Aldi Strategic Analysis

Topics: Aldi, Wal-Mart, Supermarket Pages: 7 (2559 words) Published: October 6, 2012
In 1948, the brothers Theo and Karl Albrecht opened the grocery store ‘Albrecht Discounts' (Aldi) in Essen (Ruhr Valley), Germany. The store had a simple layout and provided a great deal of products at a low price. The company grew rapidly, owning 13 stores in 1950 and about 300 stores in 1961 across Germany. In 1961, Theo and Karl divided the company into Aldi North (run by Theo) and Aldi South (run by Karl). The reasons for this division, according to Dieter Brandes, a former managing director of Aldi in Schleswig-Holstein, Germany, were different views about how to develop the business. However, the brothers normally exchanged information about a range of issues such as performance and cost figures, current and potential suppliers and they also conducted joint negotiations with suppliers. In 2003, Theo and Karl resigned as CEOs. Theo's son, Theo Albrecht Jr, now runs Aldi North, and Juergen Kroll and Norbert Podschlapp run Aldi South. Since the ‘Spend a little Live a lot' message is being known by more and more people, and Aldi has been obtained ‘Best Supermarket 2009 Award' in 2009, Aldi has become one of most reputable retailer in the international business, and it operates over 7,000 stores worldwide. Considering of this situation, it would be interesting to understand and analyse the management strategies of Aldi. Therefore, my project will analyse management strategies of Aldi which operates a discount supermarket chain in the retail industry. The paper begins by using PEST analysis, Porter's 5 forces analysis and Competitors' analysis to analyse the environment of supermarket industry. The next section is to analyse the strategic capability of Aldi. The following section discusses purpose of Aldi, and the final section draws recommendations for improvement of Aldi's strategy. Section 1: Environmental Analysis

PEST analysis
Based on using a PEST analysis, it is likely to recognize the core environmental influences on Aldi. Firstly, it is well-known that the major economic factor is the global recession which originally caused by the United States housing bubble during the period from 2005 to 2008. This financial event has been to strongly motivate customers who begin to purchase inexpensive products with high quality. This means that Aldi will attract a great deal of customers without advertising and doing activities of sales promotion. Because of this situation, it is not necessary to conduct new strategies for the growth of customers. On the other hand, global recession possibly result in the increase of product's cost, thus there is a doubt of whether Aldi could sale low-price products with good quality. Therefore, Aldi should consider this problem in order to ensure future growth. Furthermore, social factors impact on Aldi includes the change in consumer taste, some of lifestyle changes and health concerns. It is clear that in recent years more and more consumers start changing their taste, for instance, an increasing demand for organic foods and ban of GM foods. Aldi should consider this factor because it may impacts on the future products' development of strategy. Moreover, there is not doubt that some of lifestyle changes such as home shopping and interest usage might increase online shopping, thus according to this factor, Aldi possibly invest more funds to enhance their online service and delivery's service. Recently, health concern has become a key issue around the world, so consumers tend to purchase health products without worrying about the price. For example, BSE outbreak precipitated ban of British beef (Elliott, 2005). There do not seem to any main political and technological factors in the environment that Aldi needs to consider. Porter's five forces

In order to effectively analyse the competitive environment of Aldi, it is better to use Porter's five forces to analyse (Porter, 1985). According to the analysis, the threat of new entrants into the supermarket industry in the UK is not high. It is...
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