The paper "Strategic Management of Albrecht Discounts" is a perfect example of a case study on management. Albrecht Discounts (ALDI) is a successful global food retailer that started in 1948 in Essen Germany (Bonn, 2006). The food retailer has grown from a small grocery store to be one of the world's largest food retailers by the end of 2003. ALDI have their main market in Germany, which accounts for at least two-thirds of their sales and have maintained a market share of 40%. The company was able to open its first store in Australia in 2001.
The presence in Australia involves strategic expansion which is cash-based making their risk level low. ALDI was expected to capture 10 % of the Australian grocery market by the end of 2010. The grocery retailer has helped to add competition to the Australia market through its cheap pricing. The company has also benefited from positive reception by the consumers in Australia (Bonn, 2006). The case study analysis will recommend an approach which ALDI should employ in their expansion in Australia in order to maintain their strategic competitiveness and growth despite the challenges facing the sector.
To address the issue, the analysis will be divided into strategic management and competitiveness, external environment, internal environment, and business level strategies. Strategic management and strategic competitiveness The strategy is the outcome of a planning process that has the key roles being played by the managers. In rare cases, strategies come from the depth of the organization without prior planning (Nag, Hambrick, & Chen, 2007). Despite this, a strategy is undertaken when there is formal planning in an organization. Strategic management involves having a strategic management process which is undertaken through the top leaders in an organization.
Strategies are made based on organization strengths and weaknesses (Cartwright, 2001). ALDI has managed to have a successful market in Australia due to competitive strategies (Bonn, 2006). When the company entered the Australian market, there were other competitors who were established brand names. The competitors in the Australian market involve Woolworths and Coles. The company had to come up with a strategy that will enable them to penetrate the market. One of the strategies was offering groceries at a lower price.
ALDI has been able to affect the competition significantly using the strategy. The store has been found to sell their products at a price which is 25% lower than the competitors. The fact that the market is competitive has made ALDI introduce weekly price discounts on items. In response to ALDI strategies, competitors have reduced their prices. Some of the competitors have intensified their use of technology with virtual supermarkets used by Woolworths. The competitive environment has made companies change their management and competitive strategies (Scott & Kesten, 2007). External Environment ALDI external environment can be best analyzed using porter 5 forces analysis.
The analysis looks at the threat of new entrants, bargaining power of the buyers, bargaining power of the suppliers, the threat of substitutes, s, and rivalry among the competitors (Michael, Nicholas & Anita, 2002). The threat of new entrants ALDI operated in a market where the threat of a new entrant is high. The industry is promising hence attracting new entrants more easily (Cartwright, 2001). The Australian government has been keen on making the market competitive. This has led to the government encouraging new innovations and entrants into the market.
Despite the high threat for new entrants, small entrepreneurs are required to have a lot of startup capital to compete with established brands like ALDI. There is also a need for adequate technology and capital in the industry. For large scale retailers, entering the Australian market is easier. The high turnover from the industry has been attracting new competitors (Bonn, 2006).
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