Aldi’s Micro environment

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Key Stakeholder Groups in Aldi’s Micro Environment
Porter’s Five Forces Analysis of Aldi in the UK’s HSS Sector
Conclusion and recommendations
Presentation Speech
Reference List

Introduction

Aldi is a German Based multinational company that operates in the discounted stores sector. Having started its operations back in the year 1946, the company has grown to the extent that it controls 8078 stores around the world today. The company entered the United Kingdom in 1990 with the opening of a single store. As of today, the company has managed to open four hundred stores across the United Kingdom.

This growth has put the company amongst one of the most competitive companies in the Hypermarkets, Supermarkets and Superstores sector in the United Kingdom. In the United Kingdom, the company operates within a competitive micro environment. This implies that there are a substantial number of stakeholders in the sector in which Aldi operates (International Markets Bureau 2011).

This paper explores the internal and external environment in which Aldi operates in the United Kingdom. The paper begins by examining the key stakeholders of the company. This is followed by a Porter’s five forces analysis, which helps to capture the macro environment in which the company operates. The paper ends by drawing recommendations from the findings, which can be used by Aldi to gain a competitive position in the United Kingdom.

Key Stakeholder Groups in Aldi’s Micro Environment

The government and regulators

Each stakeholder plays a given role in as far as the influence of operation for companies is concerned. The government plays a greater role in setting the business environment. It influences the operation of a given company from the macro and even narrows down to shape the micro environment (Fassin 2009).

The UK government, especially the ministry of trade ensures that comprehensive trade policies are in place in order to steer the operation of business companies. The government ensures that the operational environment is fair for all the companies operating in the HSS. The retail laws are set by the government. Also, the government ensures that labour laws are effectively developed.

The social and environmental policy matters are also coordinated by the government. The government does not have needs per se, but helps in setting standards that are required for effective business operation (International Markets Bureau 2011).

Customers

The other critical stakeholders in the micro environment are the customers (Fassin 2009). Research has pointed out that customers are the most valid stakeholders by any company, including Aldi. The reason behind this is that customers are the main sources of competitive advantage by virtue of their shopping trends and habits.

The growth of Aldi is associated with its ability to provide diverse services, which have enabled them to gain a substantial number of customers over time. Customers have their expectations of the company.

Customers have been demanding for services at discounted prices. This enables the customers to attain goods at lesser costs. This is because of the higher cost of living that has been brought about by the recent tough economic conditions in the country and the world at large (NFU n.d).

Suppliers

Suppliers are vital for companies that deal with the marketing of a wide range of products. Aldi offers a wide range of products. This is one of the positioning factors for the company. The relevance of the suppliers to the company is to ensure sustainable supply of goods to the company (Fassin 2009). Aldi gets its supplies from different manufacturers and processors.

In order to ensure that it maintains its relationship with its customers, a company has to ensure that it maintains a stable relationship with its suppliers so that they can keep supplying quality products. Through the maintenance of a working relationship with their suppliers, the company is able to get a constant supply of products and services.

The main need for suppliers is to ensure that they secure a relationship with the company so that they can maintain the company as one of their chains where they make their supplies.

Employees

According to Fassin (2009), employees are the immediate stakeholders in the company. When it comes to the issue of employees, Aldi focuses on two things: The maintenance of their employees through deployment of best practices in human resource management and the outsourcing of high quality employees from the lumber industry in the United Kingdom. As mentioned earlier, Aldi operates four hundred stores in the United Kingdom.

This points out that the company has a substantial amount of employees in the country. The company has attained most of its managerial employees from the Universities in the United Kingdom. The employees need to be maintained by the company through a better pay and other practices of performance management (NFU n.d).

Communities

Communities are another critical group of stakeholders in the company. The company draws its customers from the communities in areas where it has set its retail stores. It is argued that the only way through which a company can establish positive relationships and attachment to the community is by employing best practices in corporate social responsibility (Fassin 2009).

These entail the support of activities and functions within the community. It also involves engagement in sustainable management and environmental conservation. These practices make the communities to be drawn near the company. Aldi has a policy on corporate social responsibility, which helps it to establish and sustain relationships with the communities in the UK (NFU n.d).

Porter’s Five Forces Analysis of Aldi in the UK’s HSS Sector

The HSS sector is comprised of a substantial number of operators, thereby making the sector to be quite competitive. This implies that any company that aims at attaining a competitive position in the sector has to make efforts to understand the factors of competitiveness in the sector.

Though still faced with challenges that impede its competitiveness in the UK HSS sector, Aldi has been active in the sector and has managed to gain a substantive amount of customers due its mastery of the macro environment and the subsequent adoption of competitive practices.

Threat of new competition

One thing that is feared by business companies, yet the most critical determiner for their performance is competition. Firms are required to keep monitoring and assessing the developments in the industry in which they operate to gain knowledge on how to adjust their activities in the market. This ensures competitiveness in the market (Draganska & Klapper 2007).

The HSS in the UK retail industry is comprised of a number of companies that have operated in the industry for a relatively longer period of time. Such companies include Tesco, Sainsbury, Morrissonswhereas and Asda (Hall 2011). Aldi is not considered as a new entrant in the HSS of the UK since it has operated in the UK for more than 20 years.

