Write a strategic analysis report.
The strategic analysis will be on a local company. The report consists of two parts and should cover the following requirements:
PART 1 (External analysis)
1. Business background
2. What industry is it?
3. General environment analysis (economic, physical, social cultural, global, technological, political/legal and demographic – and work out what the important facts are).
4. The industry environment ((i.e., supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each).
5. Competitive environment (Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?)
6. Opportunities and threats
PART 2 (Internal analysis and proposal)
1. The firm’s resources, tangible and intangible
2. Capabilities identification (explain the capabilities carefully to indicate what the firm really does.)
3. Core competency analysis (For each capability, indicate which of the four tests for a core competency it meets).
4. Propose a suitable information system solution that meets the chosen company needs.
5. Evaluate the proposed system and provide your recommendations
Part 1 (External Analysis)
Aldi is a discount supermarket chain founded by two brother named as Theo and Karl Albrecht. It has 1000 stores in 20 countries. It has opened its first store in Australia in 2001. It is the no. 1 fast growing retail outlet of the country. It is retail industry that is operating as an “everyday low prices” store. It offers various discounts such as buy one get one free so that customers keep shopping from their supermarket (Aldi, 2014). The vision statement of the Aldi for Australia is that it wants to enable the citizens to shop the best quality product in lower prices. In order to succeed in the market, it is required by the company to have sufficient number of resources and capabilities. In this report, the resources and capabilities of Aldi is discussed in the report. In the current business environment, companies are required to communicate continuously with its employees, suppliers and customers, further in the report, a discussion is carried on the suitable information system that Aldi can use.
General Environmental analysis
- Political factor- in the political condition, government plays an important role by influencing the businesses by bringing the changes in taxation policies, rules, and regulation in conducting the business. Report based on Australian political condition states that Australia is world’s most political stable country with low corruption, easy of doing business as well greater government support (HABC, 2018). Government of Australia has adopted a policy in order to remove the trade protectionism and bringing the open trade in the business environment of Australia (Roy Morgan, 2015). Because of open trade, if any firm will come up with new approach, it will affect the growth of Aldi. Besides this, due to the stable political condition of Austral
ia, firms do business without any political disturbance.
- Economic factor- economic factor includes the GDP rate, inflation rate of any country. As per the reserve bank of the Australia, GDP rate of Australia will increase in the upcoming year. Due to the positive GDP condition, Aldi can benefit from the Australia in the coming years. As per the report published by Australian business council, Australia is developed, modern, democratic and stable that encourages more foreign investment in the country. Due to this, Aldi business can affect in future (HABC, 2018).
- Social factors- social condition of any country can affect the company in positive as well negative way. In recent era, Aldi is the most growing supermarket of Australia by giving employment to more and more people in Australia. By providing higher wages to its employees, the living standard of those is increasing (The Conversation, 2017). Besides this, the growing population of Australia mostly prefer doing shopping under one roof or doing online shopping. In this case, Aldi supermarket provides benefit to them by providing both the facility. For this, Aldi digital marketing strategy proves to be fruitful.
- Technological factor- it is founded that the people of Australia want convenient and high technology while shopping. Therefore, to enhance the experience of customers, it has done technological innovation (Sampson, 2014). In the report, it is founded that the growing concern for online shopping will increase the sales of supermarket in future which will prove to be fruitful for Aldi.
- Demographic and physical factor- the population of Australia is continuously growing and expected to increase in near future. Due to the growing population, the demand for furniture and kitchenware will increase that in turn positively affect the Aldi (Australian Government, 2018). In order to save and protect the environment, Australian government has made code standard for packaging system (Nielsen and Skaggs, 2017). As per the law made by Australian government, Aldi offer those bags that are not for single use. Besides it, Aldi recycle the waste that is generated from it.
Porters five forces of Aldi (Australia)
Bargaining power of buyers
The bargaining power of buyers in Aldi is more due to the low switching cost. Customers of Aldi can move to other supermarkets like Asda, Tesco, and Londis. Customers have various choices available in the market due to which they can shift to another shopping market if it even makes slight increment in the prices.
Bargaining power of suppliers
Bargaining power of suppliers is less in Aldi as there are many suppliers available in retain industry of Australia. The suppliers of Aldi fear in losing the contract with the biggest supermarket. Due to the low bargaining power of supplier, it gets various products in lower prices that in turn improve the profit margin of Aldi.
Threat of substitutes
The threat of substitute for food product in Aldi is very low. Aldi put high concern of its competitors by identifying the switching cost of other products in the market. Due to low switching cost, Aldi offers best quality products at lower prices.
Threat of new entrants
New entrants in food industry bring modernisation, new methods of doing things. All these things put pressure on Aldi even it is low price supermarket. Due to these challenges, Aldi is providing various discounts to its customers by offering variety of products.
There are different other companies who are the competitors of Aldi. These companies also provide different products under one roof as well as low prices like Aldi. In this way, threat of competitive rivalry is high in Aldi.
Aldi is facing competition from Woolworths and Coles in Australia. Woolworths followed a strategy to build a multi optional store in terms of good quality product with low price (Berman, 2015). In order to win over Aldi, Woolworths announced pricing strategy in which it will offer best quality products at lower prices and it is planning to start its new stores so that customers get attracted. Besides both these competitors, Kaufland, German retailer is planning to launch its best discount supermarket in Australia. Form a report, it is founded that Kaufland will put the direct competition on Aldi’s by setting its prices in a careful manner (Elmas, 2018).
Opportunities and threats
As the needs of customers is growing day by day. The propensity of consumers recent days is high due to which they are willing to pay higher prices for those product which best satisfy their demand. In this, Aldi can charge higher prices by offering the best quality products in their supermarket. By offering niche products to the Australian consumers, it can add more revenue.
