The Aldi Stores in the United Kingdom - Paper Example

2021-07-28 10:43:57
7 pages
1897 words
University of California, Santa Barbara
Type of paper: 
Research paper
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The Aldi Stores in the United Kingdom refers to a chain of food products outlets that are known for their comparative value for money and quality products

Aldi stores fall in the retail food industry which is a highly competitive industry. To outshine others you ought to understand what the customers want. Aldi understands that the customers want value for money without the compromise of quality. Since it opened its first store in 1913, it has been using a lean approach in all its business operation. It aims at offering their customers with high-quality products at a relatively competitive price. So far it has more than 7,000 outlets worldwide; this has been possible due to the use of available internal resources and capabilities that gives it a competitive advantage.

To begin with is efficiency. Efficiency is the relationship between the inputs and the corresponding outputs. Aldi, enhances proper time management thus saving time, saving energy and efforts, this enables the store to minimize cost. Most food retailers run promotions and additional services that they use to draw the customers, Aldi core purpose is to ensure that customers get value and quality by being efficient and fair. This store constantly improves their service delivery, thus improving its set business objectives.

Secondly is lean production, it aims at getting more for less. The lean production aims to reduce costs by eliminating waste and therefore use fewer materials, space, time and labor. Additionally it ensures that the savings made are passed down to the customers thus increasing their value for money. Some concepts form the basis for lean production; continuous improvement in Aldi store the employees are involved in the improvement process, also they ensure they produce the need at that time and thus maintenance of low stock. It employs multiskilled and flexible workforce thus reduction in time wasted.

Thirdly, simplicity, responsibility and consistency are some of the core values of this store. Aldi stores are very similar and they are thus consistent, they are also simple in design. The aspect of responsibility is very vital in the running of this particular store, from induction of employees and developing them to actively engaging them in the supply chain, thus ensuring that an international influence in the food industry.

The other concept that enables Aldi to stand out is, the creation of business relationships with its suppliers, this helps in continuous improvement of products offered. They also ensure that their suppliers meet international standards. The labeling is done thus the customers can make the right choices and from a wide scope.

In conclusion, Aldi can achieve its competitive advantage over the other retail firms through its distinctive approach to retailing, and thus customers are offered with quality products at the lowest possible price.

The external business environment constitutes of two elements; the macro environment which takes into consideration the environment the business is operating on and the micro that emphasizes the specific industry. Some of the external facts that affect the entrepreneurial of Aldi include but not limited to the following.

First, the political environment of a country can either have positive or negative implications for the industry. A new government may choose some of the existing legislation like tax implications and the market conditions. The new governance can either favor the entrepreneurial activities leading to high productivity or affect the businesses negatively leading to closure and withdrawal of entrepreneurs.

Secondly, we have the economic environment another key driver of change. As an economy leaves recession, expectations are that there could be a shift in the buying behavior. Customer may shift from low cost and back to the mainstream outlet. This change can adversely affect the market share. During financial constraints, customers turn to the outlets offering consumable goods at a fairer price thus Aldi stores and thus the high rate of growth. Aldi has tuned its supply chain finely with focus on distribution and logistical capability and thus becoming the leading outlet as most consumers prefer lower levels of service and choice as long as the price is favorable.

Thirdly we have the social environment. As the economy rises the food outlet that offers low prices on products and services like Aldi stores may be faced with stigma as people may want to shop at relatively expensive outlets. Also, the competing outlets like Tesco, Asda are introducing a diverse range of goods and services by introducing products like clothing, late night chemists, optical, nonfood items which would result in a change in customer behavior. Aldi must know how to handle the expected changes to maintain its customer base. The UK population mainly constitutes of an aging population, which is more costly to handle as they are prone to diseases. Competitors are also offering a full-time service to their customers and thus customers are being attracted to these competitors as there is assurance of service at any given time, Aldi may be required to put this into operation to maintain its market share, although this will to an increase in costs. Busy family life benefits from the operation from a narrower range of product, through streamlined shopping experience as it is quicker and more focused.

The other aspect is the technological environment. Most of the industries have introduced the online and mobile shopping strategy to their customers, currently this has no.t been offered at Aldi, they may be required to consider this enhance it with other technologies that are available in the market. Technological structures are also key drivers to change, they play a key role in the supply chain management of the business. The customer experience needs continuous improvement at the point of sale systems and checkouts that are replacing the outdated traditional conveyer belt where there are no options for the customers.

