BUS6002 Strategic Management Case Study-Based Report

Aldi's strategic approach, evaluating past strategies, challenges, and opportunities for future growth in the retail industry.

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Introduction Of Strategic Management Case Study-Based Report

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Aldi is an international discount superstore chain that was established in Germany in 1946. The company has become known for its low-cost business model and has experienced rapid growth over the past few decades, expanding to over 20 countries worldwide. As Aldi has grown, it has faced a range of challenges related to the macro-environmental and competitive factors that affect the retail industry. In response, the company has developed a range of strategic initiatives aimed at maintaining its competitive advantage and securing future growth. This essay will critically analyze Aldi's strategies using a range of theoretical models, including Porter's Five Forces, Porter's Value Chain, the VRIO Framework, the Ansoff Matrix, and Porter's Generic Strategy Framework. By applying these frameworks, the report can gain a deeper understanding of Aldi's strategic capabilities, assess the sustainability of its competitive advantage, and identify opportunities for future growth.

company logo

Figure company logo

(Source: das, 2022)

Deliberate and Emergent Approaches to Strategy Formulation at Aldi

Aldi is a budget grocery processor headquartered in Germany that operates in over 20 countries. The organization has taken a methodical approach to strategy formulation, which includes establishing defined goals and creative tactics to attain them. One of the company's key goals is to provide high-quality products at reasonable costs (Lehrer, and Schmid, 2020). To accomplish this goal, Aldi has created a one-of-a-kind business model that entails sourcing products directly from suppliers and selling them under its private labels. Because of this strategy, the business has been able to offer high-quality goods at inferior prices to its competitor.

Aldi, on the other hand, takes an emergent approach to strategy design, allowing the company to adjust to changes in the internal and external environment. for instance, Aldi has launched a variety of organic and sustainable products in its stores in response to the increased demand for organic and sustainable products. This emerging strategy has helped the organization to satisfy changing client expectations while remaining competitive in the market.

Appropriateness of the Balance of Deliberate and Emergent Approaches at Aldi

Aldi's strategy formulation mix of planned and emergent approaches has been ideal for the company's performance in the highly competitive retail sector (Janes and Sutton, 2017). The deliberate strategy allowed the company to achieve its core goal of providing high-quality items at reasonable rates, but the emergent method allowed the company to change its strategies to suit the changing needs of its clients.

Recommendations for Transforming the Balance of purposeful and Emergent Approaches for the Future

Aldi should adjust its balance of planned as well as emergent approaches to policy formulation to remain competitive in the constantly dynamic retail sector. The company should place a higher emphasis on the emergent method to respond to changes in the internal and external environments more swiftly (Jenkins and Williamson, 2015). This can be accomplished by taking a more agile approach to strategy formation, in which the organization regularly scans the environment for changes and updates its strategies as needed.

Aldi should make investments in the growth of its employees' skills and capacities to facilitate the growth of the appropriate equilibrium of organizational strategies as well as plans. This can be accomplished by implementing training programs that emphasize strategic thinking, decision-making, and problem-solving. In addition, the organization should cultivate an environment of innovation and experimentation in which employees are encouraged to explore new ideas and take calculated chances.

Theoretical Models for Developing Strategies and Supporting Strategic Decisions

A variety of theoretical models can be used to generate strategies and support strategic decisions. The SWOT analysis, which involves examining the business strengths, weaknesses, opportunities, as well as threats, is one of the most extensively utilized methods. Another methodology is Porter's Five Forces Model, which entails examining the industry's competitive forces to establish the organization's competitive position (Banerjee, 2022). Another theoretical paradigm is the Resource-Based Vision (RBV), which focuses on a business's internal resources as well as capabilities to identify its competitive advantage.

Theoretical Developments in Strategy

The field of strategy has undergone several theoretical developments over the years. One of the most significant developments is the recognition that strategy is not just about setting objectives and developing plans, but also about creating value for stakeholders. This has led to the development of innovative models such as the Stakeholder Theory.

Stakeholders in the strategic decision-making process

Traditionally, the strategic decision-making process in corporations was centered on maximizing revenues and shareholder value. This approach, however, has been disciplined for ignoring the demands and interests of other stakeholders, like employees, consumers, suppliers, and the wider community.

