aldi case study
Aldi and Lidl: International Expansion of Two German GroceryDiscounters: Case study
Answer 1
Greenfield Investment strategy is one of the routes that companies prefer when it comes to making a Foreign Direct Investment (FDI). As the termsuggests, it is associated with companies expanding its business outside itsnational borders. greenfield investment is one such example where the companysets off in an endeavor to establish its business operations from the scratch. Analternate way of engaging in FDI could be via Mergers & Acquisitions or JointVentures. However, the degree of flexibility and ease of conducting businessvaries between the three.From the case study of Aldi¶s & Lidl¶s international expansion it can beseen that the company has engaged in both acquisitions as well as Greenfieldinvestment. However, in recent years it is evident that the strategy of these twocompanies has tilted in favor of the Greenfield investments. Aldi and Lidl are bothefficiency seekers and more focused on supplying Fast Moving Consumer Goods(FMCG) at the lowest costs possible. They plan to capitalize on an increasednumber of units sold rather than the profits realized on a per unit basis. Tesco,Sainsbury and other such chains are more focused on the latter factor to realize profit.
The two German companies had to look for international prospects as themarket in Germany was on the brink of market saturation as well as negligiblegrowth in the economy. Apart from this there are various factors that the twocompanies could have fancied which lead to the decision of FDI¶s via Greenfieldinvestments. Some of these factors are as mentioned below: Degree of freedom:
Greenfield investment involves setting upbusiness in the manner as perceived by the investors. They are free tochoose their own suppliers, channel of distribution and so on, and nothave to make do with pre defined operating procedures. This freedomallowed the two companies to change required strategy whenever required in
Answer 1
Greenfield Investment strategy is one of the routes that companies prefer when it comes to making a Foreign Direct Investment (FDI). As the termsuggests, it is associated with companies expanding its business outside itsnational borders. greenfield investment is one such example where the companysets off in an endeavor to establish its business operations from the scratch. Analternate way of engaging in FDI could be via Mergers & Acquisitions or JointVentures. However, the degree of flexibility and ease of conducting businessvaries between the three.From the case study of Aldi¶s & Lidl¶s international expansion it can beseen that the company has engaged in both acquisitions as well as Greenfieldinvestment. However, in recent years it is evident that the strategy of these twocompanies has tilted in favor of the Greenfield investments. Aldi and Lidl are bothefficiency seekers and more focused on supplying Fast Moving Consumer Goods(FMCG) at the lowest costs possible. They plan to capitalize on an increasednumber of units sold rather than the profits realized on a per unit basis. Tesco,Sainsbury and other such chains are more focused on the latter factor to realize profit.
The two German companies had to look for international prospects as themarket in Germany was on the brink of market saturation as well as negligiblegrowth in the economy. Apart from this there are various factors that the twocompanies could have fancied which lead to the decision of FDI¶s via Greenfieldinvestments. Some of these factors are as mentioned below: Degree of freedom:
Greenfield investment involves setting upbusiness in the manner as perceived by the investors. They are free tochoose their own suppliers, channel of distribution and so on, and nothave to make do with pre defined operating procedures. This freedomallowed the two companies to change required strategy whenever required in