Aldi Case Study of Response to Question Aldi is a grocery firm first founded in Germany, which has established to have stores in different countries all over the world. However, the most vital decisions are made centrally. In locating its stores, the firm strategy involves putting up their stores in nondescript locations that are well trafficked. They also ensure that such locations have limited parking. Since many people like shopping at impressive places, the strategy should be reviewed to meet the competitive edge in the market. Walmart is Aldi’s rival though Aldi has a long way to go to catch up.
Location Aldi stores closer to Walmart would not help if other areas of customer service are ignored. Many customers are likely to leave Aldi and walk into Walmart of the former is less impressive. The best strategy for Aldi should be customer service-based as opposed to location-based strategy. For that reason, locating their stores in locations far away from Walmart stores ensure that there is no customer poaching. Alternatively, they can still improve and offer customer services. Response to Question 2 Firstly, take into consideration the threat of substitute products or services.
Locating closer to Walmart may see Aldi’s customers walk into Walmart to compare products and probably never come back. This means that this force is moderately observed. Secondly, consider the threat of established rivals. This force is moderately observed for as Walmart and other competitors operate on a high profile customer service, attractive displays and affordability. Many shoppers like to be associated with class while at the same time they are keen on affordability. Aldi stands to lose substantially on this.
Threat of new entrants as a force is a moderate for Aldi. Based on the profits that Aldi makes, it can be rated among the best firms in the industry. However, capital required for entry is affordable for many mega industries. Aldi has 9,482 stores worldwide, and it operates only in 19 states. This means that new entrants can come into the lowly exploited markets, but Aldi will continue surviving. The bargaining power of suppliers is a high-risk force. Suppliers can change their prices depending on costs of production as allowable under free market policies.
Finally, the bargaining power of customers is lowly observed. Many customers do not bargain so much as they buy goods whose prices are relatively stable. This allows firms in the industry to premeditate their profitability.