...Sean Spencer 2/1/2016 BA 427 Business Policy Aldi: The Dark Horse Discounter Should Wal-Mart be worried about Aldi? Should Aldi be worried about Wal-mart? Do you believe Aldi to be at a competitive advantage or disadvantage relative to Wal-mart? Both Walmart and Aldi should be worried about each other because both have distinct advantages over each other in bringing in customers. Aldi advantage is that its stores provide the lowest price in town with their products being on average 15-20% cheaper than Wal-Mart (pg 3). How it does this is by cutting costs and offering its products at the lowest possible price. This practice of cutting cost is best summed up by the Aldi motto “"When you buy a can of peas at Aldi, you're paying almost entirely for the can of peas” (Steen pg 4). How Aldi does this is by skipping or excluding practices that most tradition grocery retail provide or practice. These practices include not spending money on advertising, market research or comparing their prices to their competitors. Aldi also do not invest in highly complicated engineering, the only focus of Aldi is operating their business at the lowest possible cost. By doing so Aldi operating cost is significantly lower than those at Wal-Mart but by focusing on offering the lowest price alone is also Aldi main weakness which Wal-Mart can exploit. Aldi main focus is not to customer service, but to offering their products at the lowest possible price and because their stores focus on offering lower...
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...understand what their customers want. Aldi understands that its customers want value for money but do not want to compromise on quality. This case study will demonstrate how Aldi uses a lean approach to its business operations to offer its customers quality products at competitive prices. Since opening its first store in 1913, Aldi has established itself as a reputable retailer operating in international markets including Germany, Australia and the U.S. Aldi has over 7,000 stores worldwide. What distinguishes Aldi from its competitors is its competitive pricing strategy without reducing the quality of its products. In fact, in some cases Aldi’s products are 30% cheaper than those offered by its competitors. Aldi can do this because the business operates so efficiently. Efficiency is the relationship between inputs and corresponding outputs. For Aldi operating efficiently involves reducing costs in all areas of the business. Some of the key areas where Aldi is able to minimise costs are by saving time, space, effort and energy. Aldi’s approach to doing this is to run its business around the principles of lean thinking. Aldi has a no-nonsense approach to running its business. Whereas other food retailers have elaborate displays, additional services and promotions that draw customers into the business, Aldi’s core purpose is to ‘provide value and quality to our customers by being fair and efficient in all we do’. Everything Aldi does is focused around giving its...
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...Final Assignment Case Study Aldi store originated in 1913 and is one of Germany’s leading store chains. It was created by the Albriet brothers. Aldi stores corporation has various names such as Aldi, Hofer, and Combi. There are approximately 5400 stores worldwide. The Aldi stores are located in the following countries, Germany, Netherlands, Belgium, Denmark, Austria, France, United States, and the United Kingdom. Currently there are 20,000 Aldi employees worldwide. In 1993 the sales for the Aldi Group was 21 billion dollars. Aldi has been known as one of the top competitors in the global retail markets. Product and branding strategies Approximately 90% of Aldi’s products are under their own brand, which means that the can and dry goods are produced by local manufacturers and then re-labeled under a generic name. Aldi takes pride in only supplying 500 – 1000 items at any given time in their store. They take pride in keeping the stores lean and bare minimum selling primarily frozen foods, fresh vegetables and canned goods. Pricing strategies Pricing is very important to Aldi stores, they utilize the Market Penetration Pricing strategy which means that they set the price of a product or service as low as possible to facilitate rapid sales of the goods and services. Market Penetration Pricing strategy is used primarily with new product introductions. Aldi takes pride in having their products 30% cheaper than their competitors. Lean Production Aldi takes pride...
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...A Case Study on Aldi I. Introduction The retail industry is a very competitive market. Organizations need to offer customers value for money. Customers want to pay for low priced but high quality products. With such hard competition it is necessary for organizations to know what their customers want. Aldi recognizes that its customers want value for money but do not want to compromise on quality. This case study will show how Aldi’s strategy led them to a competitive advantage. It will also show how Aldi provides quality products at reasonable costs. Aldi is a Germany-based hard discounter that has unique business practices. They use a lean approach to its business operations to offer its customers quality products at competitive prices. They concentrate on purchasing power; carrying only the most frequently purchased grocery and household items, of which most are ALDI select brands. As a result, they get the lowest prices from our suppliers and pass the savings on to the customers. They update operations eliminating every feature that increases cost and prices. II. Objectives and Scope Our group was given a task to do the case study analysis on Aldi. We need to find out how Aldi’s strategy leads to competitive advantage and how they achieve this strategy. We also need to find out whether Aldi’s low-cost strategy implies that they offer low quality products and why quality is important regardless of competitive strategy.For us to answer these questions, we will...
