Posted: March 12th, 2023

Case Study

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ALDI CASE STUDY (FINAL EXAM)

INTERNATIONAL BUSINESS

CASE GUIDELINE

Pre-Case Analysis Process

1. Read the entire case (Review all exhibits), and then

2. Analyze the case

3. Opening paragraph – introduces the situation

4. Background information – provides the reader with organizational data,

products, history, competition and anything else of significance

5. The specific problem (or decisions to be made)

6. Alternatives – open to the decision maker, which may or may not be

stated in the case.

7. Conclusion – set up the task, any constraints or limitations, and the

urgency of the situation

CASE STUDY – OUTLINE

Written Format

 Executive Summary (write this last)

 Define the issue(s)/problems or opportunities

 Analyze the case data (Data analysis)

 Generating Alternatives Analysis

 Selecting key decision criteria

 Analyzing and evaluating alternatives

 Selecting the preferred alternative

 Developing an action/implementation plan

 Recommendations for the future

ALDI STORE

(Case Study)

Aldi

Aldi is a leading retailer with over 8,000 stores worldwide. Since opening its first store in 1913,

Aldi has successfully established itself as one of the most reputable retailers in the international

business market.

The Aldi brand is associated with value for money. Its emphasis is on providing high quality

products and excellent value for customers. To put it simply, we offer our customers a smarter

way to shop.

Aldi’s slogan is ‘spend a little, live a lot’. It works hard to keep prices low for its customers. The

company buys large quantities of products from carefully selected suppliers. Its buyers are experts who

choose the best quality products at the most competitive prices. The savings achieved by sourcing

products in this way can be passed on to customers. Aldi keep costs down in other ways. It ensures its

operations are as efficient as possible, for example, store layouts are kept simple and opening hours

focus on the busiest times of the day.

The importance of developing people

Aldi places great importance on how it trains and develops its employees. Training is the process

of providing employees with the necessary knowledge and skills to perform their tasks and roles

competently. Training not only helps to increase business efficiency, but it can also make staff

more motivated by increasing their job satisfaction.

While training is narrowly focused on helping a company become efficient and effective in

the short term, development is more about building the long-term capabilities of the

workforce. It is about helping individuals to gain knowledge, learn new skills and develop a

wide range of attributes. Development makes employees more adaptable and more able to

take on a wider range of roles.

This case study will demonstrate how Aldi’s training and development programs help

ensure its employees have the skills and competencies that the business requires both now and

in the future.

ALDI’S Strategies for Success

ALDI keeps it cheap so shoppers can, too. How has discount food retailer ALDI Group become

one of the world’s biggest grocery chains, running more than 9,800 stores worldwide? By

offering deeply discounted prices on about 1,400 popular food items (a typical grocery store has

30,000). ALDI (short for “Albrecht Discounts”) buys cheap land mostly on city outskirts, builds

cheap warehouses, employs a tiny staff, and carries mostly (95%) private-label items, displaying

them on pallets rather than shelves. ALDI has some 1,200 stores in 30-plus US states, but

Germany (where ALDI has about 4,300 stores) accounts for about two-thirds of sales. ALDI was

co-founded by brothers Karl and the late Theo Albrecht.

Officers:

Co-President: Jason Hart

Co-President: Grocery Stores & Supermarkets

Aldi’s is not traded on the NASDAQ.

GERMAN supermarket chain Aldi will reinvest nearly $200 million into its Australian operations

to fund its ambitious growth plans of opening as many as 30 new stores over the next year and

peeling away more customers from industry heavyweights Coles and Woolworths.

However, the retailer, which is known for its limited product range and steep discounting, has

complained that onerous planning laws have locked it out of certain suburbs across the east

coast of Australia, constricting the benefits for consumers in the process.

Aldi said it would invest $183 million in its new stores this year as well as a warehouse as its

annual revenue from its Australian operations pushes towards $1 billion.

A spokeswoman for Aldi told BusinessDay the supermarket retailer had 251 stores across the

east coast of Australia as at the end of calendar 2010 with a further 14 stores added to the

network so far this year. Future store openings were forecast to be in line with Aldi’s historical

store openings of 25 to 30 stores per year, she said.

Controlled by a highly reclusive family in Germany, Aldi has worked to keep the breadth

and profitability of its Australian arm confidential.

But latest financial reports by Aldi Stores, its trading name in Australia, shows the limited

partnership that controls the local retailer did not receive any profits for calendar 2010.

The documents show that Aldi Foods Pty Ltd and Aldi Pty Ltd, did not request the company’s

latest annual profit to be distributed, with all its surplus fund injected back into the business.

Aldi’s Australian supermarkets posted a net profit of $91.94 million for 2009, an improvement

of 27 per cent on the $72.6 million booked in 2008. The latest financial documents do not

disclose profitability or revenue for the supermarkets for 2010. Estimates of annual sales in

Australia range from $700 million to more than $1.5 billion, but the figure is believed to be

below the $1 billion mark.

To help support its aggressive growth plans, Aldi has built five distribution centers, each of

which is reportedly capable of supporting 80 to 100 stores. In 2009 it opened a product quality

and development section at its Sydney headquarters.

Aldi first entered the Australian market in 2001, and the discount retailer is believed to have

captured a 4-5 per cent national market share of the supermarket industry. Aldi has complained

its growth in Australia is being obstructed by state and local council planning laws which have

served to ”lock out” the retailer from particular suburbs and activity centers.

In its submission last month to the Productivity Commission’s inquiry into the retail industry,

it said constraints on the development of Aldi stores could have adverse competitive, retail

productivity and welfare effects that translated into higher than necessary consumer cost of

living.

