SWOT Analysis of the Aldi Company - Case Study Example

ALDI Introduction Management of businesses in a highly competitive environment can sometimes be challenging, especially if that business does not develop a clear blueprint for its operations. Even with the clearest blueprint, a business is likely to plunge into management problems, thus management need to remain vigilant always in order to enhance their competitive edge in the market(Sekhar 2009). This essay seeks to critically analyse the strategy of Aldi company particularly in relation to its plans to open new stores in various regions. Strategy at Aldi A strategy can be considered as a short-term plan that aims at increasing the market share of a business, thus making it a market leader in the industry (Waddell et al 2007). As a giant retail store company, Aldi’s strategy plan involves opening new stores in regions that would boost its business and enhance its profitability. Besides this, the stores would provide several job opportunities to individuals in the particular areas. Evidently, the company’s initial plan of opening new stores did not take off as expected due to diffuuculties experienced in the course of the planning process (Browne 2012). According to Browne’s article it is evident that Aldi has adequate resources that it can utilize for expansion and the implementation of its objectives and mission. Therefore,the main challenge that the company faces in its expansion is strategic planning. Waddel et al (2007) observes that, planning entails identifying goals that are to be achieved and specifying how to attain the goals. Planning should be embedded in the company’s objectives, mission statement and vision. Basically, Aldi’s mission and vision emphasises on providing excellent value to customers by providing high-quality products and services (Aldi 2012). In order for the company to uphold its mission and vision which emphasises on providing excellent value to customers, there are several factors that the company should put into account in the course of its planning process. For instance, effective consultation with relevant stakeholders is crucial. In Aldi’s expansion plan, there is no mention of the company’s stakeholders in its decision to expand the stores. Hitt, Ireland and Hoskisson (2012) observe that companies need to start with stakeholders if they have to implement their strategies. The stakeholders must be included in the scorecard during the evaluation of company performance, something that Aldi Company may have overlooked in the hurry to open up new stores.Consequently, the performance of Aldi has been adversely affected, as the company cannot open up new stores as expected by customers. For instance, Buchan (2012) notes that Aldi’s expansion plan in north-east town failed mainly because Aldi failed to take into account the concerns of local politicians and community councilors. A look at the company activities reveals that the company did not get its strategic plan right since it is unable to continue with plans of opening new stores in the region, despite the fact that the company owns a prime land downtown (Buchan 2012). Despite of the diffuclties that the company has faced in the course of its expansion process , acrticall look at Browne’s ( 2012) and Buchan’s (2012) article shows that the company has a viable expansion plan. As part of its expansion, Aldi plans to concentrate on a single business as a supermarket giant through the selling of its products in new stores. This is important mainly because Aldi has a strong brand equity and presence in the market. For example, the company’s plan to expand in the international market by building a large distribution center from where it intends to spread out its wings as a leader in retail stores is viable. The company also plans to diversify its operations through franchising some of its premises to retailers as revealed in its advertisement for business space in its new retail park. Similarly, international expansions are on the top of company agenda even though it struggles with behind-the-scene negotiations. With these initial plans, it is evident that Aldi is looking forward for better days in future in its business (Browne 2012 ; Buchan 2012). However, Aldi seems to lack a proper mangment strategy in the wake of its failure to observe datelines. In the process, plans are postponed or abandoned leaving customers disgruntled. Browne’s ( 2012) and Buchan’s (2012) article highlight pertinent strategic issues that the company may have overlooked. Despite the fact that Aldi intends to expand its operations into new regions, it is clear that strategic plans were not put in place sufficiently enough to withstand the internal and external forces that threaten the operation of the company. As it stands out now, most of the strategic plans that the company had more than five years ago are being abandoned in favor of the need to develop stores in areas that were initially overlooked. What leads to this sudden change of mind by the company management goes down