Case study of ALDI
Purpose of this assignment
This assignment looks at understanding the strategy process which includes strategic planning. This involves strategic context and terminology, strategic thinking, planning systems/issues and techniques. Strategy formulation looks at issues such as stake holder, environmental auditing, strategic positioning and organisational audit. An approach to strategy evaluation and implementation includes different entry strategies, realisation of strategic plans to operational reality, resource allocation, review and evaluation of chosen strategy.
Aldi is the common brand of two leading global discount supermarket chains with over 10,000 stores in 18 countries, and an estimated combined turnover of more than €50 billion. Based in Germany, the chain was founded by brothers Karl and Theo Albrecht in 1946 when they took over their mother's store in Essen, which had been in operation since 1913.
The business was split into two separate groups in 1960, that later became Aldi Nord, headquartered in Essen; and Aldi Süd, headquartered in nearby Mülheim. In 1962, they introduced the name Aldi (a syllabic abbreviation for Albrecht Diskont).
Aldi launched in Great Britain, on 5 April 1990, in Stechford, Birmingham using the wholly owned English registered company of ALDI Stores Limited and Aldi sales in Britain grew consistently. In October 2013, Aldi opened the 300th store in Great Britain. By 2016 Aldi had over 550 stores there.
It was still a small player in Great Britain, with a grocery share of less than 3.6%, but its importance, along with that of continental no-frills competitor Lidl was growing, with half of shoppers in Great Britain visiting Lidl or Aldi over Christmas that year.Please follow the case study provided above to address the following tasks.
Task 1 - Strategic planning
a) Provide an assessment of the extent to which Aldi's missions, visions, objectives, goals, core competencies inform strategic planning. (AC1.1)
b) Many market experts have indicated that market share for Aldi will grow rapidly. Sales at Aldi rose by 19.8% in the 12 weeks to 21 May 2017 (Guardian, 2017), while the UK's big four supermarkets, Tesco, Sainsbury's, Asda and Morrison's, collectively grew by just 1.6%, according to market share data from Kantar Worldpanel.
c) In a situation like this, analyse the factors that Aldi will have to be consider when formulating their strategic plans. (AC 1.2)
d) Using evidence to support your answer evaluate the worth or usefulness of techniques used when businesses develop their strategic plans. You are encouraged to use techniques such as BCG growth matrix, SPACE or PIMS to enhance your answer. (AC1.3)
e) Carry out an organisational audit for ALDI and provide an analysis of their current strategic position. (AC 2.1)
f) Carry out an environmental audit for ALDI showing both micro and macro environment. You are advised to use Porter's 5 Forces analysis to answer this task. (AC 2.2)
g) Assess the significance of stakeholder analysis for ALDI when formulating new strategy. You will explain why stakeholder analysis is important when formulating a new strategy and support your answer with justifiable reasons. (AC 2.3)
h) Using the research and information collected about ALDI, present a new strategy ALDI can follow. (AC 2.4) A suggested framework for presenting your strategy could be as follows;
I. Where are we now? Review the current strategic position and clarify the mission, vision and values.
II. Where are we going? Establish ALDI's competitive advantage and the direction the organization is heading.
III. How will we get there? Layout the road map to connect where they are now to where they going. Set the strategic objectives, goals and action items.
Task 2 - Strategic evaluation and choice
Strategic choices involve understanding the underlying bases for future strategy at both the business unit and corporate levels and the options for developing strategy in terms of both the directions and methods of development. You will be required to show an understanding of different approaches (market entry, substantive growth, limited growth or retrenchment) used by organisations to enter, grow or withdraw from a market.
Required
a) Identify a market (new or existing) and analyse the appropriateness of suitable strategy for ALDI in relation to substantive growth, limited growth or retrenchment. You will need to make a case for at least one of the three strategies mentioned. (AC 3.1)
b) Provide a justification of one of the strategies for market entry and growth that you have discussed in 3.1. You will need supportive evidence to your opinion or rational. (AC 3.2)
Opportunity for merit and distinction in this section To achieve merit:
- You should be able to evaluate alternative strategies in terms of their suitability for the organisation
- You should provide convincing justification of a proposed strategy based on evidence.
Task 3 - Strategic Implementation
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals. Implementing your strategic plan is as important, or even more important, than your strategy (Olsen, 2007). For this task you will be required to show an understanding of the how an organisation implement strategy and the responsibilities of personnel who contributes to the implementation.
Answers to the questions in this section can be linked to your answer in Task 1 (h) on your proposed strategy for ALDI.
You must ensure you substantiate your answers with suitable examples and proper referencing.
You are required to;
a) Provide an assessment of the roles and responsibilities of personnel who are involved with the implementation of the strategy. (AC 4.1)
b) Provide an analysis of the resource requirements for the implementation of the strategy. (AC 4.2)
c) Evaluate how the use of SMART targets (give examples) can contribute to achieving the strategic objectives. (AC 4.3)