The company has gained competitiveness in the industry through a strategic move, which made it venture into discount retailing. However, it has been noted that a substantial number of companies are opting to invest in the discount retailing in the future because of the developments in the current market (Brown 2013). This calls for Aldi to adjust its activities by making adjustments to the offers made to its customers.

This is the best way through which the company can maintain its customers. The advantage for Aldi is that it has already operated in the discounted retailing for an extended period of time, thereby attracting a substantial number of customers.

Threat of substitute products or services

When there are numerous companies operating in an industry, substitute products or services are used as differential factors for companies in the market (Lusch, Vargo & O’Brien 2007). The HSS industry in the UK has a high number of players who provide varied services to their customers. When a company uses the feature well, it easily gains a competitive advantage over other companies in the market.

Aldi provides a wide range of products and services to its customers, for instance the weekly price offers and the special buy deals. This enables the company to attract a wide range of customers in the UK retail market (International Markets Bureau 2011).

Bargaining power of customers

The customers purchase the products and services of firms, thereby enabling firms to sustain their operations in the market. The purchasing behaviour of customers is shaped by a number of factors.

Among these factors are the economic conditions and the offers that are made on purchases by the company. Brown (2013) observed that the current economic conditions in the world raised the conditions of living, forcing customers to cut down their expenditure on goods and services.

This means that the bargaining power of customers is low, and they prefer to purchase from retailers who help them save. Therefore, the offers on the prices of goods and services favour a substantial number of buyers. This is what has enhanced the performance of Aldi in the recent years of operation in the UK HSS sector (Hall 2011).

Bargaining power of suppliers

Grewal and Levy (2009) observed that each company seeks for suppliers who can ensure it gets quality products at competitive prices in order to draw profits from the supplies. Aldi offers its customers a wide range of products. This implies that the company has a large number of suppliers from which it gets the products.

The prices that are offered to the suppliers by the company are drawn from the industry since the company has to ensure that its customers get the goods at affordable prices. Therefore, Aldi has developed strong links with a number of suppliers, who offers them supplies at discounted prices.

This in turn enables the company to extend the discounts to their customers, which boosts their sales. In turn, this enables the company to get more supplies and benefit the suppliers (International Markets Bureau 2011).

Intensity of competitive rivalry

The intensity of competition in an industry is dictated by the number of active players in the industry and the nature of service offing to the customers by the players. The UK HSS has a number of well established companies like Sainsbury, Morrissonswhereas, Asda and Tesco. These companies are considered as the main competitors for Aldi in the sector (Hall 2011).

Their higher level of competitiveness resonates from the fact that they have been in operation in the country longer and have well expanded retail stores when compared to Aldi. However, Aldi has been strategic, a factor that enables the compact to ease the competitive pressures from the giant companies in the sector.

Aldi has managed to ease the competitive pressure by fully venturing into discount retailing. As of today, it is argued that Aldi is one of the leading companies in discounted retailing in the UK. The discount retailers have continued to mount pressure on large supermarkets across the UK (International Markets Bureau 2011).

Conclusion and recommendations

According to the findings of this paper, Aldi is one of the most competitive companies in the UK retailing industry. The company has managed to gain competitiveness through the deployment of a number of strategic moves, such as venturing into discounted retailing and higher diversification of the number and types of products. Therefore, the company has a high likelihood of continuing performing remarkably in the UK. This can be done through a number of practices.

Aldi needs to increase the diversity in its service offering in order to capture the diverse groups of customers in the UK. The number of discounted offers ought to be extended so that they can favour buyers from the middle class, as well as those from the high class.
At the same time, there is need for the company to start venturing into other sectors of the UK retail industry. This can be attained through research in order to enable the company to identify the best way to diversify its operating segments.
Future prospects point to the fact that customers prefer discounting as a way of saving. Therefore, Aldi can enhance its competitiveness by opening more discounted stores across the entire UK.

Presentation Speech

In this paper, I present a clear picture of the competitive position of Aldi by putting the company within the perspective of the HSS industry in the UK. The three issues in areas of analysis of the company that I have focused on are: The stakeholder analysis, the Porter’s five force analysis and the recommendations. The stakeholder analysis has focused on five main stakeholders.

These are: The government and regulators, suppliers, customers, employees, and the communities. The five forces analysis has explored the key areas of competitiveness of the company in the UK retail industry. From the discussion, I have derived three main recommendations for the company.

Reference List

Brown, J., 2013. ‘Every Lidl helps: bargain hunters flock to German masters of no-frills shopping’, The Independent. Web.

Draganska, M., & Klapper, D., 2007. ‘Retail environment and manufacturer competitive intensity’, Journal of Retailing, vol. 83 no. 2, pp. 183-198.

Fassin, Y., 2009. ‘The stakeholder model refined’, Journal of Business Ethics, vol. 84 no. 1, pp. 113-135.

Grewal, D. & Levy, M., 2009. ‘Emerging issues in retailing research’, Journal of Retailing, vol. 85 no. 4, pp. 522-526.

Hall, J., 2011. ‘Aldi and Lidl increase market shares as shoppers cut back’, The Telegraph. Web.

International Markets Bureau, 2011. The United Kingdom: A sophisticated retail sector. Web.

Lusch, R. F., Vargo, S. L. & O’Brien, M., 2007. ‘Competing through service: Insights from service-dominant logic’, Journal of Retailing, vol. 83 no. 1, pp. 5–18.

NFU. Review of grocery retailer CSR policies. Web.

Click Here To Order Now!