Aldi was founded in Germany in 1913 and has since expanded globally. They focus on keeping costs low through strategies like affordable prices, limited product selection, and efficient operations. This case study analyzes Aldi's business model, strategies, and external factors influencing its success. A SWOT, PESTEL, Porter's 5 Forces, and BCG matrix are used to evaluate Aldi's position and recommend further expanding product offerings and entering new markets in Asia.

2. Aldi case study
Sairash masood
Rubab fiaz
Haseena

3. Breif overview of Aldi
• In Essen Germany, Aldi was founded by 2 brothers Karl & Theo Albrecht in 1013.
• In 1960 they had 300 stores in Germany, they work hard and put all their efforts
in making best retailer of grocery in Germany. They achieve it and become very
popular in Germany and then make business expansion.
• The most important factor in their success and popularity are affordable prices
and great quality.
• Karl & Theo decide to split the Aldi operations in two groups Nord and Sud
because they have encountered a small misunderstanding regarding the sale of
cigarettes in the store. This issue becomes the main reason of dispute among
them and they had separated. The Nord Aldi operates in the north Germany and
the Sud Aldi operates in the south Germany. In 1967 the Sud Aldi expands its
operations and started opening stores in Austria. In 1973 the Nord Aldi starts its
expansion by opening stores in Netherland and other countries.

4. • Now Aldi has more than 10,000 Branches all over the world in almost
70 countries.
• It’s been in last few years that Aldi has gained its market share
(Kantar, 2015). In 2010, Aldi is not performing its full potential, at-
least not on potential level in accordance to their expectations.
• Aldi wins “Which? Supermarket of the Year Award 2015”. Which? Its
a magazine that focus on searching the best products and savings for
customers and is a very well respected and coveted award in the
supermarket s

5. Aldi’s mission, vision, objectives and core
values
• Mission is to deliver the best quality products to its customers which
fulfill the needs & wants of the customers in a more satisfactory way.
• Vision is to facilitate to its buyers so that they can enjoy the flavor of
rich life by paying low prices and the key purpose is to provide the
• opportunity to peoples for using the quality products at the equal
level.
• Aldi offers their customers a smoother way to purchasing the goods.
• Goals and objectives are to provide quality and value through fairness
and efficiency in all systems and to achieve growth in market share. o

6. • Core Values include consistency, simplicity and responsibility that will
lead to reliability, efficiency and commitment respectively.

7. Factors to be considered while formulating
strategies
• : Guardian (2017) indicates that market share of Aldi will grow by 19.8
percent in the 12 weeks to May 21 2017 whereas the 4 big rivals like
Sainsbury’s, Tesco, Asda & Morrison’s will grow mutually by 1.6 %
only.
• In this situation Aldi should plan and implement new strategies for its
growth, the following factors should be considered while planning for
new strategies:

8. • Workers: Workers are type of stakeholders for Aldi and they can also
be called as internal stakeholders. Aldi encourage the employees and
expect hard work from them, work honestly and also fulfill their
responsibilities and ensure commitment.
• Delegation In the delegation process Aldi allocates responsibilities
among all the workers in accordance with the hierarchy.
• Resources Aldi owns the important resources and it’s the strength of
Aldi. Strategic strength plays an important role in success of a
company and is known as strategic necessities such as good quality at
low cost.

9. Boston Consulting Group’s (BCG)
Growth Matrix of Aldi
• Star stage Aldi is positioned in the star box of the matrix as it has the high
market share and growth rate. Aldi is the market leader and also endowed
to maintenance of the leadership position and decides to continue
operations for longer.
• Question mark The question mark refers to relatively lower market share &
high growth rate and it’s not profitable for firm, it also affects cash flows.
• Cash cow The cash cow shows high profitability and low investment. It also
displays relatively high market share and lower growth. The excess of cash
is employed to fund the stars & question marks.
• Dogs Products or brands in this category are sufficiently weak so they can’t
achieve dominance in market and have low growth and they started
developing negative cash flows.

10. BCG Growth Matrix of ALDI

11. Organizational Audit ➢
1. SWOT Analysis for Aldi
2. PESTAL analysis of Aldi
3. Porter’s 5 Forces Analysis:

12. The SWOT analysis of Aldi
Strengths
• Strong associations with supplier
• Low priced quality products
• Focuses on CSR ( respecting the planet
by using our resources responsibly)
• Ethical trade & protect the environment
• Make efforts for well-being & development of workers.
• Operating costs is kept as low as possible.
• Loyal customers

13. Weaknesses
• Smaller range of product
• Assumption in consumers that the products of low prices have poor
quality.
• The use of “Just-In-Time” production system. It means that when
store runs-out of any product it’s possible that they may have to wait
for a number of days for the delivery
• Not utilizing technology for operations
• Advertisement is less focused by Aldi
• British people do not accept change easily and don’t give attention to
the products that are not cultivated in British Isles

14. Opportunities
• ▪ To expand the market share through new offerings
• Can increase customer by introducing loyalty programs
• Can take advantage of increase in market share through high
advertisement.
• Can use business expansion to grow in other countries that are not
targeted at present.
• They can open new modern store to attract more customers.

