MSc Management Assignment Sample 2022
Introduction
Business strategy is essential for a company in dealing with the issues and challenges (Schmidet. al. 2018).Consultancy report is about understanding the client’s challenges and providing efficient solutions to them. The context of this consultancy report is concerned with evaluating the challenges faced by Aldi. This supermarket is the brand of two German-owned family discount supermarket chains having ten thousand stores in twenty nations. The founders of Aldi are Karl and Theo Albrecht. It is headquartered in Germany. The focus of Aldi strategy is on delivering high-quality products at reasonable prices. The three core elements of Aldi’s business strategy are responsibility, simplicity, and consistency (Djankov, 2016).The company has a distinctive approach to retailing. The operational emphasis of this grocery store chain is on delivering quality products that have value for money.
Overall, the report identifies and analyses the problems and challenges faced by Aldi in relation to current affairs. The issues have been elaborated as the strengthening position of Tesco, inappropriate store size of Tesco, and inadequate stock management. These significant problems affect the company’s overall brand image and competitiveness in the industry. This report provides an efficient value to the company in dealing with the existing issues.
The report is well-structured and categorized into different sections. The first section is about discussing and provides a brief evaluation of the challenges faced by the supermarket organization. Three main issues have been described in this section following the current affairs. Another area enlightens the purpose of the report. It mentions the reason for identifying the issue and their possible recommendations on benefiting the Aldi stores.
Further, in the segment of research on stakeholders, the impact of these issues on the internal and external stakeholders has been explained. In addition to this, the report also encompasses a critical evaluation of the secondary data in purpose to the information. The last part is about recommendations and suggestions for the identified issues of Aldi.
Challenges/problems Aldi is facing
Aldi is facing several issues restricting its growth and development in the industry (Polonsky and Waller, 2018). The company operates in the retail sector and thus faces stiff competition with different supermarkets and retailers. The biggest issue is the size of the store. The biggest asset of any budget Supermarket is the size of the premise or store. It becomes quick and easy for the consumers to buy as they have easy accessibility for every product.
On the other hand, Aldi is facing the issue of short premises and store size, and due to this, they can only pass a product only once. Also, if the customer is indecisive in the Purchase Decision, the Aldi Store does not offer any other opportunity to buy it through promotions. This is the reason that they do have not the available shelf space. As per the current scenario, the customers want a good area for moving around, and they require various products. Customers nowadays prefer to visit a place with more shelf space and provide multiple products (Martinsuoet. al. 2019). The availability of different products helps the customers in purchasing more and thus gaining numerous discounts and other cashback.
Another issue is the continuously increasing intense competition in the industry. The large retail chains worldwide are dominating the supermarkets. The shaky market positioning of Tesco has proved advantageous for Aldi. The Tesco scandal has deteriorated its condition and performance in the market. It became an advantage for other retail chains, including Aldi. However, Aldi has shown a sign of recovery in the past few months. The positioning of Tesco is limiting the growth of Aldi. The excellent store location of Tesco makes it convenient for the customers to purchase the products. Location is the crucial element and factor for the customers (Ellickson, 2016).From the consultant’s perspective, this creates an obstacle to Aldi’s expansion. The company is facing this issue due to improper strategic application and monitoring of the company’s activities.
Another major challenge that Aldi is facing is stocking setbacks. Some Aldi stores are struggling with stock. It has been evaluated that Aldi only orders more stock when needed. The setbacks in the Aldi store are becoming an issue. This can be for several reasons, including a just-in-time approach for stock management. The supermarket has adopted a philosophy of business process improvement (Thomassenet. al. 2017). Thus, the customers of Aldi are facing an issue of stock shortage and unavailability. Due to this cause, in the year 2020, the company had to put customer limits on specific items as they were facing shortages(Maxwell, 2020).
The customers were disappointed with the empty shelves and lack of featured items.They have their Expectations regarding product availability, which makes them dissatisfied with the unavailability of the essential things (Woo, 2018). Thus, it can be said that supply chain management and inventory management is also an issue for the company. Concerning current affairs, customers have numerous choices available in the retail industry, and such acts can disappoint the customers.
Purpose of the report
This consultancy report aims to understand the challenges and main issues for Aldi in the UK. The information will also recommend how Aldi would improve and resolve the significant problems of product unavailability and competition. Examination of these issues will prove helpful for Aldi, as it will be able to implement the suggestions and modify the business strategies accordingly. In addition to this, the supermarket will benefit as resolving the problems will contribute to the growth and success of the company (Lan and Dobson, 2017).Thus, it assesses the challenges of inadequate store size, competition with Tesco, and inefficient supply chain. Therefore, the critical purpose is to evaluate the issues and suggest appropriate strategies to resolve the problems.
