Business-Level Strategies, Mall Rents Negotiation, Technology-Enabled Communication, and Value Creat

Aldi's Business-Level Strategy and Potential Pitfalls

Q1. Aldi, a discount supermarket retailer, has grown from its German base to the rest of Europe, Australia, and the United States by replicating a simple business format. Aldi limits the number of products (SKUs in the grocery business) in each category to ensure product turn, to ease stocking shelves, and to increase its power over suppliers. It also sells mostly private-label products to minimize cost. It has small, efficient, and simply designed stores. It offers limited services and expects customers to bring their own bags and bag their own groceries. As a result, Aldi can offer its products at prices 40 percent lower than competing supermarkets.

A.Identify and critically discuss the business level strategy adopted by Aldi to outperform rivals and achieve competitive advantage. 

B.Explain the potential pitfalls of Aldi’s strategy and how it can improve company competitive position vis-à-vis the five forces.

Q2. Apple’s enormous gravitational pull on mall traffic distorts the market for mall rents and helps win the iPhone maker sweetheart deals. Apple draws in so many shoppers that its stores can single-handedly lift sales by 10 percent at the malls in which they operate, according to Green Street Advisors, a real estate research firm. In fact, Apple has used its bargaining power to pay no more than 2 percent of its sales a square foot in rent. That compares very favorably with a typical tenant, which pays as much as 15 percent, according to industry executives. In addition to paying a lower percentage of sales for rent, Apple does not pay additional rent if their sales exceed a particular level—a luxury not afforded other retail tenants. Apple opened its first two retail stores in 2001 at Tysons Corner Center in Mc-Clean, Virginia, and in the Glendale Galleria in Glendale, California. As of 2016, it had more than 450 stores in the United States and more than 18 other countries. In addition, it plans to open 25 new stores in China by 2017, bringing its total to 40 in that country. Although the stores account for about only 12 percent of Apple’s total revenues, they draw about 1 million visitors a day. Critically discuss how Apple flexes its muscle when it comes to negotiate rental rates for its stores in malls.

Q3. Martin Sorrell, chairman of WPP Group PLC, the huge $15 billion advertising and public relations firm, is a strong believer in the use of email. He emails all of his employees once a month to discuss how the company is doing, address specific issues, and offer his perspectives on hot issues, such as new business models for the Internet. He believes that it keeps people abreast of what he is working on. Technology can also enable much more sophisticated forms of communication in addition to knowledge sharing. Cisco, for example, launched Integrated Workforce Experience (IWE) in 2010.109 It is a social business platform designed to facilitate internal and external collaboration and decentralize decision making. It functions much like a Facebook “wall”: A real-time news feed provides updates on employees’ status and activities as well as information about relevant communities, business projects, and customer and partner interactions.

A.Explain how technology can enable sophisticated forms of communication to be used for knowledge sharing within an organization. 

B.Critically discuss why “electronic” or “virtual” teams are critical in combining and leveraging knowledge in organizations and how they can be made more effective 

Q4.  Value is the amount that buyers are willing to pay for what a firm provides them. Creating value for buyers that exceeds the costs of production is a key concept used in analyzing a firm’s competitive position. Suggest and critically discuss in details an approach useful for understanding the value creation building blocks that could secure competitive advantage.