Business

SBU (Strategic Business Unit)

Introduction

This report is based on the strategic business unit (SBU) within the organization. For the study, the purpose is selected by the researcher. The researcher has selected grocery SBU for conducting this study in an effective manner. For conducting this study in an effective manner, a huge focus has given by the researcher to select the tools according to the SBU while focusing towards applying the theory which is based on industry maturity and competitive positioning. For the purpose of one portfolio analysis _ tool is used by the researcher as this framework remains fit for the selected SBU. For strategic analysis, Ansoff matrix model and Porter’s generic model tools are used by the researcher while discussing the benefits of the models. At the same time, the study has supported to identify that how these findings can influence the marketing strategy in term of planning as well as implementation. In this paper, the researcher has discussed portfolio analysis and strategic analysis while giving focus towards detailed understanding regarding the viability of the approaches for the selected SBU. This study is based on secondary data analysis while critically analyze the research topic to get the deep understanding regarding the research topic.

Market strategy

SBU (Strategic Business Unit)

Chau and Witcher (2010) stated that strategic business unit (SBU) is a profit centre in which huge focus given by the firm product offering and market segment. SBUs remained focus towards the particular product of the organization and focuses towards discrete marketing plan on the basis of analyzing the competition in the market for the particular product of the firm. On the basis of marketing analysis, the marketing campaign is designed by the organization for the SBU.

Even though they may be part of a larger business entity. An SBU may be a business unit within a larger corporation, or it may be a business into itself or a branch. Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors which influence their performance (Bowman, 2012). Managed as separate businesses, they are responsible to a parent corporation.

Aldi is the common brand of two largest supermarket chains that 10000 stores more than 20 countries. The turnover of the company is approx the 50 billion Euro. It is private firm and deals in the retail industry over the world and it’s headquartered is in Germany. The company is providing employment more than 10000 people. The major product of the company is food, beverage and sanitary.

In order to become the successful in the market, the companies use the competitive strategies that enable the company to achieve the competitive advantage. Authors Michael Treacy and Fred Wiersma determined three generic competitive strategies, or value disciplines such as operational excellence, product leadership and customer intimacy (Umbreit, 2012).

The term operational excellence refers to the ability of employees and management to meet the expectation of the customers. In the other words, the operational excellence is a general philosophy of the workplace in the context of the problem solving and leadership result and teamwork. Aldi is successful in the industry in the concern of the operational excellence. In the success of the company, there is a great role of organizational strategy. Under the operational excellence, Aldi has an aim to accomplish cost leadership. For this, the company has a set of the effective strategy that helps the company to remain the cost of operation low (Butler, 2012). The strategy provides high-volume to the business operation. The business strategy of Aldi is transaction-oriented and standardized.

The company has customer intimacy strategy as the competitive strategy. Under this strategy, the company focuses on the customer need that provides great value to the company. Aldi’s customer intimacy strategy concerns on offering a unique range of customer services. It is helpful for the personalization of service that is also effective to meet the customer needs.  As this strategy, the company has an aim to achieve the competitive advantage.

The management of Aldi is also involving to develop the product leadership strategy as the competitive strategy. The product leadership strategy of the company has an aim to develop a culture continuously brings superior products to market. It helps the company get the market share and generate good price (Grant and Jordan, 2015).

Portfolio Analysis

Portfolio analysis is a technique to analyze and evaluate product and services of the company. It critically evaluates products and services of the company that company is offering in the market. Product portfolio analysis is important to identify the risk and return of the product to the company. Aldi offers the lots of the product in the market. The portfolio analysis will help the company analyze the risk and return. BCG matrix can be used as the product portfolio analyze of the company (Koumparoulis, 2013).

BCG Matrix

The Boston Consulting group’s product portfolio matrix (BCG) is developed for the companies to do long term strategic planning. It is helpful for the companies to focus on the market opportunities by conceding on its product portfolio. It also provides an idea to the company about the investment on the product (Munier, 2011). In the strategic management, it is also known as the growth/ share matrix. This matrix has four stages according to the market growth and relative market share.

Dogs:

In the dog category, these products come which have low growth and market share. These products are very week in the market. It is because these products fail to achieve market dominance in low growth markets. They produce negative cash flows for the company. The negative impact of Aldi mix strategy of the product is that since Aldi keeps non-branded products (Miller, et al, 2011) The company strategy to keep the more products in the store is not good because it affects the brand image of the other products.

Question mark

The product under this category, those products are included that have high growth market and low market share. These products have the ability to become a star product. The product is required to high investment if the company want to generate profit by them.

Star

The product under this category, those products are included that have high growth market and high market share. They products are market leaders and generate high profitability for the company. There products required to high investment to maintain sales and profit. Aldi is doing business in the retail industry form the many years. Its products are in the growth stage and have significant market share. The company gets huge profit by the help of its star products (David, 2011).

Cash cows 

The product under this category, those products are included that have low growth market and high market share. The products under the cash cow show that high profit by the known investment. These products have the highest market share in the low market growth.

Strategic development tool

Porter’s Generic Strategy

The market position of the company shows that whether the company’s profitability is above the industry and below the industry average.  If a company get continuous profit above the industry then its come under the sustainable completive advantage. In the business environment, there is two way to get the competitive advantage. In this, the company can get the competitive advantage as low cost and product differentiation (Dubrin, 2011). The competitive advantage leads to three generic strategies such as the cost leadership, differentiation and focus. In this, the focus strategy ahs two variables such as cost focus and differentiation focus.