to the issue of planning. It is interesting that a well-known and established company like Aldi would embark on such ambitious plans only to shelve them at their peak (Browne 2012; Buchan 2012). SWOT Analysis Waddell et al (2007) and Freeman (2010) provide great insight on how the Aldi company can realise positive outcomes when it comes to its expansion strategy. These authors accentuate on the need for business to analyse current situation prior to developing strategies. Browne (2012) and Buchan (2012) highlight pertinent strategic issues that the company may have overlooked when formulating their strategic plans. For instance, it is evident that the company did not effectively analyse its current situation prior to developing its expansion plans. In order for the company to effectively analyse its current situation SWOT analysis provides a suitable strategic planning approach can be used to analyse the strengths,limitations , opportunities and threats of its strategic plans. Based on this approach, some of the key strengths that the company can use as leverage in order to realise its strategic plans include ; a strong brand equity and presence in the market. This would enable the company to expand through franchising some of its premises to retailers. Additionally, the company has adequate resources that can be effectively used to facilitate its expansion plan(Browne 2012; Buchan 2012). As it stands, the company’s weaknesses lies in its lack of a clear blueprint regarding its expansion. The company’s initial plan of opening new stores did not take off as expected due to diffuuculties experienced in the course of the planning process. Despite the fact that the company owns a prime land downtown , it failed to get its strategic plan right since it was unable to continue with plans of opening new stores in the region. Aldi seems to lack a proper mangment strategy in the wake of its failure to observe opening datelines. In the process, plans are postponed or abandoned leaving customers and locals disgruntled (Browne 2012; Buchan 2012). Regardless of of the diffuclties that the company has faced in the course of its expansion process , a crticall look at Browne’s ( 2012) and Buchan’s (2012) article shows that the company has a viable expansion plan. For example the company’s plan to franchise its stores and expand in the international market by building a large distribution center from where it intends to spread out its wings as a leader in retail stores is very viable since the company is the company has a strong brand equity and presence in the market. If these strategic plans are effectively implemented the company wll be looking forward for better days in future in its business (Browne 2012 ; Buchan 2012). On the other hand, due to the company’s failure to observe datelines when its comes to its expansion plans the company may have suffered a negative public image that could act as a threat to its reception in the market and its overall brand image. The company’s constant postponement or adondonment of its expansions plan has left customers disgruntled and locals disappointed since this expansion would provide several job opportunities to individuals in the alleged local areas. In addition to this, external forces such as property demand and increasing competition in the market may act as a threat to the company’s expansion strategic plan (Browne 2012 ; Buchan 2012). Conclusion This essay has critically analysed the strategy of Aldi company particularly in relation to its plans to open new stores in various regions. It is established in this essay that as a giant retail store company, Aldi’s strategy plan involves opening new stores in regions that would boost its business and enhance its profitability. However, company initial plans have not been implemented due to diffuuculties experienced in the course of the planning process. One of the key strengths of the company is that its has a strong brand equity and presence in the market. However, the company lacks of a clear blueprint regarding its expansion strategy. Given that an effective business strategy focuses on the available opportunity that a company can use to bolster its revenues, there is need for the company’s management to focus effectively analysing the company’s current situation and subsequently develop a clear blueprint on the company’s expansion strategy (Kossmann 2006; Waddell et al 2007; Browne 2012 ; Buchan 2012). References Aldi , 2012, Everyday Value, viewed on September 2 2012 Browne, B., 2012, New Aldi in Fermony creates 15jobs, viewed on September 2 2012 Buchan, J., 2012, Jobs hopes dashed as Aldi axes shops plan, viewed on September 2 2012, Freeman, E. ,2010, Strategic Management: A Stakeholder Approach, Cambridge University Press, Cambridge. Hitt,  A., Ireland,  D. & Hoskisson, E. ,2012, Strategic Management: Concepts and Cases: Competitiveness and Globalization, Cengage Learning, Connecticut, NY. Sekhar, S. , 2009, Business Policy and Strategic Management, I. K. International Pvt Ltd , New Delhi. Read More