Aldi's Strategic Management Assignment

An in-depth analysis of Aldi's historical strategies, current market position, and future directions

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Introduction Of Aldi's Strategic Management Assignment

Task 1

Brief about the case

Strategic management refers to the act of establishing goals, treatments, and purposes in a bid to boost the degree of competitiveness of a business or organization. Commonly, a business strategy company should consider how to best distribute personnel and finances to accomplish the above objectives. The report is based on the case study of the Aldi effect which shows how the company provides discounts and it has a huge impact on the Britain shops. For Aldi, the big hurry and anxiety are essential components of retail expertise for different purposes (Fuertes, G., and, 2020). Further, it includes a discussion of the different strategies developed by using emergent approaches. The company provides a huge discount on the products and it affected other companies like Tesco as well as Sainsbury and they also dominate the British grocery industry.

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Evaluate how Aldi has formulated strategies historically using a deliberate and emergent approach

Aldi's strategic analysis framework incorporates intentional and newly emerging methods. Clearly intentional confronts entail putting together a strategy with a certain objective in mind and then implementing that strategy to accomplish that goal, whereas experiential frameworks are more adaptable and permit modifications to the strategy as circumstances have changed. Aldi has had enormous achievements in the UK general merchandise industry, and their alignment of intentional and observable methods to strategic planning has already been critical to that accomplishment (Bogers, and, 2019). Among the chief causes for Aldi's accomplishment is that they maintain a specific vision of their bargain retail industry and are dedicated to offering premium goods at affordable rates. This clearly intentional strategy has helped them to establish authoritative brand recognition and establish a loyal clientele. Their products and services are customized to about their intended currency's tastes, and their pricing structure keeps them ahead of the competition in the markdown retailing industry. Simultaneously, Aldi has already been rapid to react to shifting markets but also adjust their game plan. In anticipation of shifting customers ’ preferences, they became the first stores to start introducing more nutritious foods like local vegetables and allergen goods. They too have gone digital, with internet retail and contactless billing options that are available (Hitt, Ireland, and Hoskisson, 2019). This innovative strategy has helped Aldi to maintain a lead over rivals and gain market share.

Aldi has also been capable of upholding a coherent corporate image whilst also keeping the rest flexible and open to market situations thanks to the stability of purposeful and dynamic strategies. Aldi has been capable of developing and executing protracted methodologies while keeping the rest open and responsive to changes in the marketplace by integrating the two methods. This has allowed them to develop a solid reputation all while responding to shifts in consumer tastes and the latest developments. All in all, Aldi's strategic analysis rebalancing of premeditated and observable methods have been extremely suitable and efficient in attaining greatness in the UK retail industry (Wang, and, 2019). Their intentional concentration just on the retailing industry, as well as their dedication to delivering increased goods at affordable rates, has enabled people to develop an established corporate image and achieve cost leaders and managers. In the meantime, their innovation strategy to adjust to market moves has enabled them to maintain a competitive edge and gain more customers. Aldi has been capable of staying flexible and adaptable to the economic environment while preserving its distinctive brand recognition by trying to combine both strategies, which has proven vital to its achievement.

In what ways should the balance be transformed for the future, and what support is needed to encourage development?

Aldi's equity of intentional and observable methods to strategic planning must be morphed if the company is to remain profitable down the road. Particular emphasis should be placed on the make preparation, because retailing is constantly shifting and developing, and being capable of reacting rapidly to those shifts is crucial (Ramamurti, and Williamson, 2019). Aldi could perhaps put money more of it into market studies and data analysis to help comprehend burgeoning patterns and client priorities in order to accomplish this. They must also prioritize innovative thinking and experiments in their sales channels and marketing campaigns, having allowed for even more trial and error. Because not all tests will be productive, this strategy will necessitate a bigger dedication to risk-taking and accepting defeat. At the identical time, Aldi really shouldn't surrender the components of the program entirely. They must maintain their spotlight on one‘s bargain retail market and dedication to delivering rising goods at affordable rates, as that has been crucial to their achievement. They could perhaps, even so, be open to making modifications to their cost and item services as required to keep up with rivals (Mostert, 2020).

