Strategic Management – Aldi Case Study
Read the attached Case “The Ripple Effect of Supermarket Wars: Aldi Is Changing the Markets in Many Countries.” Write a 1 page summary by answering the following questions:
- Decide if Aldi is more likely to respond to any strategic actions Amazon might initiate through Whole Foods, or
- If Amazon through Whole Foods is more likely to respond to any strategic actions Aldi takes. Be prepared to justify your decision.
- In a competitive rivalry sense, explain the actions (strategic and/or tactical) you believe Walmart and Costco will take to respond to Aldi’s intentions to have 2,500 U.S. stores by 2020
Case Study Overview:
Aldi started as a small, family-owned grocery store located in Essen, Germany, in 1913. Two sons, Karl and Theo, took over the store from their mother in 1946; soon after doing so, they began expanding the business. They emphasized low costs from the very beginning, allowing them to offer their products to customers at low prices relative to competitors. Over time, Aldi expanded to other European countries, and it entered the United States market in 1976. Currently, there are roughly 11,000 Aldi stores located in 20 countries; 1,750 of these units arc in 35 states in the United States. In the United States alone, the firm serves 40 million customers on a monthly basis.
Aldi holds its costs down in a variety of ways. It largely sells its own brand-label products in “no frill” stores. The company limits the number of external brands it sells (usually one or two per product), and it has low packaging, transportation, and employee costs. To sell products in its stores, Aldi positions them in ways that are similar to the approach warehouse stores use, for example, placing products on pallets and in cut-away cardboard boxes. In Germany, Aldi advertises very little, but it does advertise in the United States. It produces its own ads in-house (no external agency) and advertises mostly through newspaper inserts and a few television commercials.