Stakeholder theory emphasizes the significance of addressing all stakeholders' requirements and interests during the strategic decision-making process (Jenkins and Williamson, 2015). This approach acknowledges that organizations operate in a larger economic and social environment and that their actions can have many further implications for various stakeholders. Organizations may make better-informed choices that benefit all stakeholders by taking into account the demands and interests of all stakeholders. In addition to stakeholder theory, there has been a growing focus on sustainability and corporate social responsibility in the field of strategy. Organizations are increasingly recognizing the need to adopt sustainable practices and consider the impact of their activities on the environment and society. This shift in thinking has been driven by a growing awareness of the negative consequences of unsustainable practices, such as climate change, pollution and social inequality.

The Triple Bottom Line is a model that measures an organization's performance in terms of social, environmental and economic factors. This approach recognizes that organizations have a responsibility to contribute to society and safeguard the environment in addition to generating profits. Organizations can analyze their total impact on society and discover opportunities for improvement by analyzing performance across these three dimensions.

Ultimately, the significance of taking into account the demands and interests of all stakeholders and implementing sustainable practices in strategic decision-making cannot be emphasized (Tuten, 2022). Companies that prioritize responsibility for society and the environment and take a more comprehensive approach to strategy are more likely to be successful as well as sustainable in the long run.

Aldi's previous balance of planned and emergent approaches to strategy building was suited for the company's performance in the highly competitive retail sector. To be competitive in the future, Aldi should shift its mix of deliberate and emergent tactics by emphasizing the emergent approach. The company should also invest in the talents and competencies of its personnel in sort to encourage the growth of the appropriate balance of organizational strategies with plans. Many theoretical models can be used to generate strategies and support strategic decisions, and the field of strategy has gone through several theoretical advancements, including an emphasis on providing value for stakeholders and sustainability.

The major macro-environmental and industry issues that Aldi has faced in the past

Aldi is a multinational discount retail operator that has previously encountered several macro-environmental and industry concerns. This study reviews Aldi's reactions to important issues, identifies the influence of the main macro- and competitive environment issues at present confronting Aldi, and analyses the possibilities of theoretical models for building strategy and supporting strategic decisions (Hardaker and Zhang, 2021). It also evaluates the influence of strategy formulation in a more dynamic and tumultuous environment.

One of the chief macro-environmental problems that Aldi has dealt with is the economic downturn. During the 2008 global financial crisis, consumer behavior shifted as people became more price-sensitive and value-conscious. Aldi responded to this by expanding its range of products and investing in promotional campaigns to attract cost-conscious customers. This strategy was effective, and Aldi experienced significant growth during this period.

Another major macroenvironmental issue that Aldi has faced is increased competition. With the entry of new players such as Lidl and Amazon, the discount supermarket segment has become increasingly competitive (Piercy, 2016). To respond to this, Aldi has focused on improving its product quality, enhancing its customer experience, and expanding its store network. This strategy has been effective, and Aldi has continued to grow its market share.

In terms of industry issues, Aldi has faced challenges related to supply chain management. With a lean supply chain and a focus on efficiency, Aldi has struggled to ensure that its suppliers meet its quality and ethical standards. To address this issue, Aldi has invested in improving its supply chain management systems and has established relationships with suppliers that share its values.

Currently, one of the major macro-environmental issues facing Aldi is the impact of the COVID-19 pandemic. The epidemic has disrupted international supply chains, caused significant economic disruption, and shifted consumer behavior. To respond to this, Aldi has implemented safety measures in its stores, expanded its online ordering and delivery services, and increased its investment in product innovation.

In addition to the pandemic, Aldi is facing increased pressure to adopt sustainable practices and reduce its environmental impact. To address this issue, Aldi has committed to sourcing more sustainable products, reducing its carbon footprint, and reducing waste. While these efforts have been praised, there is still space for development in conditions of the scale and impact of these initiatives.

The resource-based view (RBV) model is one alternative theoretical model for developing strategy. According to this approach, firms can attain long-term competitive advantage by building and using distinctive resources and competencies (Bonfrer et.al 2022). Aldi may be able to improve its customer experience by leveraging its systems for managing its supply chains, investing in product innovation, and leveraging its supply chain management systems.

Another potential model is the contingency model, which suggests that the most effective strategies depend on specific environmental conditions and organizational characteristics. This model emphasizes the importance of flexibility and adaptation, which is particularly relevant for Aldi given the volatile and unpredictable nature of its environment.