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...Case Study - ALDI 1. How does ALDI’s strategy lead to a competitive advantage? How does the company achieve this strategy? Costumers want to buy the finest products available at the best price possible. ALDI understands its costumers and deliver their desires to them. The Company’s strategy is about selling high quality products at a low price. The German grocery discounter’s strategy leads to a competitive advantage due to the reason that their low prices do not affect their product’s quality. In other words, ALDI’s products are just as good as their competitor’s products, but cheaper. To achieve their strategy, ALDI uses many different methods. They are very efficient, and they reduce costs in all the areas of their business. The first method is by buying goods in a large scale, and for that reason, they take advantage of quantity discounts. The second method is by maintaining small stores and usually, they are located in inexpensive areas, such as the outskirts of towns and minor streets. The third method is by displaying the goods on pallets and not shelves, which are much more expensive. The forth method is by training employees to be capable of doing whatever they are needed to do. For example, the person that stays in the checkout charging for the products can also replace the pallets when they are empty. The fifth method is by having the customers to bring their own bags or having to pay for the ones in the supermarket. Also, the customers are supposed to make...
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...Aldi and Lidl: International Expansion: Case study Answer 1 Greenfield Investment strategy is associated with companies expanding its business outside its national borders. Greenfield investment is one such example where the company sets off in an effort to establish its business operations from the scratch. in recent years it is evident that the strategy of these two companies has tilted in favor of the Greenfield investments. There are various factors responsible for both Aldi & Lidl in choosing Greenfield investment as a primary market entry strategy. Some of these factors are as mentioned below: Degree of freedom: Greenfield investment involves setting up business in the manner as perceived by the investors. They are free to choose their own suppliers, channel of distribution and so this freedom allowed the two companies to change required strategy whenever required in order to adapt to different market conditions in different countries. This strategy involves few rules, regulations, licensing issues that allowed the company to cash in on the brand name, which means ability to attract new customers with relatively low costs. Resource & efficiency: Since Germany had already been exploited, the companies¶ seeked for ways of acquiring resources at much lower rates. So by choosing this stategy , , would help them to compete in the markets with major supermarkets and hypermarkets as they could drive down the costs of products that would lead to attracting...
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...References 20 Bibliography 21 TASK 1 Since the first store was opened in the German town of Essen in 1913, by Karl and Theo Albrecht, Albrecht Discount has continued to flourish into the successful, global organisation we know as Aldi. Aldi has over 8000 stores worldwide and continues to expand in Europe, North America and Australia. The finance section of The Telegraph (October, 2012) reported that Aldi hope to have 500 stores open in the UK by the end of 2013, 40 of them new stores with an estimated cost of £181m, will create 4,500 new jobs. Despite hours of research on Aldi, it proved extremely difficult to find their mission statement. As an international organisation they have many websites but none appear to display their mission statement; nor does their Corporate Responsibility Policy (Aldi, UK 2013). The reason for this difficulty became clear with the discovery of a book, Bare Essentials: The Aldi Way to Retail Success, Brandes and Brandes (2012). Dieter Brandes contributed for many years to the policies which brought success to Aldi; he was initially a regional general manager and then for 10 years, until he left in 1993, was a managing director for the Executive Board. In his book, he explains how Aldi never had a mission statement, because they never needed one. The company’s goals of lowest prices and best quality are sensible, understandable and simple, so how could anyone else write anything which would make them any clearer? Understandable...
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...IWIM - Institut für Weltwirtschaft und Internationales Management IWIM - Institute for World Economics and International Management Why did Wal-Mart fail in Germany? Andreas Knorr and Andreas Arndt Materialien des Wissenschaftsschwerpunktes „Globalisierung der Weltwirtschaft“ Band 24 Hrsg. von Andreas Knorr, Alfons Lemper, Axel Sell, Karl Wohlmuth Universität Bremen Why did Wal-Mart fail in Germany? Andreas Knorr and Andreas Arndt Andreas Knorr, Alfons Lemper, Axel Sell, Karl Wohlmuth (Hrsg.): Materialien des Wissenschaftsschwerpunktes „Globalisierung der Weltwirtschaft“, Bd. 24, Juni 2003, ISSN 0948-3837 (ehemals: Materialien des Universitätsschwerpunktes „Internationale Wirtschaftsbeziehungen und Internationales Management“) Bezug: IWIM - Institut für Weltwirtschaft und Internationales Management Universität Bremen Fachbereich Wirtschaftswissenschaft Postfach 33 04 40 D- 28334 Bremen Telefon: 04 21 / 2 18 - 34 29 Telefax: 04 21 / 2 18 - 45 50 E-mail: iwim@uni-bremen.de Homepage: http://www.iwim.uni-bremen.de Abstract Clearly dominating the US retail market, Wal-Mart expanded into Germany (and Europe) in late 1997. Wal-Mart’s attempt to apply the company’s proven US success formula in an unmodified manner to the German market, however, turned out to be nothing short of a fiasco. Upon closer inspection, the circumstances of the company’s failure to establish itself in Germany give reason to believe that it pursued a fundamentally flawed internationalization...
