused on providing other associated benefits to the employees including health insurance for all the family members in order to ensure they remain with the organization for long timeframe (Mansfield, 2013). Moreover, Aldi also has focused on providing effective career development opportunities in order to ensure that they grow up as professionals in an appropriate manner. Aldi also has tried to provide effective training and development facilities to the employees so that they can handle advance technologies and business processes in an appropriate manner.

As opined by Claver-Cortés, Pertusa-Ortega and Molina-Azorín (2012) leadership is a key aspect in handling the performances of the organizations in an appropriate way. It not only allows organizations to maintain healthy working atmosphere but also help to formulate effective strategies for the fulfilment of business objectives. For that reason, Aldi has consciously tried to utilize democratic leadership styles so that it can include different perspectives of the employees in an effective manner. Moreover, it also allows Aldi to maintain the motivation level of the employees. Aldi leadership style has been constructed in such a way so that employees can easily look for help or assistance from the senior management (Al-Swidi & Mahmood, 2012). As a result, it has helped the organization to maintain positive healthy working atmosphere, which eventually has made greater impact on the overall performance level. In addition, Aldi has also focused on capturing few advantages of transformational leadership style, as it is looking to motivate people with shared vision and mission statement. Aldi leadership strategy focuses on inspiring all the team members so that they can able to give their best at the workplace. For that reason, Aldi focuses on setting clear goals and objectives for each employee so that they can plan their work in an effective manner.

 

Identification of the key issues and recommendations:

The above discussion has highlighted the fact that Aldi has able to develop effective strategies for achieving sustainable growth in the market. For instance, low-pricing strategies have able to enhance the popularity level in the global market in a huge way. However, it has affected the amount of profit margin that organization can actually achieve by charging relative higher prices for their products (Coghlan, Rashford & de Figueiredo, 2015). It has been highlighted that Aldi has tried to provide different designs for their products so that it can be acceptable for the people coming from different cultural and educational background. As a result, it has increases the cost level for the organization, which also increases the necessity of charging relatively higher prices for their products.

On the other hand, the discussion has also highlighted the fact that Aldi has primarily focuses on providing grocery items in the market. As a result, it has not able to take advantages of including diversification in the business segment (Gond et al., 2012). For that reason, Aldi still has not able to capture major share of the Australia and global market. Thus, Aldi needs to focus on including diversification in their product range in order to increase the popularity in the market in an effective way. However, Aldi has included different products like liquor and home appliances in their business segment recently. Still, the diversification in the product range is not at the optimum level that can affect the overall business perspective in an appropriate manner.

It has been identified that leadership style of Aldi is primarily focuses on the utilization of democratic leadership style for the fulfilment of the organizational responsibilities. As a result, it has helped Aldi to highlight the significance of employee perspective in the organizational structure. However, it has also slowed the decision-making process of the organization (Macnamara & Zerfass, 2012). For that reason, in order to counter any new challenges in the market segment Aldi require more time. As a result, it has affected the effectiveness of the operational process for the organization. In addition, Aldi also need to focus on increasing the number of technologies used in the promotional or advertisement campaign for reaching to its desired customers in an effective way. For instance, Aldi will have to focus on the effective utilization of social media platforms for providing required level of information in an appropriate manner. Aldi will also have to utilize social media platforms for collecting feedback from the customers regarding the quality of products and services they received at the time purchasing from Aldi’s retail outlets. Moreover, Aldi also need to focus on evaluating present organizational structure to counter future challenges in an appropriate way. However, Aldi already has a well-developed structure where employees know their roles appropriately. Still, increasing competition and changing market environment has influenced Aldi to make specific adjustments to the present structure so that they can able to handle the challenges in an effective manner.

 

Conclusion:

The above discussion has highlighted the significance of developing effective strategies for the fulfilment of the business objectives. The report has highlighted the fact that initiated strategies have played a greater role in increasing the popularity of Aldi in the global market. It has mentioned the fact that Aldi has focused on developing independent strategies for internal and external business environment. It has focused on organizational culture and leadership aspect to provide healthy working atmosphere for the employees. On the other hand, it has tried to develop low-price and business expansion strategies for achieving sustainable growth in the market.

 

References:

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aldi.com. (2017). Aldi.com. Retrieved 25 January 2017, from https://www.aldi.com

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