Besides these opportunities, Aldi have to face lot of competition from various players such as best buy and Walmart. Additionally, Amazon is the biggest threat to Aldi by offering the products online.
Part 2 (internal analysis)
Aldi tangible and intangible resources
- Human resource- Aldi does not have any separate department for human resources. It pays the above wages to its manager as well better incentives to outs staff members. the major tangible resource of Aldi is its employees and it contributes the success of supermarket to its employees. Besides this, it is the first retailer who has provided maternity leaves to its employees. Aldi provides the various benefits to its employees such as chairs to the assistant who all are placed at the counter for checkout. All these things show that employees are the valuable assets of Aldi. It invests huge amount of money on the training of its employees.
- Financial resources- the financial resources of Aldi are so strong due to which it enjoys the great reputation in the market. It does not take any loan from bank that helps it in achieving the growth every year (Aldi, 2018).
- Technology- Aldi has various innovative technologies that it uses in the supermarket. Besides this, it has started online delivery service in order to cope up with the need of customers. Through this technology, home delivery services are provided to customers.it has expended its services by keeping the innovative technologies in their supermarket. The innovative services of Aldi provide the competitive advantage to the company.
- Reputation and goodwill- Aldi has strong base in Australian market that proves to be a strong intangible resource for the company. Due to its better goodwill in the market, it is able to achieve the high growth in the market.
- Brand image- In Australia, Aldi has better brand image that helps it in increasing its market base. Any firm’s brand image is its most resource. Aldi has huge customer base due to its brand image that in turn is the most important asset of Aldi.
Core competencies of Aldi
There are four tests to identify the core competencies of any organisation. As there is too much competition prevailing in food industry. In this case, organisations are required to offer customers value for money. In today’s business environment, customers want the best quality at lower prices that only fewer firms achieve success in providing. Aldi understand the approach of customers by providing them value for money (Reynolds, 2014). This fulfils the first tests of core competencies that is providing the significant value. The core competency of Aldi is its efficiency. The business of Aldi operates efficiently by reducing the cost in all areas of business. This aspect of Aldi fulfils the second test that is allowing to increase market share.
Besides it, the major core competency of Aldi is its prices. This fulfils the third taste by providing the competitive advantage to the firm. In order to provide the best quality products at lower prices, Aldi has adopted cost leadership strategy. The leadership status of the Aldi is due to its prices that Aldi offers to its customers. It keeps stock of limited goods but they are of high quality (Basy, 2018). This fulfils the fourth test of core competency that provides the competitors to imitate its policy. The main competency of Aldi is that it focuses only on its own so to remain independent.
Capabilities analysis of Aldi
The financial resources of Aldi are strong, as it does not take loan from any banks. Due to its strong financial resources, their sale increases every year. Customer mostly prefers shopping from there because it offers best quality products at lower prices. Besides it, all the resources of Aldi go first in department of quality management so that it ensures the best quality products to its customers. In addition, Aldi does management of inventory effectively. Whenever suppliers precede the inventory in Aldi’s department, it is sent to the proper warehouse so that proper quality can be maintained.
Suitable information system that meets the need of company
Information systems play an important role in the retail industry. Aldi can use the transaction information system to collect, store, process, cancel or modify the transaction. All the data in this system will store the databases that sometimes can use to produce the reports such as wages, inventory summaries, billing, checking registers. These systems make the best possible use of technology as well as manage the continuous flow of information in various departments.
- For customers- Aldi can use “point-of-sale terminal” in order to set the accounts of customers. Customer relationship management can help the company to influence the relation with customer that is the key success of nay retail store. It can use those customers’ data that are most familiar with the store and Aldi can offer them marketing promotion that will improve the customer experience (Davoren, 2018).
- For suppliers- Aldi can keep the regular flow of information by linking the stores computer with the key suppliers so that information can be reach in less time. This will help the Aldi to allow vendors to submit the orders of shipping after the fulfilment of order. This will assist the company to get the information from the vendor directly on their respective computer system (Davoren, 2018).
- For internal communication- management information system provides the various benefits to communicate internally. It can program store computers to display the daily messages and can add suggestion box in which important information related to their working will be display. Using this system, it can communicate with the employees through email. This will facilitate the quick transfer of information to various people at one time. Besides it, Aldi can do online training sessions for employees to train them (Davoren, 2018).
Evaluation of these systems and recommendations
The above mentioned information systems can result in continuous and quick flow of information among employees, suppliers and customers. In order to manage the inventory and keep the customers updated, the management information system will help the Aldi to improve its processes. The growing customers need require the Aldi to manage the inventory time-to-time. In this way, continuous dealing with suppliers is must in order to satisfy the customers. The management information system will keep the Aldi to keep the continuous with suppliers.
It is recommended that besides using the information system for customers, employees and suppliers, it should appoint an expert to do the time-time-time research regarding the changes that are occurring and that might occur. Besides this, Aldi can use support system for decision by working and analysing the data that will further generate the data and statistics. This will help in improving the quality of manager to take decisions.
From the above report, it can be concluded that Aldi is fast growing supermarket chain of Australia. Due to its better quality product at lower price, it is best and largest supermarket with highest market share. Despite of its best strategies, the threat of switching of customer toward another supermarket is high. It is facing huge competition from Woolworths and Wesfarmers due to their various competitive advantages. The main advantage of company is its strong financial position and best inventory management. It has sufficient tangible and intangible resources that lead the company to enjoy its growth. Aldi can use various information system in order to do the continues communication with its employees, customers and supplier.
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