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...3. Is the industry in which Aldi operates attractive? Aldi is now acknowledged as operating the leanest low-cost model in the world. The key to its success is low service and even lower choice. In my opinion, Aldi operate attractive but still have space for improvement. Aldi is a typical ‘hard discounter’, pursuing a cost-leadership strategy. Its approach is to offer a limited number of good quality products at low prices. Due to above reason, customers have limited choices of the products compare with those large chain supermarket eg. Coles. Aldi also offers a selection of ‘surprise buys’, which change every week and are only available as long as the stocks last. The Aldi website states that they focus on their own brands in order to remain independent, enabling them to avoid high marketing costs often associated with national brands and to set their own price, product and quality policies. According to Shoebridge, however, house brands are attractive for grocery retailers because they cost 5–20 per cent less than national brands, depending on the category. In addition, a retailer’s profit margin on house brands is about two percentages points higher than the margins on a national brand. The limited number of products enables Aldi to leverage its impressive buying power and to control the cost of its products by buying in large quantities. According to Brandes, Aldi has 30 to 100 times the buying power of Wal-Mart. Minimising costs at all levels in the value chain is the...
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...ALDI is a German grocery store that was started over forty years ago. Today it has over five thousand stores in 16 different countries. It is ranked 12 out of the top 30 food retailers in the world, and Germany named it their top brand in 2000. ALDI is able to offer such low prices by having a relatively small selection but buying in large quantities, known as the limited assortment concept. It carries only 700 to 1500 items compared to Wal-mart’s 25,000 items. It focuses on most frequently used products, and spices up its selection with “weekly specials” such as DVD players and house wares. Their “no frills” strategy is also one of ALDI’s cost saving methods. They eliminate virtually all of the extras. There are no baggers, fancy displays, check cashing or preferred customer savings programs. Customers shop out of open displays, which are easy to replenish and require the least amount of labor. They also use a shopping cart rental system. The customer is required to put a coin in the grocery cart and when the cart is returned the customer gets the coin back. This tactic cuts down on labor costs, since customers must take their cart back to its original location to receive their coin. This eliminates the need to hire employees whose job is to retrieve shopping carts. ALDI strives to maintain operational efficiency. Its “bare bones” approach to inventory acquisition has made it easier for them to order large quantities far in advance. ALDI has an amazing turnover rate. It...
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...ALDI IN AUSTRALIA: WHAT WILL BE THE IMPACT? May 2000 Aldi in Australia Aldi will become a small but significant player in the Australian market OVERVIEW I. Aldi is the world’s lowest cost grocery retailer II. The United Kingdom provides an excellent model for the development of Aldi in Australia III. The arrival of Aldi in Australia will have a focused impact, felt mostly on key line pricing and by Franklins Aldi 2 Aldi in Australia I. Aldi is the world’s lowest cost grocery retailer – Ia. Aldi acts as a category killer in core grocery lines – Ib. Aldi has a low-cost logistics and operational system that works on a 12% gross margin – Ic. Privately owned Aldi has a long investment horizon and plenty of patient capital – Id. There are few threats to Aldi or the limited assortment store. Aldi is immune to competition, even from WalMart Aldi 3 Aldi in Australia Ia. Aldi acts as a category killer in core grocery lines – Aldi is a limited assortment discount grocery store, a format characterized by a high turnover on a narrow range of grocery items in a small space – The main appeal of limited assortment stores is low prices – Packaged grocery accounts for almost 50% of a German Aldi store’s turnover and 50% of an American store’s SKU mix – In Germany, over 70% of German households shop at Aldi, mostly for basic staples Aldi 4 Aldi in Australia Aldi is a limited assortment discount grocery store… TYPES OF DISCOUNT...