Impact of research on stakeholders
Stakeholders are the key people who have concerns or interests in the business or company (de Waal et. al. 2017).The stakeholders get influenced by the company’s actions, policies, and objectives. In relation to the context of Aldi, stakeholders play a crucial role. As per the stakeholder’s matrix, the internal stakeholders of Aldi are employees, investors, managers, and investors. On the other side, the external stakeholders are customers, suppliers, government, competitors and society.
This project is concerned with various internal and external stakeholders.Every stakeholder creates a significant impact on the company’s brand image, and these stakeholders also get affected by the company’s actions and policies.
Figure 1: Mendelow’s stakeholder matrix
Source: (BizzleDizzle.com, 2021)
For instance, considering employees due to the inefficient stock management system and supply chain activities, the human resource gets irritated. They face difficulties in managing the order and stock (Tench and Topić, 2017).Employees are the crucial internal stakeholders, and their interaction and involvement in the company are essential. As per the above matrix, the employees have the high power and high interest in the success of the company. This is possible by streamlining the workflows and creating ease in the overall operations. Employees of Aldi play a crucial role in the growth of the company. Thus, they must be provided with various equipment, and the company should involve them while drafting strategy. Hence, it can be said that the analysis of the issues will guide the employees and create a positive impact on them.
It is significant to keep the customers informed as they have high interest in the company’s offerings.Further, as the size of the supermarket is relatively small and jammed, this irritates the customers. They feel problematic moving around and gettinglarge varieties of products and other goods (Davies et. al. 2017).They are not getting sortsdue to lack of space within the store.A good ambience is crucial for a positive shopping experience, and the company lacks this, which creates an ineffective impact on the customers and their satisfaction. Furthermore, it has been identified from the issues as mentioned earlier that customers are also dissatisfied with the unavailability of the required products.Customer dissatisfaction can result in a loss of revenue.
The competitors are the external stakeholders of Aldi as they have high power and low interest in the company, and they can gain the advantage of these weaknesses of the company (Benetton, 2017).For instance, Tesco supermarket is improving its position in the market, and this is one of the biggest competitors of Aldi in the Retail Industry. With the easy accessibility and convenience of the Tesco stores, Aldi can face difficulty sustaining long-term and generating more revenue.The Aldi’s stores inadequate stock availability and dissatisfied customers can make it Complex and challenging for the company to create a competitive profile in the industry.
Another stakeholder analysis can be done of the investors or shareholders.They have a keen interest in the company’s activities, holds a strong power as the functions of the company affects revenue and profit margin(Woo and Lee, 2018).Investors believe that the company will perform best and derive an excellent financial figure.Such actions and issues of the company can hamper the overall brand image of the supermarket in the industry, which will derive an adverse impact on the financial performance.When the brand image of Aldi gets improved, it will be beneficial for the investors. The company can attain more revenue and thus will be able to compete with the giant rivals in the industry, including Tesco.
In the context of suppliers, it has been assessed that the company uses the JIT inventory management approach. In addition to this, these stakeholders have low power as well as low interest in the company’s activities in the context of Aldi.In this system, maintaining an efficient relationship with the suppliers is essential (Beaton-Wells and Paul-Taylor, 2017). The company can make a strong bond and relationship with the suppliers to ensure timely delivery of the products. In addition to this, the managers and leaders of the Aldi stores also have vital interests in the company activities. Their role and value in the company management and issue relevance are prominent. This assessment will also influence the working operations and alertness of the control of the retail organization.
Evaluation and analysis with secondary data
As evaluated from the analysis of the above section, the cited grocery chain is facing stiff competition and other weaknesses. Due to these challenges, the company faces low revenue compared to the rivals and impacts the stakeholders. As per the views of Keogh (2016), the UK grocery market has become intensely competitive in the past years. These can be Tesco, Sainsbury or Aldi. In this regard, it is suitable for consumers, as they are getting products with lower prices and discounts as these stores are trying to enlarge the market share.
To assess the problems and challenges within Aldi, a SWOT analysis can be conducted. The strengths of Aldi are its low prices and good product mix. Also, the company’s brand reputation and long-lasting supplier relationships are its most excellent capability. On the other hand, Aldi’s weak points are poor employee satisfaction and low margins. Following the opportunities, the company is available with numerous expansion opportunities (Walthew, 2016). Aldi can expand to the UK as well as different emerging economies with varying strategies of entry including Greenfield investment, strategic alliances, or franchisee (Argentesi et. al. 2021).In addition to this, the significant threats and challenges of this business organization are intense competition and changing customer demands. In brief, the SWOT analysis of Aldi is presented below:
Figure 1: SWOT analysis of Aldi
(Source: Self-made, 2022)
Also, as per the website of Aldi, its store size is around 16,400 square feet with 10,000 square feet of selling floor (Stern, 2020).