In an increasingly dynamic and tumultuous environment, strategy has a huge impact. Conventional techniques for strategy development may no longer be viable in this situation, necessitating the adoption of new strategies that are flexible, adaptive, and responsive to change. Using more decentralized decision-making procedures, encouraging innovation and experimentation, and cultivating a culture of learning and continuous improvement may all be part of this.

Aldi has faced several macro-environmental and industry issues in the past but has been able to respond effectively to these challenges. The company must continue to adapt to changes in the environment, particularly those related to the COVID-19 pandemic and sustainability (Richardson, 2019). Theoretical models such as the RBV and contingency models may provide useful frameworks for developing strategy and supporting strategic decisions. In an increasingly volatile and turbulent environment, it is critical for organizations like Aldi to adopt new approaches to strategy that are flexible, adaptable, and responsive to change.

Another major issue that Aldi is facing is increased competition from other discount retailers and online grocery shopping platforms. Competitors such as Lidl, Walmart, and Amazon have entered the discount grocery market, creating a more competitive landscape. These competitors are adopting similar business models as Aldi, offering low-priced products and focusing on efficiency in their operations. Aldi needs to continue to innovate to differentiate itself from its competitors and maintain its market position.

Evaluate Aldi’s responses to the major macro-environmental and industry issues. How effective have those responses been?

In response to these challenges, Aldi has focused on several strategies. One of the key strategies that Aldi has implemented is expanding its product range to include more premium and organic products. This has enabled Aldi to appeal to a wider range of customers and increase its market share. Aldi has also invested in e-commerce, partnering with Instacart to provide online grocery shopping and delivery services. This has enabled Aldi to compete with online retailers such as Amazon and Walmart.

Aldi has also focused on improving its store experience, with store renovations and redesigns aimed at creating a more modern and inviting atmosphere (Chatterjee, 2017). Aldi has also improved its supply chain, investing in a new distribution center in South Carolina to improve efficiency and reduce costs.

In terms of the effectiveness of these responses, Aldi has been successful in maintaining its market position and growing its market share. The expansion of its product range and investment in e-commerce has enabled Aldi to appeal to a wider choice of customers as well as compete among online retailers. The improvements in its store experience and supply chain have also helped to improve efficiency and reduce costs, enabling Aldi to maintain its low-price strategy.

Impact of major macro- and competitive environmental issues currently facing Aldi

In terms of future strategy, Aldi needs to continue to innovate to maintain its market position in the face of increasing competition. This may involve further investment in e-commerce and expanding its product range to include more premium and organic products.

Theoretical models that could be applied to support Aldi's strategy development include Porter's Five Forces, which can help to identify the aggressive forces in the market and inform strategic decision-making (Zamora, 2016). Another model is the VRIO framework, which can assist to recognize the resources and capabilities that Aldi possesses and assess their potential to provide a sustainable competitive advantage.

In an increasingly volatile and turbulent environment, strategy-making is crucial for the long-term success of organizations. It is significant for the union to be able to become familiarized with changes in the environment and make strategic decisions that enable them to maintain its competitive advantage. This may involve a more agile approach to strategy development and a willingness to experiment with new ideas and innovations. The use of data and analytics can also help organizations to make more informed strategic decisions in a rapidly changing environment.

Aldi’s strategic capability

Aldi is a German inexpensive supermarket operator with over 11,000 locations in 20 countries. By providing high-quality products at reasonable rates, the company has established itself as a retail sector leader. Aldi has created a strong strategic competency to retain its competitive advantage, which is underpinned by good value chain management and sustainable resources. In this analysis.

Porter’s Value Chain framework

Porter’s Value Chain structure is a useful tool for analyzing the value-creating activities of a company. The framework consists of two main components: main activities as well as support activities. Primary activities are those that are openly occupied in the creation and release of products and services, while support activities provide indirect support to primary activities (Kumar and Rajeev, 2016). Aldi’s value chain consists of the following main and support activities:

Figure : the investor book

(Source: the investor book, 2023)

Inbound logistics – This includes sourcing products from suppliers, transportation, and receiving and warehousing. Aldi manages this activity particularly well by sourcing products directly from manufacturers, minimizing the number of intermediaries in the supply chain, and using a just-in-time inventory system to minimize inventory costs.

