The paper "The Australian Supermarket Industry" is a great example of a Management Case Study. Australia has the most heavily concentrated grocery market across the globe. The two primary players are Coles Myer and Woolworths, which control about 76% of the market (Wortmann, 2004, pp. 447). There has been intense competition among the existing rivals despite the industry’ s concentration. However, with such a competitive and concentrated environment, Aldi, a global grocery retailer entered the Australian market in 2001. The move was impressive given that penetration into the Australian market is difficult and complex.
Indeed, there was no other foreign retailer that had previously succeeded in establishing its presence in Australia. According to Gerhard and Hahn (2005, pp. 15), Aldi is a German-founded retail store by two brothers, Karl and Theo. It commenced its operations in 1948 and then spread to the rest of the world. Today, Aldi is one of the biggest international food retailers owning approximately 7000 stores globally. In Australia, Aldi embraces its universal policy of providing consumers with low prices and high-quality products. Although Aldi faces various challenges in its operations, this strategy has made it successful.
Fundamentally, low prices and high-quality strategy have helped Aldi to overcome its day-to-day problems thus gaining the much-needed competitive edge. Situational Analysis The Australian market offers a favorable setting for business especially in grocery retailing. Foremost, Australia has one of the rapidly growing economies in the world and thus attracts investors from every corner of the earth. Although the Australian government seeks to protect domestic firms and products, it offers opportunities for foreign companies to invest in the country since it focuses on expanding its economy (Grant et al. , 2014, pp.
56). Importantly, the changing lifestyle of the Australian population necessitates innovations to meet their diverse tastes and preferences. In this regard, there are increased opportunities for other firms to address these needs. Probably, the ability of the Aldi to provide products that meet consumers’ expectations has been a crucial pillar of its success in the market despite the presence of the Coles Myer and Woolworths, the two chief monopolies. Additionally, Aldi emphasizes the use of environmentally friendly products and packaging thus earning the trust of the Australian authorities (Zarkada-Fraser and Fraser, 2002, pp.
285). Indeed, the great concern of the Australian government is a food packaging, a factor that Aldi has put into considerations since its establishment. Australia also embraces technology that offers a central platform for Aldi to employ technological facilities to deliver its products to the clients on time. The threats of new entrants in the Australian market are high because there is a great possibility of duplication of the competitor’ s strategies in the grocery business. Indeed, both big and small firms in the industry could easily copy and implement a competitor's strategy in another market segment (McKinna, 2011, pp.
7). In this regard, Aldi should expect some challenges from other international competitors such as Tesco and Wal-Mart, which may consider penetrating the Australian market. Therefore, Aldi should remain prepared for any competition that might arise from new entrants to the Australian market. Correspondingly, the threat of substitutes is also high because there are a significant number of global players as well as domestic firms in Australia with similar products to the consumers.
In such a scenario customers may feel dissatisfied and they may shift to the competitors especially if the switching cost is low. Fortunately, Aldi has slighter power over other players owing to consumers’ loyalty and trust through its low price and good quality policy.
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