The supermarket said the chronic under-supply of suitably zoned or sized land had locked it

out of opening new stores along the eastern seaboard. Aldi has supported a raft of draft

recommendations issued by the Productivity Commission, including broadening zoning laws,

reducing prescriptive planning requirements and cutting compliance costs associated with the

planning system.

WORKFORCE PLANNING

Workforce planning is the process of finding out how a business will meet its labor

requirements both now and in the future. Aldi, like other businesses, needs to predict its future

staffing needs accurately. It needs to plan for both the number of workers it will require and the

specific skills that the business will need in the future. The company can then recruit new staff if

necessary. It can also ensure that it has training and development programs in place to meet

these needs.

Aldi identifies future training needs through an on-going analysis of company performance in

key areas at all levels. For example, the company monitors the availability of its products to the

customer within its stores. If the level of availability drops below the targeted level then a

program of training on order accuracy would be undertaken. It also considers future

developments within the business and also within the grocery retail sector in order to predict

both the total numbers of staff it will need and, more crucially, the skills and competencies that

will be required.

Aldi’s rapid expansion means that its current workforce cannot meet its future staffing

requirements. The company will need to recruit more than 4,000 new members of staff within

the next 12 months to meet the requirements of current exceptional sales growth and new store

openings. To attract the best candidates, it offers industry-leading salaries at all levels.

To ensure it gets people with the right set of skills, the company produces clear and detailed job

descriptions for each post. These show the tasks and responsibilities for that position and in turn,

the skills and competencies needed by an individual to succeed in that role.

On-the-job training is training that takes place while employees are actually working. It means

that skills can be gained while trainees are carrying out their jobs. This benefits both

employees and the business. Employees learn in the real work environment and gain

experience dealing with the tasks and challenges that they will meet during a normal working

day. The business benefits by ensuring that the training is specific to the job. It also does not

have to meet the additional costs of providing off-the-job training or losing working time.

There are several methods of providing on-the-job training. Four frequently used methods

are briefly described here:

· Coaching – an experienced member of staff will help trainees learn skills and processes

through providing instructions or demonstrations (or both).

· Mentoring – each trainee is allocated to an established member of staff who acts as a

guide and helper. A mentor usually offers more personal support than a coach,

although the terms ‘mentor’ and ‘coach’ are often used interchangeably.

· Job rotation – this is where members of staff rotate roles or tasks so that they gain

experience of a full range of jobs.

· ‘Sitting next to Nellie’ – this describes the process of working alongside a colleague to

observe and learn the skills needed for a particular process. This can be a faster and more

useful way of learning a job role than studying a written manual. The colleague is always

on hand to answer any questions or deal with any unexpected problems.

Store managers act as trainers

For most on-the-job training at Aldi stores, the store manager acts as the trainer. A typical

format is for the manager to explain a process to the trainee, then to demonstrate it. The trainee

then carries out the process, while the manager observes. Once the manager is happy that

trainees are competent, they can then carry out the process unaided. This process is used, for

example, to teach a store assistant how to operate the till and to instruct a trainee manager how

to order stock accurately.

All positions from apprentices through to trainee area managers follow this type of structured

‘tell, show, do’ training. Trainee area managers also undergo job rotation. They have the

opportunity to experience all aspects of the business to give them a complete overview of how

Aldi operates. They can then see how each department and business operation relates to and links

with other parts of the company and other processes.

ALDI’S APPRENTICESHIP SCHEME

Aldi provides training opportunities for young people. The Aldi apprentice scheme combines on the job and off-the-job training. Apprenticeships are open to 16-18-year old. Apprentices

training as store assistants also study for an NVQ in Retail Apprenticeship. They complete store

assistant training and gain an NVQ Level 2 in their first year. They then take a store

management training program over two years and work for a Level 3 advanced qualification.

The variety seems to suit apprentices. As Sam, an Aldi apprentice says:

‘The fast pace of the role is really exciting, with lots of chances to learn new and useful skills. As

well as the on-the-job training, there is also studying towards a recognized qualification that I can

fit around work.’

Emily, another apprentice, recognizes that the program is a good opportunity:

After attending college, I was looking for an opportunity that would allow me to use my

customer service skills and the Aldi apprenticeship has given me just that. There is a lot of

competition for places, so you really need to want to succeed. I really feel part of the store team.

It can be challenging but it is well worth it.’

At the end of their apprenticeships, Sam and Emily will have the knowledge and skills to take

on deputy manager or assistant store manager positions. From there each can rise to become a

Store Manager in the business. Aldi’s current growth means that there are many opportunities

for promotion, so Sam and Emily could soon join the many others who have been promoted

within the business.

ALDI’S PLACEMENT SCHEME

The Aldi retail placement scheme takes university students on a one-year placement. This allows

the chosen individuals to show what they can offer the business and to find out what the business

can offer them. Aldi offers an excellent reward package for students on a placement, but in return

expects trainees to have enthusiasm, drive and ambition. Successful students get the opportunity

to apply for a place on Aldi’s Area Management training program.

To support their development, managers help employees to set personal goals. These are

identified during an appraisal process. This is when a member of staff sits down with their

line manager to evaluate past and current performance, to consider what skills are needed

going forward and to set targets for the future. This could involve identifying further training

or development opportunities.

CASE – STRATEGY QUESTIONS

1. What is the SWOT Analysis of ALDI’s (SWOTT) –

Strengths/Weaknesses/Opportunities/Threats/Trends).

2. What makes ALDI’s different from other retailers in the same field?

3. What could other organizations learn from ALDI’s?

4. Where do you see organizational (structure) adjustments need to be made at ALDI’s?

5. What would you do differently to reposition ALDI for future growth?