Aldi must also buy shares in staff education and growth to cultivate a tradition of creativity and improvisation in a way that encourages the growth of this advised proportion of managerial plans and objectives. They should also incentivize cross-departmental work and interaction to make sure all employees are functioning toward that targets and goals. Furthermore, they should set up a system for having reviewed and adapting their tactical and strategic objectives on a frequent basis so that they factor to keep with one‘s set targets. In phrases of assistance, Aldi must think about collaborating with outside professionals, like professionals or market analysts, capable of providing added knowledge and perspective (Sarisa, 2021). They might also collaborate with vendors as well as other associates to recognize fresh possibilities for expansion and innovative thinking. To sum it up, in order for Aldi to remain profitable in the years to come, their amount of purposeful and observable methodologies to strategic planning must be converted. More money ought to be spent on the numerous modifications strategy, with massive investments in direct marketing, data processing, innovative thinking, as well as experiments. It is essential to enhance the level of promotion for handling the balance and planning for the growth of the business.

Task 2

Aldi's past challenges in the macro environment and industry

The number of competitors in the bargain retail industry is among the main macro environment consists concerns that Aldi has encountered over the years. Aldi competes in a highly saturated sector with some other key figures like Lidl, Tesco, and Asda (Rego, and, 2022). This business rivalry has enhanced price inflation, posing challenges for Aldi to preserve their cost leadership. A further macro environment concern that Aldi has dealt with is shifting customer demand, especially when it comes to the topic of nutrition and fitness. As customers become more aware of their own well-being and also the ecological consequences of their purchase intention, there is a larger preference for naturally and responsibly farmed goods.

Aldi has replied to this trend whilst also having to introduce alternatives to unhealthy food and environmentally friendly goods lines, including their fresh foods and complementary market segments. One of the critical barriers that Aldi has encountered in regard to marketplace concerns is how to stabilize their approach to cost leadership with their obligation to support high goods and outstanding customer service (Aichner, and Santa, 2023). This has necessitated meticulous control of their supply chains and additional investments in retaining employees to make sure that their workers have the skills to even outstanding service to clients. Some other issue that Aldi has encountered in the sector is that it must keep up with the latest patterns and innovations, such as internet retail and mobile payment pricing options. The Pestel is one template that may be employed to recognize the macro environment consists and business concerns that Aldi had also encountered (Hossain, and, 2022). This model describes 6 key macro environment variables that can have an influence on a country's financial system: political, institutional, sociocultural, technical, environmental, and legal. When each of these aspects is examined in connection to Aldi, it may become completely obvious that one‘s accomplishment is strongly driven by outside influences like shifting customer tastes and enhanced competitive pressures. The PESTEL analysis additionally has the potential to recognize sector variables of that kind as the requirement to maintain price strategy with product and service excellence, as well as the significance of keeping updated with starting emerging innovations and developments.

Assess Aldi's environmental and industry response. Has the response been effective?

Aldi has a procedure of getting macro environment consists and sector issues in a variety of manners, and one‘s impact can be measured by the way they've resolved the difficulties while maintaining their status as a top retail business (Zengin, and, 2021). In reaction to growing competition in the bargain retail industry, Aldi has focused on its biggest competencies, which also include price strategy, rising product lines, and effective control of its supply chain. They have also widened their range of selections to satisfy evolving customer priorities, like the introduction of more nutritious meals and self-sustaining market segments. These replies have assisted Aldi in maintaining its status as a top retail business, of prolonged growth in the UK and worldwide.

In reply to the changes in consumer preferences, Aldi introduce some organic as well as sourced products (Rahman, and, 2021). They've also worked diligently to minimize plastic wrapping garbage and boost reuse, which has assisted them to attract ecologically minded customers. These replies have aided Aldi in staying competitive and appealing to a broader spectrum of consumers, notably those seeking more nutritious and environmentally friendly possibilities. Regarding business concerns, Aldi has replied by making an investment in their IT connectivity in order to keep up with starting to emerge concepts and innovations. They have, for instance, initiated i shopping alternatives and non-contact forms of payment to keep up with evolving customer perceptions. Aldi has introduced a variety of organic and sustainably sourced products in response to changing consumer preferences, particularly in the area of health and wellness (Ajibola, 2022). They've also made significant investments in training and growth for staff members to make sure their workers are well-equipped to do is provide outstanding client service, which has helped them keep their notoriety as a consumer retail outlet.

