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PM106 Business Strategy t Level 5 Plymouth University

Answer :

INTRODUCTION

The term business strategy refers to plans and procedures of firms to achieve its objectives in a sustainable manner thereby making profits and enhancing scale of operations. Strategic planning is a concept of business which is related with those activities which strengthen business operations and help in controlling its activities. It includes planning for strategies for the organisation and involves continuous process done by managers. Every organization thus needs to plan strategies in order to attain competitive advantage.

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Aldi is one of the leading discount supermarket chains based in Germany, founded by two brothers, Karl and Theo Albrecht with around 10000 stores globally. The company earned a revenue of €53 billion in the year 2010. Such a big supermarket store needs to plan its strategies so as to perform well in the long run making profits for their shareholders. Thus, Aldi needs to manage its stores thereby planning and formulating business strategies which will be covered in the report.

PART 1: EVALUATING THE STRATEGY

a) Impact of mission, vision, objectives, goals and core competencies on Aldi's strategic planning

Strategic planning is an essential part of an organization which involves formulating plans so as to achieve organizational objectives and goals (Schot and Geels, 2008). It involves strategic decisions as well as resources required to formulate plans to achieve competitive advantage. Aldi uses a variety of strategic programs so as to compete with others and thereby making profits. These incorporates its mission, vision, goals and core strategies.

Mission - A mission statement of Aldi reflects its main purpose of operations which gives people an insight about its existence. It helps in meeting the ends with set standards and analysing market size (Malhotra, 2015). Company focuses on success and the growth by building efficiency at each step whether construction or distribution.

Vision - It is something which provides a long term aspect about an organization. Aldi's vision about future motivated its employees and stakeholders by maintaining cordial relations and through working in harmony. Aldi being a discounted supermarket has a vision of providing great quality products at lower prices (Huang, 2009).

Goals - This refers to the end perspective of any organization which directs towards generation of profits (Luan and Sudhir, 2010). Aldi has set goals for both short and long time periods which everyone needs to fulfil thereby meeting standards and correcting deviations. This not only accomplishes tasks but improves enhances the performance of stores as well.

Core Competencies - These are the objectives which organizations set up to achieve competitive advantage over competitors. These strategies make a distinction in between two homogeneous companies. Aldi has many competitors serving grocery products all over the globe but it has a distinct competency of selling discounted quality products which makes it different from others (Huang, 2009).

All these processes help in planning strategy for business and thus, helps in achieving targets for company. Aldi has a set of business mission and vision for its stakeholders to view and follow the same and thereby undertaking operations. The goals and objectives of the company help employees to move in a particular direction for enhancing performance.

b) Various factors for formulating strategic plans for Aldi

The proper management of financial, human and technological resources is based on strategic plans developed at initial stage. Strategic business plans are essential to forecast the future and take actions according to that (Jenyo and Soyoye, 2015). Aldi incorporates various factors so as to enhance strategic planning which is essential to attain the set targets. Factors to be kept in mind while formulating strategies are:

People - They play a key role in determining strategies as well as its implementation. Right number of people are necessary to achieve the targets (Luan and Sudhir, 2010). Aldi has a critical setup for determining right people for the right post and fill in the vacant position either internally or externally so as to enhance operations thereby providing training and development facilities.

Resources - Allocation of resources in a sustainable manner is an essential strategy that every organization needs to design. Aldi undergoes a statistical financial planning for procuring resources and its allocation to various departments in order to attain the end goals. Time being an essential resource at Aldi is planned and managed in a strategic way (Jenyo and Soyoye, 2015).

Culture - Aldi constitutes a culture of harmony where everyone with diverse group or society work towards attaining common objective. This helps in making employees feel comfortable thereby bringing necessary changes and implementing business strategy seemingly. Such a culture at Aldi helps workers to take up actions and accountability for their work to increase productivity.

Structure - Aldi has clear and concise structure with defined lines of authority and responsibility. Each person has a stipulated supervisor which he or she needs to report in a formal manner (Huang, 2009). Such a hierarchical structure is followed at Aldi so as to carry out operations in a defined way. Managers at Aldi are ensuring clear lines of communication so that strategies will be formulated and implemented in a correct way.

Systems - Aldi has predefined systems and processes to manage work and obtain output. Each project is completed on the priority basis thereby ensuring commitment and involvement of employees (Luan and Sudhir, 2010).

c) Techniques used to evaluate Aldi's strategic plans and procedures.

The Boston Consultancy Growth Share Matrix is a tool for analysing business strategy in order to achieve sustainable competitive advantage. It assesses a product or business in two categories mainly the relative market share which the new product or business firm will have in compliance with others and market growth potential that they would grab with time (Huang, 2009). Aldi uses BCG matrix technique to assess and evaluate its position in the market. The four components of BCG matrix are:

Question mark - It implies the way in which business will perform in the market. It is also known as problem child with high growth and low market share. Aldi since its inception was a part of Question mark category as it is building its operations and basis of performance in the market amongst competitors. It is the growing stage which takes a lot of liquidity and thereby, capturing cash resources of firm (Malhotra, 2015).

Star – Today, with the growing demand and structure, Aldi is a part of the star box category of the BCG matrix. This part of matrix has a high growth rate as well as high market share which helps business firms to enhance their operations and productions as this stage will generate profits (Schot and Geels, 2008). This stage provided Aldi a competitive advantage as people are recognizing the brand and more innovation of products was incorporated. Aldi in the long run may take the position of Cash cows (Huang, 2009).

Cash Cows - The cash cows represent high market share thereby generating profits but a relative low growth. At this stage, Aldi generates ample amount of funds which could be used to invest in new projects or rebuilding and renovating older projects.

Dogs - These are the projects that business needs to disinvest in as they generate low profits with low market share and growth (Malhotra, 2015). Aldi has to look into the segment of its products and quickly takes an action on stopping its production so as to give proper assistance to other products and services thereby maintaining competitive

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