Figure 1: Grocery market share in Great Britain 2017-2021
(Source: Statista, 2021)
The above figure depicts the market share of various supermarkets and grocery retailers. This is from January 2017 to May 2021. At the pandemic or coronavirus outbreak, Iceland, Symbols & Independents, and other outlets managed to enhance their share in the market. On the other hand, Asda had lost a percentage of its market share from March 2020. Tesco and Sainsbury are top and have the largest share (Basker, 2016). They held around 42.3% of the market together as of May 2021.
Further, in March 2019, the shares of Asda surpassed Sainsbury, which can recover the second position in the following month. It is worth stating in this context that before the popularity of the discounters, the grocery market within the nation was highly dominated by the four supermarkets. These four are Morison’s, Tesco, Sainsbury, and Asda.
With the uncertainties in the market and growing inflation, the consumers shifted to cheap products offered by Lidl and Aldi. In this context, Argentesiet. al. (2021) suggests that this price war has stressed the supermarkets to lower their prices. Further, this caused volatility in the retail market and till the end of January 2017, Aldi managed to become the fifth largest supermarket in the United Kingdom. Moreover, after a cut-throat competition, Lidl overtook Waitrose and is likely to surpass the cooperative in the upcoming years.
Further, to make the competition within the UK of Aldi with its competitors quite elaborative, below are some graphs presented.
Figure 2: Financial metrics
(Source: Craft, 2021)
It has been assessed that due to the concept and need of social distancing, the larger stores are in benefit. Aguirregabiria and Suzuki (2016) state that the stores’ larger space makes it easy to maintain social distancing. The two biggest supermarkets of the United Kingdom, Including Sainsbury and Tesco, have increased the sales volume faster than the discounter Aldi.This is for the first time in the decade because of the pandemic, which has led people to shop every week and more to rely on online ordering.
The sales of Tesco have increased to 11.7% in the 12 weeks to May 2016.On the other hand, Sainsbury sales have been Rose to 11% year on year (Financial Times, 2021). Comparatively, the sales at Aldi Rose to 10.1% are relatively less than the two Supermarket Giants operating within the UK.Due to the pandemic,people within the United Kingdom have lowered down their visits to the stores also due to the small store size of Aldi.Its sales were impacted as people would fear entering into a crowded area with smaller space.
Ellicksonet. al. (2020) opines that the consumers are trying to avoid exposure in crowded areas, thus limiting the stores’ footfall. Sainsbury and Tesco have demonstrated and boosted their capability to expand the click and collect operations and home delivery. These tactics have helped the supermarkets to increase their number of orders (Pires and Trindade, 2018). Aldi has also recently started a trial at some stores where the staff picks online Orders and takes the delivery to the customers.
As per the views of Chao (2018), the success of the retail chain is highly dependent on the efficient supply chain. Further, Ellicksonet al. (2020) elaborated that customers now demand higher quality products with lower prices. Thus, the companies are required to adopt a suitable and effective supply chain.
Again, Tesco is one of the largest retailers in the world, having significant buying power (Corfe and Gicheva, 2017). Tesco is considered a market leader and is generally seen as offering a wide range of products at relatively lower prices. On the other side, the German retailer; Aldi is significantly smaller in size, and its growth strategy impacts the country’s retail segment.
The case of the customer of Aldi can be discussed in this regard. The customer stated that he had experiencedempty spaces at the Aldi store. Therefore, he had to repurchase the same things due to a lack of variety. He further stated that he went to the Aldi store on Monday and did not find the required products.
The product recall of Aldi is also an example of why the companies need to Foster a relationship with the supply chain. In the past few years, discounters, including Aldi, have shaken up the supermarket in the history of Britain. The supermarket has challenged the dominance of the big 4 (das Nair, 2020).OnceAldi was forced to recall various sweets, biscuits, and snacks made by the supplier based on Middlesbrough.The reason forrecalling has been identified that the food has been manufactured in unhygienic conditions.
Such a supermarket incident demonstrates the significance of an effective supplier relationship.The company has somehow managed to maintain this relationship, affecting its overall brand reputation (Ellicksonet. al. 2016).This creates an adverse impact on the stakeholders and mainly customers.Considering this product recalling the example of Aldi, it can be said that the company needs to adopt an effective strategy in its supply chain to maintain product quality as well as availability. On the other hand, it is also worth stating that the company has worked incredibly hard to develop its corporate reputation as a business.Thecompany has made many efforts to survive in the United Kingdom and enlarge its market share (Havice and Campling, 2017).