Therefore, the response of Aldi to the macro environment as well as the issues of industry and all the things helps them to face it in an effective manner and manages its position in the market as well. They have all been capable of adjusting to shifting customer demand and competing effectively in a highly competitive market while maintaining their key competence and value systems. Even so, as the current economic environment evolves, Aldi will need to keep coming up with ideas and adjusting in order to stay relevant in the long term.

Explain how Aldi's future strategy should take into account macro- and competitive environmental challenges.

There are some of the important macro and economic issues of the environment which is faced by Aldi which is required to reflect on the future strategy of the business. Two strategies can be used for understanding the consequences of Porter’s Five Forces and PESTEL Analysis.

The PESTEL research identified 6 main macro environments consisting of variables that can have an influence on a firm's management: political, economic, sociocultural, technological, environmental, and process followed (Christ, and Burritt, 2021). Competitive pressure in the retail business is a significant topic that Aldi is actually experiencing. This is due to a variety of considerations, including the development of e-commerce and the growing appeal of internet purchasing. This topic must be reflected in Aldi's strategic planning, which must keep emphasizing strong points such as premium pricing and effective supply chain supervision all while pursuing innovative technology solutions and adding new selections to satisfy changing customer desires. In this, another main issue is faced by Aldi due to the changes in priorities of consumers as they move towards health and fitness. As buyers become more concerned with their well-being and the environmental damage of their purchase behaviour, there is a higher need for natural and responsibly farmed ingredients. Aldi's strategic objective must tackle that problem by staying invested in organic vegetables and gratis market segments, while also limiting plastic wrapping trash and boosting reusing (Li, and, 2023).

Porter's Five Forces analysis is an approach that recognizes the following competitive factors that could affect a firm’s profitability: Serious risk of New Entrants, Supplier Bargaining Power, Buyer Bargaining Power, Threat of Substitutes, and Rivalry among Leading Rivals. Yet another key concern that Aldi is currently dealing with is the rising bargaining power among suppliers. Distributors are growing increasingly strong and capable of demanding increased costs as more customers value natural and responsibly farmed commodities. To reduce the possibility of suppliers in the market, Aldi should incorporate this issue into their strategic planning by wanting to invest in lengthy logistics services and consider various procurement choices (Runlian, and, 2023). A further issue confronting Aldi is the threat posed by fresh entrants. As the bargain retail industry expands, newbies come onto the scene and competitive pressures. Aldi's plan of action should deal with this problem by staying invested in their private label and customer commitment programs, and also by investigating novel markets and products to broaden their selections.

Finally, to keep up with rivals in the bargain retail industry, Aldi must incorporate major macro- and competitive global pollution into its strategic planning.

Task 3

Analysis of Aldi’s tactical abilities

The Value Chain framework created by Michael Porter assists in evaluating a company's operations and identify areas where it can create value for its customers and achieve a competitive advantage. Using this framework, a critical analysis of Aldi's strategic capability can be done.

There are both core and supporting operations in the Value Chain structure. A product or service is created and delivered primarily through primary activities, whereas support activities supply the infrastructure on which main activities depend (Sigurðardóttir, Hotait, and Eichstädt, 2019).

Primary Activities

  • Inbound Logistics: Aldi manages its inbound logistics very efficiently. They have a centralized distribution system that enables them to purchase in bulk, reducing the costs of procurement. Furthermore, they have a just-in-time inventory system that ensures minimal inventory holding costs.
  • Operations: Aldi's operations are streamlined and efficient, with a focus on cost reduction. They employ a limited range of products with minimal variations, which makes it easier to manage and control production costs. This simplicity in operations also allows them to respond quickly to changes in customer demand.
  • Outbound Logistics: Aldi's outbound logistics are also very efficient. They have a distribution system that ensures timely delivery of products to their stores. Moreover, their focus on cost reduction has enabled them to negotiate better rates with their logistics partners, reducing transportation costs (Syriopoulou–Delli, and Sarri, 2022).
  • Marketing and Sales: Aldi has a unique approach to marketing and sales, which sets them apart from other retailers. They do not spend heavily on advertising, but instead, rely on word-of-mouth and the quality of their products to attract customers. Their store layout and product placement are designed to encourage customers to make impulse purchases.
  • Service: Aldi provides minimal customer service, with a focus on self-service. This helps to keep costs down and maintain their low-price strategy.