Impact of competitive forces that are influencing entrepreneurial activities. The aim of strategy formulation is trying to cope with competition. Depending on the industry, buyers, suppliers, potential entrants, and substitute products are all competitors that may be more or less prominent or active. In the fight of the market, competition is not only manifested in the other players. But, it is rooted in its underlying economics, and competitive forces exist that go well beyond the establishment

The nature of competition in an industry depends on five basic forces

The threat of new entrants in the industry leading to comp. A new entrant in the industry brings new. Capacity and desire to gain market share, and substantial resources. Less competitive and increases profit for the existing competitor. An entrant is being forced either to come in on a large scale or to cater cost disadvantage. For a product to have a different brand, an entrant will be forced to spend much to overcome customer loyalty and to advertise a new product. A new entrant must, of course, secure distribution of its product or service. The more limited channels are, the more that existing competitors will tie the products or services up and that will make it tough to enter the industry. The barrier is so high sometimes that, to surmount it, a new entrant must create its distribution channels.

Introduction of substitute products or services in the industry may be adverse the existing product negatively. A substitute product is that performs the same or similar function as another. Sometimes these products or services can limit the potential of an industry. Unless there is a quality upgrade or differentiate it somehow, the industry will have low earnings and possibly in growth. For example, if a company ranks high in a specific industry is unthreatened by potential products, it will have low returns if it faces a higher or a lower cost substitute products. In such a situation, it is advised to give a number one strategic priority to cope with the substitute product.

Jockeying for composition among the current competitors, this is when the current competitors compete in price, product introduction, and advertising of products or services. It occurs when competitors are numerous or are roughly equal in size and power. The competing outlets are roughly equal in size and power or are numerous. It is also when the industry growth is slow, that makes the competitors be expansion-minded members.

Bargaining power of suppliers. It refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing the availability of their products. A strong supplier can ensure that the industry is more competitive and this may lead to a decrease in profit potential of the industry as opposed to a lesser bargaining supplier. These powerful suppliers can squeeze profitability out of an industry that will make it unable to recover cost increases in its prices.

Bargaining power of a buyer. It refers to the pressure customers can exert on businesses to get them to provide a higher quality of products, lower prices and better customer service. The bargaining power of buyers in the industry analysis is evident from the perspective of the seller.

Customers sometimes force down prices, demanding of higher quality or more service, and play competitors off against each otherall at the expense of industry profits.

Strategic options

While choosing a supplier to buy from or buyer groups to sell to, the strategic posture of a company can improve by finding suppliers or buyers who perform poorer than them to influence it adversely. So it should be viewed as a crucial decision. An organization should be able to choose from whom it will sell to or buy. An organization can sell to powerful buyers and still come away with high profit only if it has a low-cost to everyone is self-defeating because the more sales it achieves, the more vulnerable it becomes. It has to muster the courage to turn away business and sell only to less potent customers.

In an organization, the creation of buyer and supplier power, as a result of a companys strategic decisions changes with time, naturally the power of these groups rise or decline. An organization should focus on the segments of the product industry where there is product differentiation, minimize the threat of backward integration, and mitigate the awesome power of their customers

Also it is good for an organization to cater for employee workforce. The management should determine whether the employees have the required knowledge or skills.

Aldi store Uk is a food organization. For it to succeed, it has their chain of suppliers for raw materials. Considerations for materials are the implications of the relationship with suppliers, potential backward integration and the risk of forwarding integration by suppliers. They always look for a low-cost producer with quality materials for production. The low-cost supplier may have low-quality materials which will lead to bad products or services. Aldi Store Uk compares the price of their suppliers and also the source. At production stage, if there is a new model or design in the market, the organization always determine whether an employee has the required knowledge or skills needed. If not it compare whether to recruits a trained one or train the existing one, time and money matters in this. Due to economic reasons, the organization was not able to recruit the production personnel so the existing had to be trained

Aldi store is a profitable organization, and if training is costing much is preference is put on recruiting trained ones for a healthy and satisfactory production. The effect on the production of existing items...

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