However, the news of product recall proved a big knock to the brand, which created a risk in its supply chain (Walthew, 2016). This also demonstrated that the company lacks the potential to deal with the supply chain issues and maintain efficiency.As the company procures various products from its suppliers and thus it is responsible for ensuring compliance and visibility.For the supermarket, trust plays a prominent role in supplier relationships (Baskeret. al. 2018).Therefore, the management should visit the suppliers’ sites and not rely on second-hand feedback from the suppliers and distributors.
Following this, Jarvis and Williams (2017) explained that apart from managing relationships, the risk assessments, compliance and quality control processes needs to be evaluated.Consumers are much wiser in the present world, and they do not tolerate such incidents of unethical behaviour, poor quality control, and malpractices. Thus, these can become the root cause of the problem, and it will be challenging to restore consumer confidence.
The company has a great scope within the UK market. However, the ability to gain new loyal UK shoppers can be slow in the beginning. It has been examined that the company uses a Just-in-time approach for its stock management (Richardset. al. 2018). For a supermarket, the availability of the right and required products is crucial. However, various problems have been analyzed regarding the product shortage and unavailability of the products in the Aldi supermarket. The customers got disappointed as they did not have their desired products (Das Nair and Landani, 2019). The space constraint and ineffective shelf space usage are among the most significant issues of Aldi supermarket. Concerning this, the relevant framework can be explained used by Aldi.
According to Behfaret al. (2018), Supply chain management is an essential aspect of the supermarket and can be defined as the centralized management of the flow of goods and services.Due to the supermarket’s inefficient practices within supply chain management, the company faces a shortage in its products that are disappointing the customers.The company uses the Japanese continuous improvement supply chain model, which is known as just in time approach (Chung et. al.2016).
Just in time approach in manufacturing as well as inventory management system.Further, Mogaji (2018) added that this is effective in enhancing efficiency and decreasing the losses of a company.Just in time, a supply chain management strategy is used to align the raw material to deliver directly with customer orders as well as the production schedule.This strategy is used by Aldi to prevent overstocking,minimize wastage and reduce the transportation cost.Ater and Shany (2020) refer to the aim of using this strategy in the supply chain to decrease product defects and reduce the capital tied up in stock.In just in time approach, the stock is received as per the requirement, and thus, it eliminates the need to manage significant stock levels.As it has been previously identified, the supermarket or stores of Aldi has quite Limited space. Thus, they cannotstore a variety of products.Therefore, the company uses this approach to buy the inventory whenever needed.
Aldi effectively uses this approach for store Management by only holding that inventory that is needed (Mitchell et. al. 2020). As the stock is expensive, the company has only purchased the stock which is needed at any given time.For instance, when the stock level is reduced within the organization, working capital is improved, and then this is the reason for using this inventory management system.On the other side, in general, it can be said that Aldi is not tying up too much investment in inventory which needs to be held for a more extended period of time.
This also states that the company does not pay for large warehouses to store the inventory and does not pay for additional staff members to monitor and control the warehouse stock.From the moment the inventory arrives at the store, the focus is on reducing the cost of holding and managing the stock (Grundy, 2017).This can be further illustrated that the products are delivered in display-ready cases.Therefore, once the top of the case is removed, this can be lifted onto a shelf for display to customers. 24 or more units can be easily handled and merchandise.This considers that individual units are not lined up and picked on the shelves.However, some of the things are sold in stores from a pallet. This is this way of quickly getting a large volume of items into the store.
Ater and Shany (2020) elaborate that the customer retention strategy is defined as the process and initiatives an organization uses to build customer loyalty and enhance customer lifetime value. The strategies which Aldi uses to retain the customers are embedded in its business model. This leads to the generation of happy customers and rapid expansion (Mitchell et. al. 2020).The first strategy is low prices. Aldi is not only well-known for its larger than life inventory. It is also well recognized within the country for its reasonable prices. Although the company lacks product variety, it has extremely low prices, attracting customers. Aldi has a competitive edge when it comes to offering a cheaper quality of healthy foods. Another dimension is equal quality. The items offered by the store look familiar to mainstream foods and snacks. Going green is another strategy that is emphasized on packing with actual eco-friendly initiatives. The environmental protection agency also recognizes the company for its record-breaking eco-friendly and green efforts (Behfar et. al. 2018).The strategies used by the company are no plastic bags; extra food is donated to poverty-stricken areas, reusable boxes for the customers, and energy-efficient lighting in the freezes.