Support Activities:

  • Procurement: Aldi manages its procurement activities very efficiently. They have a centralized purchasing system that enables them to negotiate better rates with suppliers, reducing procurement costs. Also, they have developed enduring partnerships with their suppliers, which guarantees a consistent supply of high-quality goods.
  • Technology Development: Aldi's focus on cost reduction extends to their technology development activities. They use technology to streamline their operations and reduce costs. For example, they use electronic shelf labels to minimize the time and labour required for price changes.
  • Human Resource Management: Aldi's human resource management practices are focused on maintaining a lean workforce. They have a minimal hierarchy; it permits them to act swiftly in response to shifts in consumer demand. They also have a culture of efficiency and cost reduction, which is ingrained in all employees (Ajibola, 2022).
  • Firm Infrastructure: Aldi has a simple and streamlined organizational structure that helps to maintain their low-cost strategy. They have a centralized decision-making process that enables them to respond quickly to changes in the market.
  • Overall, Aldi manages the linkages in the Value Chain particularly well, with a focus on cost reduction and efficiency. They have a unique approach to marketing and sales, which sets them apart from other retailers. Furthermore, they have established long-term relationships with their suppliers, which ensures a reliable supply of high-quality products. Their focus on cost reduction and efficiency extends to all areas of the Value Chain, from procurement to outbound logistics. However, their minimal approach to customer service may be a weakness, as it may limit their ability to build strong relationships with customers.

Assessment of the sustainability of Aldi’s tactical abilities using VRIO framework

The VRIO framework is a tool used to evaluate a company's resources and capabilities to determine if they can provide a sustainable competitive advantage. The framework evaluates a resource or capability based on four criteria: Value, Rarity, Imitability, and Organization. This framework will be used to assess the sustainability of Aldi's tactical capabilities.

  • Value: Aldi's strategic capability is highly valuable as it has enabled the company to achieve a low-cost strategy and offer quality products at affordable prices. Their focus on cost reduction and efficiency has helped them to maintain their competitive advantage in the highly competitive retail industry (Edström, and Westberg, 2023).
  • Rarity: Aldi's strategic capability is relatively rare in the industry. While many retailers focus on cost reduction, Aldi's unique approach to marketing and sales, streamlined operations, and centralized procurement system are not commonly found in the industry. This rarity has helped Aldi to maintain a unique positioning in the market.
  • mitability: Aldi's strategic capability is not easy to imitate. Their unique approach to marketing and sales, streamlined operations, and centralized procurement system have taken years to develop and require a significant investment in resources and time to replicate. Furthermore, Aldi's culture of efficiency and cost reduction is difficult to imitate.
  • Organization: Aldi's strategic capability is well-organized and aligned with the company's overall strategy. Their culture of efficiency and cost reduction is ingrained in all employees, and their decision-making process is centralized, enabling them to respond quickly to changes in the market (Nassery, 2019).

In totality it can be said that Aldi's strategic capability is sustainable according to the VRIO framework. Their focus on cost reduction and efficiency has enabled them to maintain a unique positioning in the market, which is difficult for competitors to imitate. Furthermore, their unique approach to marketing and sales, streamlined operations, and centralized procurement system are valuable resources that have contributed to their success. However, Aldi will need to continue to invest in technology and innovation to maintain their competitive advantage and respond to changing customer needs.

Task 4

Analysis of Aldi’s previous strategies using Porter’s Generic Strategy framework, and the Ansoff Matrix

Porter’s Generic Strategy framework and the Ansoff Matrix are two models used to evaluate a company's strategies. In this case, both frameworks will be used to critically analyze Aldi's previous strategies and their appropriateness for the future.

Porter’s Generic Strategy framework proposes three generic strategies that companies can adopt to gain a competitive advantage: cost leadership, differentiation, and focus. Aldi's previous strategies have been mainly focused on cost leadership, which is achieved by reducing costs and offering products at low prices while maintaining quality. Aldi's streamlined operations, centralized procurement system, and no-frills stores have helped the company to maintain a low-cost position in the market (Negulescu, 2019).

