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Management Assignment Question
The company to be examined is Aldi. You will need to carry out independent research.
Task 1
Carry out a full strategic analysis and evaluation of Aldi's current (2014) strategic position in the Global Food Retailing market. Use appendices to provide detailed supporting evidence and make sure that you integrate key points from the appendices into your answers. Your analysis should include as a minimum:
1a
- The product market mission of the company.
- The basis of competition (Porter's generic and/or Bowman as a minimum).
- Strategic Group Analysis.
- The activities and resources of the company (Value Chain and the Resource Based View).
- The culture of the company (Cultural Web).
- The stakeholders of the company (Stakeholder Analysis: power/interest matrix).
1b
- An assessment of the relative importance of the performance objectives (cost, quality, speed, dependability and flexibility) for the management of operations at Aldi.
- An evaluation of how supportive Operations are to the overall strategy of Aldi.
- An analysis of how Aldi ensures it can meet its performance objectives (use relevant Operations Management concepts, theories and models.
1c
- A VRIO analysis of core assets and competencies.
- A comparison with competitors in the same industry (against key performance indicators – you should have this from assignment 1).
- Conclusions (SWOT and conclusions).
Task 2
Using appropriate theory, construct a detailed Stakeholder Analysis for Aldi. In your opinion, does Aldi manage to satisfy all of its stakeholders all of the time? Which are the most powerful groups for the company and why? Could any of these groups pose a threat in the future? Use appendices to provide detailed supporting evidence and make sure that you integrate key points from the appendices into your answers.
Task 3
Using the FIRM framework and any other appropriate strategic tools/models, evaluate two recent strategic options that Aldi has followed in NEW international markets (e.g. Southern Australia and California in the US). In light of your answer to task 2, also consider the effect that these strategic options may have on the various stakeholder groups identified. You must provide supporting evidence and reference all sources.
Notes
Cross-reference to supporting evidence in your Assignment 1 answer (analysis of Aldi's external environment). You could also put supporting material from assignment 1 into your appendices. Models you could use to analyse and evaluate Aldi's strategies (Q3) include: TOWS matrix, Ansoff's matrix, BCG Matrix, Market Attractiveness matrix, FSA/CSA matrix, Porter's Diamond framework, Hofstede's Cultural Dimensions, etc. These are models/tools and not strategies in their own right. You should apply the models selectively to help you to explain, analyse and evaluate.
Management Assignment Solution on Global Strategy Management
Introduction
The answer, to the question like why some companies enjoy huge success for years, and other fail miserably, even though the external conditions are almost similar for both of them, lies in the sound strategic management decisions that the former follow, by constantly sustaining their competitive advantage, a company like Walmart is the epitome of a successful company, which has sustained its competitive advantage over its competitors using sound strategic management principles (Hill & Jones, 2008). There are two key aspects to strategic management, first the strategy formulation which dictates the course of action the organization should be taking to meet its objective and second would be strategy implementation, which means sound and effective implementation of the strategy, we designed in the planning stage and monitor the progress and make necessary changes if necessary. (Hill & Jones, 2008) Strategic management becomes all the more important, when the company functions on a global level, due to various factors…
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Company and its analysis
Brief introduction of the company
Aldi is a global, German based discount supermarket store chains, which has its presence in 17 countries as of today (Aldi, 2014). The company is a privately owned organization, and functions of two separate groups, Aldi Nord (meaning north) and Aldi Sud (meaning south). The company has a policy to not disclose their financial results and details to the public, but is estimated that, Aldi group registered a turnover of 25 Billion Euros in the year 2012 in Germany out of these total revenues, 11 billion Euros came from the Aldi Sud group and the other 14 Billion Euros from the Aldi Nord group (Euromonitor, 2014)…
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Company's basis of competition
Michael Porter has suggested that in order to sustain the competitive advantage, the firm has to either be cost leader, which means the firm would have to be offering their products at a lower price than the competition for a long period of time or it should have differentiation in terms of the value that they offer to the consumers (Porter, 1985). All the successful companies in the world maintain their competitive advantage and thrive, by following this principle, take for example a company like Apple maintains its competitive advantage by its differentiation through superior innovation, creativity and in store merchandising in all their products and services, another example of it, would be Rolls Royce, where every car are made to order by the customer, and is customised according to the need of the customer. On the other hand, there are companies, which do not have any differentiated offerings compared to their competitors, but they create and sustain their competitive advantage by being the cost leader in the industry, they have superior ability to cut costs on all fronts and pass on the benefit to customers by significantly reduced prices on goods a company, for example a company like Walmart sustains its competitive advantage, state of the art supply chain system and with it achieves cost leadership, by cutting cost in every phase of operation, and passing the benefit of it to the consumers by offering goods at significantly low prices, compared to its competitors'…
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Strategic Group Analysis
As discussed earlier in the introduction about the company, Aldi group functions through two different groups which are Aldi Nord and Aldi Sud, owned and operated separately but contributing to the one single organization, Aldi group. According to the latest report, Aldi has world's 0.5% share of the total world retailing market share value (Euromonitor, 2014). It is currently ranked 7th in the world among its competition. In 2013, Aldi outperformed its key rival Schwarz, both domestically and internally in terms of their growth rate. They outperformed the group, thanks to a better economy in Germany, which showed positive growth in the recent years, despite the global downturn, and by promoting soft discounts to the consumers (Euromonitor, 2014).
