Aldi Australia Future Analysis - Case Study Example

Aldi Australia Future Analysis Name: Course: Tutor: Institution: Date: Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Strategic Management and Strategic Competitiveness 3 3.0 External Environment 4 3.1 Buyers Bargaining Power 4 3.2 Suppliers Bargaining Power 5 3.3 Existing and Potential Competition 5 3.4 Threat of Substitutes 5 4.0 Internal Environment 6 4.1 Strengths Analysis 6 4.2 Weakness Analysis 6 4.3 Opportunities 7 4.4 Threats 7 5.0 Business Level Strategies 7 6.0 Recommendations 8 6.1 Price Discrimination 8 6.2 Online Platform 9 7.0 Conclusion 9 References 11 1.0 Introduction Strategic management has in the recent past emerged as a recent past through which organisations management efficiency and success is enhanced. In this regard, the organizations in the market have developed a strategy and approach through which they execute their management function and responsibilities. As such, the concepts of strategic management based on the pillars of planning, performance evaluation and control have emerged as organizational key strategic competitive edges in the market (Harrington and Ottenbacher, 2011, p.442). However, the execution of this management approach poses an increased range of challenges to organizational management especially in the development and planning for the future. This report offers an evaluation of the Aldi Australia Company and its application of strategic management (Ahlemann, 2012, p.22). As such, the evaluation develops a review of the organizational internal and external environment, its competitiveness as well as subsequent future development and growth recommendations. 2.0 Strategic Management and Strategic Competitiveness The Aldi Company, both the South and the North affiliations have employed and applied the concept of strategic management. On one hand, the organization applies functional division and decentralization. Crook (2003, p.77) argued on the concept of functional division and decentralization as a concept of strategic management. In this case, the study argued that through functional decentralizations and divisions, organisations acquire the increased opportunity for establishing market niches as well as efficiently serving the respective market segments (Bonn, 2006, p.c3). Through divisional empowerment through the establishment of respective profit centres such as the North and the South divisions, of which the south controls the Australian market, the organization successfully targeted the Australian as well as other markets successfully through niches establishment as well as the establishment and sufficient focus on the respective markets. Therefore, as Wilson-Jeanselme and Reynolds (2006, p.299) argued, organizations that develop critical and undivided focus on their consumer base establish a key market strategic competitiveness. Thus, the Aldi Company has over the years developed a market sustainable competiveness due to its divisional and regional divisional and specific market approach adoption. 3.0 External Environment In order to sufficiently evaluate the Australian grocery and vegetables market, this evaluation adopts the porters five forces model. In this case, the adoption and selection of this approach is based on the argument developed by Schermerhorn (2010, p.146) who argued that the use of the tool serves as an ideal industry critical audit tool. In this regard, the industry focuses on the model key elements such as suppliers bargaining power, suppliers bargaining power, threat of existing competitors, new entrants’ threat and the threat of substitutes. 3.1 Buyers Bargaining Power The Australian grocery industry is one among the largest industries in the market. This is especially facilitated and enhanced by the presence of increased health concerns in the market that advocates for increased consumption of vegetable products as well as groceries. Moreover, the key market buyers in the industry are households who demand and purchase low quantities frequently. Therefore, the presence of a wide consumer base and the subsequent low value purchase reduces the buyers bargaining powers in the market. 3.2 Suppliers Bargaining Power Industry suppliers determine the quality, quantity and costs of products in the market. In this case, the suppliers’ number and financial bases play a critical role. The Australian grocery market and the agricultural sector in general have received increased support from the Federal government. Therefore, the market has developed a strong agricultural base in the market subsequently expanding their number and products quality. Therefore, the suppliers have a relative bargaining power in the industry. 3.3 Existing and Potential Competition The Australian market is perceived as one of the developing markets in the globe. Despite its attainment of a developed economy status, the economy retained a relatively stable status in the wake of the 2008 global financial crisis while other nation’s financial states crumbled. Therefore, the market has attracted many investors both domestic and foreign especially through supermarkets that stock wide varieties of grocery products unlike the ALDI Australia that has a limited stock variety and diversification. 