The Ansoff Matrix is a framework that evaluates a company's growth strategies by assessing the options for market penetration, product development, market development, and diversification. Aldi has mainly focused on market penetration, by expanding its stores and increasing its market share in existing markets. The company has also diversified its product offering by introducing more premium and organic products, but this has been a limited diversification strategy (Patrão, 2021).

To determine the appropriateness of these strategies for the future, need to consider the current macro-environmental and industry issues that Aldi is facing. While Aldi has been successful in its low-cost strategy, the retail industry is facing significant challenges, including changing consumer preferences, increasing competition, and technological disruption. Therefore, Aldi will need to adapt its strategies to remain competitive in the future.

Aldi's focus on cost leadership is still appropriate for the future, but the company will need to invest in technology and innovation to maintain its position in the market. Aldi could leverage technology to enhance its customer experience, improve supply chain management, and develop more personalized marketing strategies. Furthermore, Aldi should focus on expanding its diversification strategy to include more premium and organic products to meet the changing consumer preferences.

Regarding the Ansoff Matrix, Aldi should continue to focus on market penetration by expanding its stores and increasing its market share in existing markets. However, the company should also consider market development by exploring new markets and international expansion. Aldi has already expanded to various countries, but there is still room for growth in untapped markets (Madsen, and Grønseth, 2022).

At last, it can be said that, Aldi's previous strategies of cost leadership and market penetration have been successful, but the company needs to adapt its strategies to remain competitive in the future. The company should leverage technology and innovation to enhance its customer experience and supply chain management while focusing on expanding its diversification strategy to include more premium and organic products. Furthermore, Aldi should explore new markets and consider international expansion to increase its market share (Swartz, and, 2020).

Approach to internationalisation that Aldi has adopted

The process of creating goods, services, and companies that can function successfully across various cultures and nations is known as internationalisation. To support global expansion, it includes adjusting to various linguistic and monetary systems, legal frameworks, and cultural standards.The importance of internationalisation lies in its capacity to help companies expand into new areas, gain more clients, and diversify their sources of income. Businesses that operate internationally can diversify risk and lessen their reliance on any one market (Helmold, and Helmold, 2021). Also, access to fresh technology, talent pools, and resources can help businesses become more innovative and competitive. Internationalization is crucial for advancing the development and prosperity of the world economy. It opens up fresh doors for trade, funding, and employment that are advantageous to both industrialised and developing nations (Sarisa, 2021).

Aldi has adopted a cautious approach to internationalization, initially expanding into neighbouring countries in Europe before gradually expanding further afield. The company has focused on maintaining its core business model of offering high-quality products at low prices while adapting its offerings to suit local market conditions. Aldi's international expansion has been successful, with the company operating over 11,000 stores in 20 countries worldwide. The company's cautious approach has helped it to avoid many of the pitfalls that other retailers have encountered when expanding into foreign markets. Aldi's approach to internationalization has been appropriate for the company's goals and objectives. The company has focused on maintaining its low-cost position while adapting to local market conditions. By tailoring its offerings to local tastes and preferences, Aldi has been able to successfully compete with established retailers in foreign markets. Furthermore, Aldi's approach to internationalization has been informed by its strong organizational culture and centralized management structure. The company has been able to maintain its high standards of quality and efficiency across its international operations by maintaining strict control over its supply chain and store operations. However, Aldi's cautious approach to internationalization has also meant that the company has missed out on opportunities in some markets (Gozali, and, 2022). The company has been slow to expand into some regions, such as Asia, where there is significant potential for growth. Additionally, Aldi's focus on maintaining its low-cost position has limited the company's ability to offer more premium and high-end products, which may be necessary for some markets to attract a wider customer base.

In conclusion, Aldi's cautious approach to internationalization has been appropriate for the company's goals and objectives (Dressler, 2022). The company has been able to successfully expand into new markets while maintaining its core business model. However, the company will need to continue to adapt its approach to internationalization to remain competitive in an increasingly globalized retail industry. Aldi should consider expanding into new markets, including Asia, and exploring new product offerings to attract a wider customer base.


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