Global grocery retail market is an extremely fragmented market, worldwide, except maybe in the USA, but world over it is a very fragmented industry. Walmart is the leader in retail with 6% share as of year, 2013 (Euromonitor, 2014). The next biggest firm after Walmart and all others have less than 2% of the market share respectively, this shows how fragmented the market is globally in grocery retail, and no such dominant player exist worldwide, except of course domestically, eg: Walmart in the USA or Aldi in Germany. Aldi has been falling behind its key competitor Schwarz in terms of financial performance and also in terms of the market share, this is largely because of its resistance to change and evolve in the face of competition and Schwarz group being perceived as more economical by the consumer, lately. In 2009, the difference between the two group was 7 billion$, this increased and gone on to 12 billion$ by 2013 (Euromonitor, 2014). The company would have to look into it, and make necessary changes in its operations to stop the widening of the gap to sustain its profit and compete in the market in the long run…
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The activities and resources of the company
Value Chain of the company
The concept of value chain was first formally introduced by Michael Porter (Porter, 1985), where a chain of activities or operations that a firm undertakes, to deliver product and services which provide value to its consumers. The main activity of the value chain or the primary value chain is to identify firstly the competitive advantage the organization has over its competitors and then to identify ways to keep or sustain the competitive advantage that the company holds over its competitors, the primary activities include following activities: inbound logistics, Operations, Outbound logistics and marketing and sales (Jurevicius, 2013) Let us analyse the value chain of Aldi, according to the chains of activities proposed by Michael Porter and try to understand how the company sustains its competitive advantage over most of its competitors(Porter, 1985)…
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Culture of the company
The organizational culture of the company determines the unity and identity among the employees for working towards a single business objective, it also gives all the employees and management of the company, a direction (lowe, n.d.). The organization of Aldi, believes in lean thinking (Womack, 2003), this means that through simplicity; they try to cut costs on all fronts. All employees are fostered with this quality to be frugal yet efficient in everything they do. The company has a strong policy of no bureaucracy; this ensures that their primary objective is to satisfy their customers (Aldi, 2014). It also has a rigour in following their processes. This strict passion for the following process ensures efficiency in the organization…
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Analysis of the Operations of the company
Relative Importance of performance objective
Aldi's strategy is to provide superior value to the consumers by offering products, at a relatively cheaper price than the competitors. It has consumer oriented strategy, which makes Aldi, a household name in the markets they operate. These forces make competitor elements, which translates into performance objective for Aldi. To understand and fulfil the needs of the customers, Aldi adopts following factors, as performance objectives: Cost, Quality, Speed, dependability and flexibility. Aldi's operation team has to excel in following competitive factors to sustain its competitive advantage.
Cost: Whether it provides value in terms of being low priced to the value seeking consumer. For this it has to cut costs at all level
Quality: High quality is expected by the consumers, even though they seek value through low pricing of products. Its operation has to excel in providing high quality goods to its customers. Quality can also be judged in terms of the in store services provided to the customers…
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Stakeholder Analysis
Stakeholders are all those entities, which affect our business directly or indirectly. Stakeholder analysis, is the analysis of these key stakeholders, and who needs to be won over and satisfied to what extent and how (Mindtools, 2014)? Let us understand these different stakeholders of Aldi:
1. Customers: Customers are one of the most important and primary stakeholder of any business (Porter, 1985). Same goes with Aldi. Aldi's core customers are those who are extremely price sensitive and look for the best value for the money they pay. Aldi's whole strategy, is to woo such customers, they have built their whole business to target and fulfil the needs of such customers. They provide highest quality goods possible at the lowest price, they achieve it by selling their own private labels rather than selling branded goods, this how they sustain to keep their margin at such low prices (A.T. Kearney, Inc., 2011). Aldi takes sufficient measures to satisfy this powerful stakeholder because their business depends on them.
2. Competitors: The main competitor of the company is Schwarz group. It has been giving intense competition to the company both domestically and in international markets. The difference in the gap between Schwarz and Aldi increased significantly over the years, due Schwarz's superior performance. In the year 2009, they were differentiated by US$7 billion, but by 2013, it went on to become US$12 billion (Euromonitor, 2014). Part of it is because Aldi, being a privately help traditional company has been very resistant to adopting changes in the organization, Schwarz, on the other hand, has remained very flexible, and has adopted according to external conditions. The company, however, has pledged, that it will be more open to change, and shall be less conservative in their approach (Euromonitor, 2014)…
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