ALDI ESSAY Harvard Case Solution & Analysis

ALDI ESSAY Case Study Solution

Socio Culture

ALDI is also improving the socio culture environment of the companies as the company has become one of the highest paying supermarket after increasing the pay of its employees in the U.K. The increase in the pay improves and enhances the life style and standard of the employees working in the organization and thus enables the employees to enjoy better consumption of goods, health care facilities and different means of nurturing their lives. One of the steps taken by the company to improve the socio culture environment is that ALDI is focused to teach more than one million children about healthy eating habit through the program called “get set to eat fresh initiative”.

Technological Environment

Technological advancement has now become prone to almost every supermarket operating and prevailing in the countries. Technology development performs a huge role in maintaining and managing the products and customers efficiently which reduces the time of the customer as well as the company’s. Hence, Aldi is yet to adopt the technological advancement in supply chain and efficiently managing customers which are adopted by its competitors. Moreover, increased waiting times in long queues lead to lose those customers who usually need grocery or retail items less often.

Environmental

Most of the private brand products which ALDI attains are from the local suppliers or farmers to ensure the freshness of the product. The waste management service is also maintained by the company through its policy for customers to bring their shoppers with them to increase the waste management capability of the company.

Legal

The ALDI’s stores are operating in different countries with distinctive legal requirement of the countries. The products which are offered by ALDI are mostly private labelled and are often subjected to scandal concerning to the content of ingredients used in the product. Overall, despite these legal scandals, the company is successfully growing and aims to expand 120 general stores annually.

SWOT Analysis

Strength

The strength of the company which is recognized is the business model of the company which involves introducing best possible low prices with maximum quality of the product. To incorporate this strategy, the company initiated to sell private brands out of which most of the brands of the product are owned by ALDI itself. The focal point is to minimize the cost of the product so that the products can be sold to the end users at the minimal retail rate possible. This strategy of the company appears to be successful and the prices of the product maintained by the company are almost 25 to 30 percent lower than its competitors such as Walmart. The other strength which is identified is that the company spends little on advertising, brand promotions and marketing tactics which provides a competitive edge to the company in providing lower prices in comparison with their competitors.

Weaknesses

There are number of weaknesses which are found in the company’s operations and business model. These weaknesses includes that company does not spend on advertising which results in the lack of awareness amongst the general public about the store. In this era of complex marketing tactics where the companies are applying innovative marketing models to attract the customers to increase their revenue and customer bases, ALDI is not focusing on marketing tactics. Advanced technological models and supply chain models are also adopted by companies to manage the goods and customer queries efficiently but ALDI is yet to adopt these technological advancement which is considered one of the major weakness of the company.

Opportunities

The opportunities which are identified for the company to achieve faster growth is the adoption of advanced technologies to manage the operations of the ALDI’s stores efficiently. Managing operation and customers efficiently by reducing the time of long queues of customers could retain those customers who often come to the store for purchasing items for daily use. Moreover, less time in long queues of customer will also enable the company to increase the customer turnover ratio within the store. Hence, by availing these opportunities company could attain a chance of increasing its customer base and revenue base.

Threats

The major threats to the company are the competitor’s strategies of increasing and retaining customers by incorporating different tactics. The other threat which is identified are that the competitors could also adopt or plagiarize the business model of the ALDI which could affect its  customer base and revenue base.

c. Competitive Strategies

Porter’s Five Forces Model

The porter’s five forces model is applied on the company to analyze the external environment effecting the business of the companies. The porter’s five forces model is discussed in detail below:

Bargaining Power of Buyer

Most of the products sold by the company are private brands and are indirectly owned by the ALDI. Hence, offering low pricing of products to the customers indicates that the company’s bargaining power with its suppliers is strong. Overall the company is offering the prices of the product almost 25 to 30 percent lower than its competitors.

Bargaining Power of Suppliers

The bargaining power of the suppliers is weak because of the company’s strategies of less brand diversification which enables the company to showcase on handful of brands on their shelves and company could diversify the costly brand with the cheap brands.

Threats of Substitutes

The threats of substitute is also high for ALDI because the competitors and new entrant could also adopt or copy the business model of providing private brands at low price and grocery items are approximately analogous in all the retail stores and supermarkets.

Threats of New Entrants

The threats of new entrant is also high because the start of retail grocery store does not require huge investment and can be opened in small area which could attract the customer of ALDI because of ease of availability of the products.

Rivalry among Competitors

The rivalry amongst the competitors is also high because there are numbers of leading global stores operating and applying complex business models to increase their customer and revenue base. Hence, rivalry is high and exists between the competitors on pricing their product because the categories of the products are almost similar of all the competitors.

Value Chain Model

The value chain model is applied by the companies to identify any flaw in the process from attaining raw materials from the suppliers to providing finished goods to the end users. The steps in the value chain model are discussed below:

Inbound Logistics

The inbound logistics of the company is not complex and is an efficient one in comparison to the competitors because of the business model of the company involving frugality i.e. simplicity in providing the products to the end users with the stock keeping units 1400 which are way less than the competitors.

Outbound Logistics

Outbound logistics involves the activities to provide and deliver the end product to the consumers, hence, customers visit retail stores to receive the end products which identifies that the outbound logistics does not play an important part in the process.

Marketing and sales

No complex marketing and sales tactics are applied by the products as the only strategy adopted by the company is providing high quality and low priced products to the end users.

Services

ALDI trains its employees to provide best services to their customers i.e. to efficiently managing the process of delivering finished products to the customers.

Procurement

The procurement strategy of the company is to attain private brands most of which are owned indirectly by the company to reduce the discrepancy in managing and delivering the products.

Technological development

The advancement in technological development is not fully adopted by ALDI as compared to  the competitors because of adopting simplicity in the provision of end products to the consumers.

Human Resource Management

The company offers trainee program to the recent graduates of the universities and is known for providing exceptional training from the evident fact that in 2017, 12000 candidates applied for ALDI training program for 50 positions offered by the company.

Firm Infrastructure

The firm’s infrastructure includes all the department of the companies i.e. efficient management of the departments of ALDI is playing a huge role in growing and expanding the business.

Conclusion

The strategies adopted by the companies identified that the company has adopted a successful and an efficient business model to provide high quality at low price to the customers which is the focal point of the business model applied by the company. Hence, this model is proved to be successful for the company as the company has maintained the growth and expansion internationally. Therefore, the company is keen to maintain its business model and strategies in order to gain competitive advantage over its competitors.............

 

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