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...screening and wages, careful use of money, fun culture, sense that its people are its brand, and communication style. Learning Objective: Our focus with this case is on immersing students in the fundamentals of organizational culture. Organizational culture is defined as a complex set of shared beliefs, guiding values, behavioral norms, and basic assumptions acquired over time that shape our thinking and behavior; they are part of the social fabric of the organization—its genetic code. As such, culture drives the organization and guides the behavior of everyone in that organization—how they think, feel, and act. In other words, the culture forms a behavior template. Davis and Landa succinctly captured the essence of culture when they say, The factors which define culture are in part internal, deriving from the unique character of the organization and, in part external, determined by the background and experiences managers and employees bring to the enterprise. Culture is a major determinant of productivity; it shapes organizational responses to external pressures; and suppresses or enhances the cooperative effort level of the workforce. Culture has a significant bottom-line effect on organizational effectiveness, profitability, and shareholder value. [1] With this in mind, let’s explore together this fascinating case study and look at defining TJ’s culture (both visible and not so visible artifacts, how the culture can be nurtured and sustained, and how this culture...
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...Executive Summary Reed’s VP Marketing Meredith Collins needs to develop a plan to increase the market share (MS) of this company from 14% to 16% in the Columbus Market. The Reeds actual expansion plan does not consider any new store opening. The competition in the retailers market is intense and the profit margins are low, therefore Collins has a minimal margin of error. Reed is the actual leader of the retailer Columbus Market but the Executives of the company are worried that Reed lost 1% of MS in the last five years. They just have implemented the dollar Weekend Campaign with no considerable important results. Reed Business is in the High end segment and it has differentiated by offering high quality products and excellent customer service. In this market price is the most important factor, but location, quality, diversity of products and customer service are also points of differentiation. In the latest years in Supermarket Industry the private labels have not been perceived anymore as low quality and their presence in the market has increased in 3% since 2005. Customers have become friendlier towards healthy and organic food. The customers are not as loyal as 20 years ago; nowadays is a trend of savvy customers. Reed’s customers are affluent, old and owned small medium houses, also more likely to have a pet. Based on the facts above my recommendation is maintaining focus in its actual customer segment, improving the product mix offered by developing private labels,...
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...Aldi and Sainsbury Grocery store is a shop which the main product sold primarily food HISTORY OF GROCERY SOTRES . They hold an extremely significant value in consumer lifestyle. This essay will compare strengths and weaknesses between Aldi and Sainsbury. Aldi Aldi is a private company which was founded in Essen, Germany 1946 by Karl and Theo Albrecht. Aldi is now a leading worldwide discount supermarket chain with more than 8,500 stores in more than 15 countries. After several years, the owners separated Aldi into Aldi Nord, which operates shops in the north of Germany, and Aldi Sud, which operate the south and the UK. Karl took the Aldi Sud (South), and his brother Theo took the Nord (North) (Rudolph, 2011). Moreover, in times of economic depression were consumers are caring more about the price. Aldi to took advantage of the depression with it being one of the leading supermarkets that offer discounts and lower prices than the main stream supermarkets. This strategy also known as razor strategy was very effective in the UK because when the economic depression hit Europe people felt the need to save and cut down expenses and restore to cheaper options. Aldi before depression. this below shows the number of the shops for people who want to save money for food for , which allows them to offer the best quality products at low prices (Haberer, 2008). According to Mirror Magazine “Aldi won the award of supermarket of the year, and this award for second year in a raw...
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...* APP update for ALDI * ` * Executive Summary This report involves how information system solves the issues experienced by a leading global supermarket chain and how the proposed plan will be enforced its targets of capturing more market shares and increasing company’s profits. Firstly, our team will describe the main problems to be confronted by ALDI. Then the goals and objectives of the project will be clarified, and the crucial factor for business future development is also listed. The following sector offers a full view of the business case. Specifically, this part contains the reasons and motivations for exploiting the new project, and the business case organizer. Additionally, the relevant environment conditions are described from several aspects in detail. Meanwhile, the current situation and opportunities are analyzed via SWOT model. After that a detailed description of assumption and obstacles about present condition and future projects is shown. Next, we provide two feasible options for ALDI, and we adopts several elements and methods to weigh both options. Then a constructive and enforceable recommendation and opinion is given through previous analysis. Finally, the implementation strategy of project will be identified briefly. * 1. Introduction Nowadays, online shopping in brick-and-mortar stores is a common consumer practice. Mobile devices, especially smart phones, have become a key tool for web shoppers (Turban, Volonino and R. Wood...
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