Operations This comprises actions involving the transformation of inputs into finished goods or services. Aldi controls this activity exceptionally well, reducing costs and increasing efficiency by improving store layouts and operations. For example, Aldi's stores are built to be simple as well as easy to explore, and its products are exhibited in their shipping boxes, eliminating the need for more shelving and stocking time.

Outbound logistics This comprises actions such as order processing, manufacturing, and delivery that are related to providing products to clients (Koc and Bozdag, 2017). Aldi handles this activity exceptionally well, thanks to a consolidated distribution structure and tight control over its supply chain. This enables the organization to adapt rapidly to changing customer demands while minimizing delivery costs.

Marketing and sales This covers activities such as product promotion and sales to customers. Aldi excels in this activity by relying on word-of-mouth promotion and providing high-quality products at reasonable prices. To create strong relationships with its clients, the corporation also invests in loyalty programs and customer service.

Service This includes activities related to providing after-sales service and support to customers. Aldi manages this activity particularly well by providing high-quality products and ensuring that customer service is a top priority (Chatzoglou et.al 2018). The company also offers a generous returns policy and encourages customer feedback to improve its products and services.

In addition to its primary activities, Aldi also manages its support activities effectively. These include procurement, technology development, and human resource management. For example, Aldi has a centralized procurement system that allows it to discuss better deals with a provider, and the company invests heavily in technology to improve its operations and customer service.

The VRIO framework

The VRIO framework is a helpful tool for assessing the sustainability of a company’s strategic capability. The framework consists of four components: value, rarity, imitability, and organization. Aldi’s strategic capability can be assessed using the VRIO framework as follows:

 VIRO framework

Figure VIRO framework

(Source: Bruin, 2016)

Value – Aldi’s strategic capability provides value to the company by allowing it to offer high-quality products at low prices, build strong relationships with customers, and preserve a competitive advantage in the trade industry.

Rarity – Aldi's strategic competency is unique in the retail market, as few companies have successfully replicated its business model (Miethlich and Oldenburg, 2019). since the company's stress on simplicity as well as efficiency, it has been capable to stand out from rivals and build a strong brand image.

Imitability – Aldi’s strategic capability is difficult to imitate due to the company’s unique culture and operating model. The company’s centralized distribution system and emphasis on cost reduction require significant investment and organizational change, making it difficult for competitors to replicate.

Organization – Aldi has organized its resources as well as capabilities effectively to support its strategic capability. The company has a highly centralized structure that enables it to control costs and maintain consistency across its operations. Aldi’s strong corporate culture also supports its strategic capability by fostering a sense of unity and commitment among employees.

Based on the VRIO framework research, Aldi's strategic competency is overall sustainable. The company's importance on simplicity, efficiency, and cost management has allowed it to expand a distinct business model that others find difficult to reproduce. Furthermore, the organization has efficiently arranged its resources and capabilities to support its strategic capacity, and its culture supports its competitive advantages.

However, it is important to note that Aldi operates in an increasingly volatile and turbulent environment, with rapid changes in consumer preferences, technological advancements, and shifting regulations. The company must continually adapt and innovate to remain competitive and sustain its strategic capability over the long term (Lee et.al 2020). Therefore, Aldi must continue to analyze and assess its strategic capability using frameworks like Porter’s Value Chain and VRIO to identify areas for improvement and maintain its competitive advantage in the retail industry.

Using the VRIO framework to evaluate Aldi's strategic capabilities, it can be stated that the company's assets and skills are valuable, rare, and difficult to replicate, but not adequately organized to capitalize on market opportunities. Aldi's distinct characteristics, such as its successful supply chain, private label approach, and cost-effective business model, have enabled it to maintain its market leadership. It must, however, constantly analyze and modify its strategy to adapt to shifting markets and consumer preferences.

Aldi has established a strong strategic capability through the efficient management of its value chain, which has enabled it to maintain its competitive benefit in the marketplace (Ariyani and Daryanto, 2018). The company's unique capabilities and resources, such as its efficient supply chain, private label strategy, and cost-efficient business model, have helped it to differentiate itself from its competitors. The VRIO framework analysis indicates that Aldi's strategic capability is sustainable, but it needs to continually monitor and adapt to the changing market conditions to exploit new opportunities and maintain its position in the market.

Porter generic strategy

Aldi has already employed various techniques that have helped make it a leader in the retail market. Porter's Generic Strategy framework and the Ansoff Matrix are two fundamental principles that can be used to analyze Aldi's previous strategies.