3.4 Threat of Substitutes The Australian market remains heavily conscious and apprehensive of the role of good health to enhance social stability as well as economic growth. Therefore, Meredith and Dyster (2012, P.374) argued that the economy remains selective in terms of consumption diets. Therefore, this implies that the industry products consumption demand is bound to increase with increasing population, thus no threat of substitutes. 4.0 Internal Environment The report in a bid to evaluate and establish the internal environmental factors of the organization applied and implemented Liu, Xu and Zhangs’ (2010, p.226) argument that recommended the use and application of the SWOT analysis evaluation tool. As such, the report focuses on the organizational strengths, weaknesses, opportunities as well as market external threats. 4.1 Strengths Analysis An evaluation of the organizational structures and systems establishes that the organization retains a low stock variety of products. In this case, the organization has a low stock variety of 700 products unlike the other suppliers in the market such as the supermarkets that stock in the excess of 25000 products. Therefore, this offers the organization to focus on specific market niches as well as market segments (Bonn, 2006, p.c4). In addition, the organization adopts a low cost approach in the market. Therefore, the organization has a benefit and opportunity to overcome its key industry competitors through its low pricing and hard core discounting approach. As such, this increases the organizational market influence as well as consumer base expansion possibilities over its competitors. 4.2 Weakness Analysis A major weakness in the organization is the lack of a functional marketing department. In this regard, an evaluation of the organizational functional systems establishes that the organization relies on the application of its organizational culture as well as the business strategy as an approach to increase its market influence and competitiveness in the market. However, the application and use of competitive approaches by its competitors may reduce the efficiency and success of its adopted passive marketing approach. 4.3 Opportunities As Poddar and Khan (2012, p.141) argued, the existing Australian market success conditions as well as the presence of increased government support through social economic and FDI programs support make it a viable investment opportunity. Therefore, statistical forecasts indicate increased business opportunities in the market into the future. Therefore, this offers the organization the chance to increase its investment capital. 4.4 Threats Finally, an evaluation of the organizational systems against the industry establishes a likelihood of increased online shopping and home delivery as the economy adopts the online trading platform. Therefore, unless the organization adopts an online portal marketing, it is bound to lose out on the Australian market. 5.0 Business Level Strategies An evaluation of the organizational business level strategies establishes that the organization applies a wide range of business level strategies. One among them is the adoption of low priced approach in the Australian and UK markets. As such, the organization has developed a range of organizational cost reduction approaches where the organization seeks to charge below the market selling prices as a cost leadership approach strategy. An additional strategy application is through the approach through which the organization develops relationships with the suppliers. Therefore, through this approach, the organisations, both the North and Southern functions develop alliances and joint negotiation teams in the market. Therefore, through this approach, the organization has developed a strategy through which the organizational supply chain management strategy is enhanced and facilitated. Consequently, this has served as its key sustainable competitive edge against industry competitors (Bonn, 2006, p.c7). In addition, the organization applies in its customer orientation programs. In this case, the organization has developed approaches and strategies through which the respective consumers are incorporate in its management process. This is established through the development and use of consumer management and relationship systems. As such the adoption and use of these systems has facilitated and enhanced increased customers satisfaction and loyalty. 6.0 Recommendations Based on an evaluation of the above factors both the internal and external organizational factors, this report develops a range of strategic recommendations. In this case, the report focuses on developing the strategic planning aspect for the Aldi Australian Corporation to increase and enhance its overall future market success. 