Recommendations and Conclusions
As the fundamental purpose of this assessment is to recommend ways for the analyzed challenges experienced by Aldi, below mentioned are the recommendations:
- The biggest issue for Aldi is the strong strengthening position of Tesco in the industry. This is one of the most significant issues faced by Aldi as it has been evaluated in section B that the positioning of Tesco in the sector is becoming an obstacle in the growth of Aldi. In this regard, it is highly recommended that the company attract customers. Although, it is evident that it has been improving every day since the company’s foundation. However, as per the above critical evaluation, it has been assessed that to sustain the competitive industry of the UK, Aldi needs to focus on grabbing the attention of the customers. This is important to compete with Tesco. The Aldi operates in a high-paced market subject to the influence of several social and technological factors. Such an environment requires a need to adopt continuous changes to grow the market share (Jarvis and Williams, 2017).
- Thus, noting the same, one of the best methods is to forecast the changes in the retail market environment. Adapting to them at the earliest that that of competitors is the foremost recommendation for Aldi. Anticipating changes helps in determining and studying consumer preferences and behaviours (Richards al. 2018). It has been further analyzed that the lack of loyalty programs in the company leads to a decrease in the capability for customer analytics. In the case of Aldi, this can emerge as the most significant opportunity to involve in the emergent strategy planning based on collected insights from the stores. The store staff of the supermarket can interact with the customers on a frequent basis to notice and observe the changes in the customer demands and market trends.
- Further, another issue noticed is the smaller store size and lack of proper ambience. Aldi has smaller stores, leading to a smaller selection compared to other grocery retailers. Thus, it is suggested that the company plan to increase its store size and make more space for a variety of products. Furthermore, some effective strategies to engage more customers and increase sales are providing in-store coupons, managing product locations, and offering free samples (Basker al. 2018).The coupon sheets with various coupons can be placed at the front of the store near shopping carts to motivate the customers to look for specific products. The expansion of the size and music within the store can enhance the customers’ shopping experience. With the size enlargement, the company will gain the opportunity to grow and develop varieties.
- Employees are the organization’s key assets that can contribute to the company’s value to help gain a competitive edge (Ellickson al.2020).Employee benefit is also a strategy for the cashiers and other staff working at the store to receive several insurance plans, bonuses, and paid vacation time. When the employees work in a happy environment, they put extra effort and satisfy the customers. Therefore, the focus of the companies should be on satisfying the employees so that they can provide a better experience to people shopping in the store. Good customer service is the sole motto of the Aldi store to keep the shoppers coming back to Aldi. This can be one of the most proven recommendations to compete with Tesco and other supermarket chains within the nation.
- The customers trust the brand, which is why the company was getting a significant position in the British Supermarket industry (Argentesi al.2021). Indeed, the growth of such discount retailers has taken the industry by storm. Consumers need a wide range of products at relatively low prices. The key ingredient to the success of the supermarket and satisfied customers is the relationship with the suppliers.It is recommended that the company focus on managing efficient relationships with its suppliers and using the efficient system for managing stock. Better operations and supply chain management enable the store to ensure product availability (Davies et. al. 2017). The primary supply chain drivers are inventory, information, transportation, and facilities. The supply chain management should be aligned with the overall organizational strategy.
- It is evident that gaining the customer’s attention in a competitive business scenario is not easy. The company has to apply numerous tactics and strategies to attract and satisfy customers (Woo and Lee, 2018). Hence, the recommended tactics for Aldi to attract and retain customers are leveraging the help of social media, engaging influencers, engaging customers with chat, and developing consumer Persona.
Thus, from the overall evaluation mentioned above, it can be stated that the company is facing some critical issues and which are impacting its stakeholders. The above report evaluated the issues as the lack of product availability due to small storage size and inefficient supply chain. Further, the intense competition with Tesco is also a severe challenge to the company. Due to the large market share of Tesco in the United Kingdom, Aldi is facing difficulty in broadening its share and generating more revenue. The report collects secondary data and demonstrates it with a relevant framework to elaborate the significant findings. After identifying the issues as per the report’s purpose, considerable recommendations have been provided in the assignment to resolve the issues. Thus, the study discloses some crucial recommendations for the analyzed issue.This includes attracting customers by assessing and forecasting the retail market changes, managing efficient supplier relationships, providing employee benefits, and enhancing morale. Employees interact with the customers at the store, and thus, they can communicate with the consumers regarding their likes and dislikes. Focusing on store size enlargement and managing the supply chain is essential in ensuring the existence of a large product variety. Furthermore, it can be said that the company has the required resources and equipment; it can effectively apply the recommendations in its business strategy.
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