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Since opening its first store in 1913, Aldi has established itself as a reputable retailer operating in international markets including Germany, Australia and the United States of America. Aldi has over 7,000 stores worldwide. What distinguishes Aldi from its competitors is its competitive pricing strategy without reducing the quality of its products. In fact, in some cases Aldi s products are 30 % cheaper than those offered by its competitors. Aldi can do this because it operates so efficiently.
You are to take the role of a management consultant who has been asked to analyse the factors and business practices that have been adopted by Aldi and contributed to their success and growth in the food retail market place.
Having undertaken further appropriate research you are required to produce a report of your findings in which you:
- Examine and analyse the processes and factors that have improved Aldi s competitive advantage.
- Undertake an internal and external evaluation.
- Investigate Aldi s communication strategy and where appropriate advise on how it could be improved.
- Identify the specific objectives and motives that have contributed to Aldi's rapid growth.
- You should investigate the implication on the company's stakeholders (current and potential) and any reaction in the food retail industry.
Expectations and requirements of customers are changing at an accelerated pace. This has forced organisations to optimize their operations through the decisions involved in the appropriate utilization of resources that would enable then to offer products and services that satisfy customers as well offer competitive advantage to the organization in terms of cost, quality, speed, dependability and flexibility in the market place (Araujo & Costa 2005). For instance, quality is a weapon which indicates improved performance, reliability, deliverability and price competence. An efficient organizational performance helps an organization to achieve competitive advantage (Wang, Lin & Chu 2011). It is interpreted as the distinction between firms with respect to comparable dimensions that positions one firm as a leader when compared to its competitors (Ma 2000). Aldi is one such company which has distinguished itself from other leading players through its unique strategies that improve its performance through efficiency. This report analyses Aldi's business practices which have led to its success and growth in the food retail industry
1. Company Background
With around a century of experience in the retailing business, Aldi operates over 10,000 stores across the globe (Aldi 2018). It has established itself as one of the most trustworthy and top ranked in the global food retail industry. It is being associated with offering high quality products at exceptional value. It is reported to offer customers a smarter mechanism to purchase through its operating philosophy of 'everyday low prices' which avoid using the multi-buy offers like buy one get one free (Ruddick 2013). There is a growing focus on selling own-brand products. Its business is set simple which allows customers to write prices when they prepare a shopping list of Aldi (Ruddick 2013). Its low-priced strategy is attributed to maximizing efficiency, leading to retailing high quality products at the lowest cost.
2. Management Processes and Factors
The successful business model of Aldi is based on its ability to offer high quality grocery and food items at the lowest price to price-conscious consumers. The retail prices of its products are reported to be 20 to 45% cheaper when compared to its major competitors. This is achieved through its consistent focus on reducing operating costs across the business. Various factors that contribute to its success are the adoption of a simple product range, limited inventory levels, simple and uniform process design, removal of non-essential services, efficient check-out, the trolley rental system, devolved responsibility and building a sustainable advantage (Clifford 2011). The management processes that support its growth are the adoption of lean products, the reduction of waste and the integrated cost-leadership and differentiation strategy (Business Case Studies 2016).
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