Porter's Generic Strategy framework is a popular methodology for determining how organizations might get a competitive advantage over their competitors. The model suggests three major corporate strategies: cost leadership, innovation, and focus.

A cost leadership strategy is founded on contributing goods or services at an inferior cost to competitors. This strategy requires a company to achieve economies of scale, as well as operational efficiency and cost control (Islami et.al 2020). By maintaining its expenses low, a company can present its goods at lesser prices, making them attractive to price-sensitive customers.

Aldi's approach is a cost leadership strategy because the company is known for selling high-quality products at affordable rates. Aldi achieves cost leadership by utilizing a variety of cost-cutting methods, like using a limited product range, decreasing packaging, and reducing advertising expenses (Pulaj et.al 2015). For example, Aldi has a limited product selection than other supermarkets, allowing the company to buy in bulk as well as negotiate better terms with suppliers. Furthermore, Aldi reduces packaging to cut costs and waste. Finally, Aldi spends less on marketing than its competitors, instead relying on low prices and term referrals from satisfied consumers to attract new customers.

Aldi's cost leadership strategy has been successful in recruiting price-conscious customers and developing customer loyalty. Aldi has been able to compete with big supermarkets by offering lower pricing, allowing the company to increase its market share. While offering lower pricing than competitors, Aldi's focus on operational efficiency and cost control has allowed the company to sustain profitability.

Aldi's cost leadership strategy has helped the company establish a strong position in the retail business. It is crucial to remember, however, that this method is not without risk. By focusing on low prices, a company may risk sacrificing quality or customer service, which could damage its reputation in the long term. Additionally, other companies may try to compete on price, which could erode Aldi's competitive advantage. Therefore, Aldi needs to continue to innovate and adapt its strategy to remain competitive in the future.

The Ansoff Matrix

The Ansoff Matrix is a strategic tool that can help companies identify their potential growth opportunities by analyzing their product and market strategies. In the context of Aldi, the company has paid attention to market diffusion and product development strategies.

the Ansoff model

Figure : the Ansoff model

(Source: hanlon, 2021)

Market Penetration: Aldi's this strategy involves expanding its market share in presented markets during the opening of new stores as well as introducing new products (Hales and Mclarney, 2017). The company has been successful in this strategy by keeping its prices low and offering high-quality products. Aldi has also made efforts to attract customers who are concerned about health and wellness by introducing organic and gluten-free product lines. Additionally, Aldi has also launched a range of premium products to cater to customers who are willing to pay more for higher quality products.

Product Development: Aldi's product development strategy involves introducing new product lines to cater to changing customer preferences. The company has been successful in this strategy by introducing new product lines that meet the needs of its target customers, such as organic and gluten-free products (Viltard, 2017).

The approach to internationalization

In terms of internationalization, Aldi has adopted a cautious approach, gradually expanding its operations into new markets. The company initially focused on establishing a strong presence in its home market of Germany before expanding into other European countries, such as France and the UK. Aldi's international expansion has been based on a standardized approach, with the company using the same business model and product range in each market.

This approach has been effective in allowing Aldi to establish a presence in new markets quickly and efficiently. However, it has also led to some challenges, such as difficulties in adapting to local market conditions and customer preferences (Gould and Desjardins, 2015). In some markets, such as the US, Aldi has faced stiff competition from established retailers, which has limited its growth potential.

Aldi's previous strategies have been effective in establishing the business as a cost leader in the trade industry. However, to remain competitive in the future, Aldi will need to adapt its strategies to changing market conditions and customer preferences. Additionally, the company will need to carefully consider the unique characteristics of each market it enters, to ensure that its business model and product range are well-suited to local customer needs.


It is concluded that the report considers the difficulties and significance of formulating and implementing strategies in an increasingly volatile and turbulent environment. Overall, this report aims to provide a comprehensive analysis of Aldi's strategic approach, highlighting the strengths and weaknesses of its past strategies and considering the potential opportunities and challenges that lie ahead with the help of theories and models. In conclusion, Aldi's focus on market penetration and product development strategies has been successful in driving the company's growth. However, the company may need to consider other strategies, such as market development or diversification, to expand into new markets and industries. Aldi's previous strategies have been effective in establishing the company as a main performer in the retail industry. However, to remain competitive in the future, Aldi will need to adapt its strategies to changing market conditions and customer preferences.


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