15. • Threats ▪ Low Price Low Quality perception ▪ Competitive rivalry ▪
Price war with other brands CASE STUDY - ALDI 5 ▪ Other brands are
taking advantage of latest technology ▪ Competitors have highly
skilled labor.

16. PESTEL Analysis of Aldi

17. Political Influences
• The governments of all over the world have become increasingly worried about
the future terrorist attacks around the world as 130 people in Paris have been
died recently. Thus they start to introduce new legislation that have a major
influence on the organization. That legislation must be followed by all companies
in the UK and non-adherence to these legislation may result into fines upto
£500,000 that may result into revenue loss and can damage the corporate image
(commissioner’s office information, 2015) Tax can be increase as the value added
tax was risen by 17.5% to 20% in the tax year 2011/12.This had a great impact on
Aldi because it rises the product price by at least 2.5%. This impact can’t be
avoided by anyone in the UK. To survive for this tax increase, Aldi had to keep
their operational cost low to maintain their competitive advantage over their
competitors. This indicates that Aldi value their employees. Aldi can be affected
by National minimum wage that it employs. They believe that UK national
minimum wage rate of £6.70 is not enough to survive in the UK so Clements
(2015) argue that Aldi pays it employees the living wage with sights to rise it to at
least £8.40 in 2016

18. Economical Influences
• Economical Influences Recession has a greater impact on Aldi’s strategy
indicating fewer disposable income in the UK and that customers were
shrinking their budgets. It means that they were just shopping for
important items. Aldi was able to make their influence on the market by
this point. Another main influence was the price war with the big four
super markets i.e. Morrison’s, Sainsbury’s, Tesco and Asda. These are huge
organizations having capacity to sell up to 25,000 products (Ruddick, 2014)
in each store while Aldi have a 1350 product’s capacity. To keep cost down
Aldi has adopted such a strategy of offering a small range. That enable
them the customers to do savings. Aldi has competed against the price war
with these big four by keeping the same margin. It has again lowered their
price by noticing that Asda and Tesco have down their prices to be
competitive with the price range. Close margin could result into loss of
competitive advantage for Aldi. This has a well effect on Aldi.

19. Social Influences Aldi
• Social Influences Aldi can be socially defined as being a low quality shop
with the assumption that low price equals to low quality. Harrison (2014)
studied that 95% of their products have their own label. These products
especially comes from Germany. The part of British fear of change is trying
a new product from a different country which has been overcome by using
a market campaign of Aldi brands that are “like brands only cheaper”. After
market research that indicated Aldi is a top up shop and people use the big
four super markets for their main shop. Ruddick (2014) studied Aldi’s has
changed the public opinion by increasing 800 to 1350 new products range
of fresh fruits, newspapers, flowers and nappies in 2013 to encourage and
rise the amount of customers doing their main shopping at Aldi.

20. Technological Influences
• There is also a big impact of Technology. The use of credit/debit cards
without a surplus modification as recent as September 2014 has
introduced by Aldi (Wikipedia, 2015). It means shopping process
could be increased for the customer. Aldi has a competitive
disadvantage with The Big Four as they do not offer online shopping
services which can result into percentage loss of market. But it’s a
part of Aldi cost saving strategy that remains effective.

21. Environmental Influences
• Environmental Influences Aldi is really aware of the environmental effects of their
organization & have established the corporate responsibility policy about the
different issues related to environment and are devoted to reduce their
environment footprint. There are six pillars of CRP (Aldi UK, 2015) 1. Consumers:
focus on three things i.e. healthy lifestyles, product safety and responsible
drinking 2. Suppliers: emphasis on Ethical working conditions 3. Resources for
Aldi’s products: concentrate upon several areas including fish, palm oil,
packaging, cocoa, forestry, detergents. 4. Operations: concentrate upon
decreasing their carbon footprint, being energy efficient, meeting global
standards for reducing and recycling their waste. 5. Our people: focus upon
delivering high quality, developing opportunities and structured training
programmers. 6. Communities: emphasis upon a number of different charity-
based activities through charitable organizations CASE STUDY - ALDI 7 Aldi’s
reputation can be improve by emphasizing upon these pillars and operational
cost can be reduce

22. Legal Influences
• In context of legal influences, there are several things that Aldi
require to adhere by. Aldi imports goods into the UK from another
country so they must follow UK and EU legislation for testing foods
and checking to ensure that they follow legislation on food additives,
irradiated foods, labelling and licences. Aldi follows legislation i.e. the
food Standards Act 1999 to ensure the food standards, how they are
made. Reputation and organization funding can be affected by not
following the legislation. So it is essential to ensure customers return

23. Porter’s 5 Forces Analysis

24. Threat of new Entrants
• Threat of new Entrants: (Low) In the grocery business it is the most
favorable point that there is a low threat of new comers due to the
large number of barriers in the way of new entrants in the retail
industry. It is known that it’s a profitable business and in this business
huge profits are earned by Aldi. But in this industry Aldi has to face
tough competition from the already existent competitors.