Under the cost leadership strategy, the company focuses to produces the goods and service at the minimum cost. The advantage of the cost leadership strategy depends on the nature of the industry. This strategy is helpful to achieve the sustainable competitive advantage. On the other hand, the differentiation strategy allows the company to produce something different and unique from the competitors. For the unique feature in the product, the company can charge high price from the customers. Focus strategy is also a significant strategy to achieve the competitive advantage in the industry (Griffin, 2016). The focus strategy has two variables such as cost focus and differentiation focus.

Aldi considers the cost leadership strategy in the market to achieve the competitive advantage. By the help of this strategy, the company gets enough sales in the market and also generates sufficient revenue. It allows the company to offers the product at the minimum cost as possible. Aldi is a supermarket chain that offers the products the lowest price as the possible for the company. It runs the business with the low price philosophy. The company develops and implements the strategy that helps the company to retain the operation cost low. Along with this, the company also focuses on keeping the transportation cost low. For this, the company directly delivers the goods warehouse to stores (Alkhafaji and Nelson, 2013).

Marketing Mix

In the current business environment, there is a significant role of the marketing mix in the marketing activities of the company. It is a kind of the business strategy that allows the company to conduct marketing activities and communicate the product in the market. The marketing mix has four main elements such as the Product, Price, place, promotion (Ismail, et al, 2012). These four elements of the marketing mix are also known as the four Ps of marketing. Aldi is also serious about the use of the marketing strategy as marketing mix. The marketing mix of Aldi is explained below:

Product

Product refers to good and service that company offers in the market. A product of the company is able to satisfy the need of the customers. In this, good has physical evidence but service has not physical evidence. Aldi is doing business in the retail industry and its product range involves Clothes, Health and beauty products, Fresh fruits and vegetables, Stationery, Household goods, Electronic products and Soft tools.

Price

Price is also an essential element of the marketing that is associated with the monetary term. The price is an amount that customer pay at the time of purchasing product. The price demonstrates the cost of the product that is paid by the customers (John and Harrison, 2013). The pricing strategy of the company depicts that company is focusing the cost minimization strategy that provides significant competitive advantage to the company.        

Place

The place is also one of the most important elements of the marketing mix that shows the distribution strategy of the company. The place strategy includes the selection of the distribution channel and location where the customer can get the product. In the context of the place strategy, Aldi’s products are available in its supermarket and stores. At the same time, the customer can also make the order through online (Kerzner, 2014).

Promotion

Promotion strategy allows the organization to communicate its product and brand in the market.  The promotion strategy is directly associated with the advertising of the products. For this, a company uses some adverting channels that help the company to communicate its product in the market. Aldi uses both traditional and modern channel of the promotion including TV advertising, online marketing, poster and discount coupons (Madadipouya, 2015).

The marketing mix of the company is concerned on the strategic business units that managed the marketing activities of the company effectively.

Summary and Conclusion

From the above conclusion, it can be said that there is a significant role of strategy business unit to develop the competitive strategy for the company. SUB is a specific function the business environment that helps the company to achieve the business goals and objective. In the large organizations, USB is helpful to manage the business activities effectively. At the same time, it is also analyzed that the companies are competitive strategy can be also in the different terms such as operational excellence, product leadership, customer intimacy. These strategies help the company to achieve the competitive advantage.

References

Alkhafaji, A. and Nelson, R.A. (2013) Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. New York: Routledge.

Bowman, H. (2012) Generic strategies: a substitute for thinking: The Ashridge Journal, 5(9). Pp.45-54.

Butler, D. (2012) Business Development: A Guide to Small Business Strategy. London: Routledge.

Chau, V. S. and Witcher, B.J. (2010) Strategic management: principles and practices. USA: Cengage Learning EMFA.

David, R. F. (2011) Strategic Management Concepts: A Competitive Advantage Approach. USA: Pearson College Division.

Dubrin, A.J. (2011) Essentials of Management. USA: Cengage Learning.

Grant, M. R and Jordan, J. J. (2015) Foundations of Strategy.USA: John Wiley & Sons.

Griffin, W. R. (2016) Management. USA: Cengage Learning.

Ismail, A.I., Rose, R.C., Uli, J and Abdullah, H. (2012) The Relationship Between Organisational Resources, Capabilities, Systems and Competitive Advantage, Asian Academy of Management Journal, 17(1), pp-151-173.

John, C. H. S. and Harrison, J. S. (2013) Foundations in strategic management. USA: Cengage Learning.

Kerzner, H. (2014) SWOT Analysis for Development Strategy. UK: John Wiley & Sons.

Koumparoulis, D. N. (2013) PESTLE Analysis. International Journal of Economy, Management and Social Sciences, 2(2), 31-36.

Madadipouya, K. (2015) A Review On The Strategic Use Of IT Applications in Achieving and Sustaining Competitive Advantage,  International Journal of Managing Public Sector Information and Communication Technologies, 6(2), pp- 1-10.

Miller, P. F., Vandome, F. A and John, B. M. (2011). Porter Five Forces Analysis. GERMANY: VDM Publishing.

Munier, N. (2011) A Strategy for Using Multicriteria Analysis in Decision-Making: A Guide for Simple and Complex Environmental Projects. Spain: Springer Science & Business Media.

Umbreit, L. (2012) The Strategic Managament (KAO Corporation). UK:  GRIN Verlag.

 

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