6.1 Price Discrimination Currently, the organization applies the low cost approach through the cost leadership approach in the market. In this case, it prices all its products lowly to edge out competition. However, as established under the weakness analysis, the approach risks leading to the overall loss of reduced profit margins. Therefore, this report recommends the application of the price discrimination approach in the industry. Baslevent (2006, p.157) argued on the role and merits of price discrimination. In this case, the study argued that besides allowing for increased profit margins, it enhances customer satisfaction and loyalty. Therefore, through this approach, the report recommends that the organization should segment and divide the Australian market based on their earnings by regional analysis. As such, it should evaluate and establish diverse prices based on the respective stores and outlets locality. This report concludes that the application and use of this approach would increase the organizational profit margins in the society. 6.2 Online Platform An evaluation of the organizational operations in the market establishes that the organization uses the physical market platform. In this case, the consumers have to visit the respective organizational outlets to acquire the organizational products and services. Therefore, the organizational relies on its physical stores in the market to generate revenue. However, the report under the treats analyses establishes a risk in the change of consumer buying behaviours. In this case, the report establishes that just like other global markets, the consumers are shifting from the physical to the online platforms. Therefore, Wilson-Jeanselme and Reynolds (2006, p.298) argued that it is imperative for organisations to develop online platforms as an approach to increase their revenue streams. Therefore, based on this analysis, this report recommends and advocates for the establishment of an online portal platform. In addition, in order to increase its overall market efficiency through the online platform in which the organization can establish and contract external logistical factors through which the organization can deliver its products to the consumers effectively and on time. 7.0 Conclusion In summary, the report evaluates the Aldi Australia Company strategic management approaches. In this case, the report develops an internal and external market analysis as well as the recommendations. On one hand, the study established that through its cost based approach; the organization has established a competitive market approach. Moreover, an Australian grocery industry analysis establishes low buyers power as well as reduced competitive threats. An internal evaluation establishes that the organizational principles and values serve as its key strengths while the low cost approach is its major weakness. Consequently, the report develops recommendations such as online portal establishment as well as price discrimination approaches to enhance future market influence and development. References Ahlemann, F., 2012, Strategic enterprise architecture management: Challenges, best practices, and future developments, Springer, Berlin. Baslevent, C. 2006, "Price discrimination across indications in the pharmaceutical industry: The case of finasteride", METU Studies in Development, vol. 33, no. 1, pp. 155-160. Bonn, I., 2006, Aldi in Australia in C.W.L Hill, GR Jones & P. Galvin (Eds) Strategic Management: Intergrated Approach (2nd Edition). Pp.c1-c11, John Willer, Milton, Qld. Crook, R.C. 2003, "Decentralisation and poverty reduction in Africa: the politics of local-central relations", Public Administration & Development, vol. 23, no. 1, pp. 77. Harrington, R.J. & Ottenbacher, M.C. 2011, "Strategic management", International Journal of Contemporary Hospitality Management, vol. 23, no. 4, pp. 439-462. Liu, Y., Xu, C. & Zhang, Y. 2010, "An Analysis on the International Competitiveness of China's Traditional Medicine Industry Based on the SWOT Model", International Journal of Business and Management, vol. 5, no. 7, pp. 225-229. Meredith, D., & Dyster, B., 2012, Australia in the global economy: Continuity and change, Cambridge University Press, New York. Poddar, G.S. & Khan, J. 2012, "Fear of FDI in Multi Brand Retailing in India : A Critical Analysis", Anusandhanika, vol. 4, no. 2, pp. 139-146. Schermerhorn, J. R., 2010, Exploring management, Wiley, Hoboken. Wilson-Jeanselme, M. & Reynolds, J. 2006, "The advantages of preference-based segmentation: An investigation of online grocery retailing", Journal of Targeting, Measurement and Analysis for Marketing, vol. 14, no. 4, pp. 297-308. Wilson-Jeanselme, M. & Reynolds, J. 2006, "The advantages of preference-based segmentation: An investigation of online grocery retailing", Journal of Targeting, Measurement and Analysis for Marketing, vol. 14, no. 4, pp. 297-308. Read More