25. Threats of Substitution
• : (From Low to Medium) Aldi is facing a substitution threat but it is
low to medium but there are chances of it to rise in the future
because the competitors are trying to beat Aldi. Aldi is maintaining
the competitive advantage of great quality in low prices by this they
are dealing with this threat. It is difficult for the competitors to
provide substitute on such a low price like Aldi is providing as the
prices of Aldi products are 20 to 30 percent lower than the market
prices. Aldi is implementing new strategies to reduce the impact of
these threats.

26. Suppliers’ bargaining Power
• (Low) Aldi is a company that operates more than 10,000 store
worldwide, it purchase in the bulk quantity from the suppliers and
have in its own right the buying power. To get more power and
favorable terms they buy from multiple countries. Aldi does not
change their suppliers since CASE STUDY - ALDI 8 starting, they have
the shipping and bundling coordination with the suppliers for their
own advantage. The suppliers help them to control the cost and to
win the competition from rivals.

27. Buyers’ Bargaining Power : (High)
• The buyer are called “king” as they always have the highest power.
The customers have many options to buy, because there is a large
number of sellers. The competitors try to copy each other’s products,
it increases the similarity in the products. This situation increases the
power of buyers as it only depends of their choice that which product
they select. Aldi in coping with this situation by providing high quality
in less prices.

28. Strategic Evaluation and Choice
• The Britain recession forced people to reduce their shopping expense
and Aldi is well known for its discount retailing. Therefore it became
the reason for Aldi’s success.
• Aldi’s strategic focus is on keeping cost low and improving quality, and
through this they hare focuses on increasing the market share.
• Aldi’s strategy of keeping prices as low as possible requires to keep
controlling the cost of operations, therefore their main focus is on
cost control.
• For this CASE STUDY - ALDI 9 purpose they use the lean working
system, it is about receiving more by investing less. Lean working
system uses many efficiency programs that include:

29. • Continuous Improvement: All the employees should persistently involve in making quality
improvements. Employees should understand importance of continuous improvement so that the
organization will run smoothly. Aldi clearly defines and implement the improvement strategies.
• Just In Time Production: Aldi hold only the needed stock because the stock is expensive and this
results in the upped capital because it’s not tied up in stock. The negative effect of this strategy is
that the store has to wait for long time to get the products delivered, it wastes the time and may
become a reason for decrease in sales.
• Time Based Management: To reduce the time wasted in operations the employees should be
skilled and flexible in their duties. Aldi provides a training programme for the development of
new, and to polish the existing skills. Time management can reduce the cost and ensures
efficiency in the whole system.
• Total Quality Management: This is associated with the Continuous Improvement of Aldi. Its rules
or codes are linked with improvement in quality of products or services to meet the customers’
needs. TQM approach helps the organization to build strong relationship among Aldi and their
suppliers and hence, they ultimately move towards the continuous improvement.

30. • Aldi should control its cost to be lower than the competitors. They works
on the leadership strategy, they can become the market leader when their
competitors couldn’t beat them on prices. If they successfully achieve the
market share they will also achieve greater scope and economies of scale
(Witcher and Chau 2015).
• All of these applied strategies together enable Aldi to keep the cost low, to
increase level of quality and to become a tough competitor in the retail
industry. Aldi also controls cost through keeping the layout of stores
simple, small size of stores and by employing less staff (Sandberg, E. 2013).
• Based on the above discussion Aldi is suggested to apply the differentiation
strategy. The Matthew Barnes and Roman Heini, new director of Aldi want
change in the company to grow and to achieve success and to win the
competition (Burrows, T. 2014).

31. • So they are suggested to use the differentiation strategy and to
introduce the new products like fresh vegetables & fruits and
newspaper and many other products that they can develop and to
open new stores in Asian market. Use an approach under which Aldi
will develop and market new and unique
• CASE STUDY - ALDI 10 products for different customer segments. They
have a competitive advantage and they should grow and take risk of
entering into a new market with new products. It will enhance their
image, increase their market share and competitive position. Aldi
should move towards the Asian countries with the new products that
are in accordance with the choices of custom

33. Conclusion
• In conclusion, we can say that Aldi is a strategically stable firm, and they
wins this position in the retail market after years of fighting, struggle &
wondering. Their use of Cost Leadership & Differentiation strategy mixed
with the Production development & Market penetration strategies ensures
the success of Aldi, and with the implementation of new strategy they
could expect for further progress. For the further success the following
recommendation should be followed by Aldi, they make them able to
strengthen their position in the market. Aldi is recommended to change
their stores’ layout. The stores of Aldi seems messy because of their
settings. By giving extra space for the setting of products on the shelf help
customers to see them clearly and the customers will enjoy the shopping
when the store look good and wellarranged. Aldi is also recommended to
start loyalty schemes for customers, they should start introducing a reward
system, and it will encourage customers to shop again and again.