Situational Analysis

Discuss about the Constant Comparative Analysis Method.

The main motive of this paper is to demonstrate the information about the expansion and development of Aldi. Aldi is one of the leading and growing retail companies in the world. It renders a variety of grocery and retail products to the customers. Apart from this, situational analysis, marketing strategies, pestle analysis and unique market entry strategy have been explained in the task. Further detail of the paper has been discussed below.

Aldi is a grocery company that was incorporated in the year 1946. It is one of the biggest deep discount groceries companies in the world. In Europe, the company has approx 3.3% share of sales whereas in Britain, Aldi has increased its sales by 22.6%. The firm has approx 600 stores in the Britain. The company’s performance and productivity in Australia has been relatively impressive and unique (Business, 2018).

Situational analysis plays a significant role in each and every company to analyze and identify the market conditions and changing market trends (Stake, 2013). Further, it also helps in identifying and analyzing the opportunities and threats of the market. SWOT analysis, pestle analysis and porter five forces analysis are done by Aldi before entering in the Chinese market (Fram, 2013). Also, it helps in analyzing the risks, challenges and obstacles of the market. SWOT analysis for Aldi has been detailed below.

Segmentation: The firm divides its entire market into different group of people to analyze and identify the needs and requirements of the customers in the international market. STP strategies are significant to enter into the Chinese market. Aldi cannot enter into the Chinese market without analyzing the expectations and requirements of the customers in such market (Peck, Christopher, Clark & Payne, 2013). The firm divides its market on the basis of geographic, demographic, physiological and behavioral areas. The company focuses on the age, gender, sex, behavior and culture of the Chinese to maximize and enhance the profitability and revenue in such market (Campling, 2015).

Targeting: The main target group of the company includes households who buy grocery products on daily basis to fulfill the needs and demands in the competitive market. The success and growth of Aldi is dependent on the target audience (Fitzroy, Hulbert & O’Shannassy, 2016). No company can survive and grow its business in Chinese market without identifying and measuring the target audience in the international market. By using targeting strategy, the firm has been able to gain competitive advantages in the Chinese market (McMillan, 2013).

SWOT Analysis

Positioning: It has been analyzed that positioning is done by Aldi after considering the needs, wants and requirements of the customers in the Chinese market. Positioning is one of the significant strategies that can be used by the company while initiating the business activities in the Mainland China (Armstrong, Adam, Denize & Kotler, 2014). It is an effective and unique strategy that can help the firm to make a dynamic brand image in the minds of the Chinese. Therefore, Aldi should focus on the positioning strategy to enter into the Chinese market (Piercy, 2016).

The competitive strengths of Aldi include the following:

• The company uses effective and unique pricing strategy without reducing the quality of its products and services.
• It has been found that the company’s products are 30% cheaper than those rendered by its competitors.
• The company maintains low operating cost therefore it is the biggest strength of the firm.

The company invest huge amount on the training and development of the employees. It helps the company to make differentiate it from the competitors. It provides competitive advantages to Aldi in the international market. Efficiency, clarity and honesty are the core values of the firm. These core values also help in overcoming the competitors. Effective leadership styles are used by the employees of Aldi thus it also provides ample of competitive benefits to the company.

The pestle analysis plays a significant role to analyze and identify the external environment of the Mainland China . By using this analysis, Aldi has been able to measure the future obstacles and issues of the foreign market. The pestle analysis for Aldi in Mainland China  has been detailed below.

Political factor: Recently, Mainland China government is ongoing to encourage the rule of low. After the Cultural Revolution, a legal system to restrict of official authority has been developed. It has been analyzed that Mainland China is growing day by day. On the other hand, it is not easy to manage and handle the international business in Mainland China . The local differentiation and core competencies could also affect the success of Aldi adversely in Mainland China. Government regulations and legal issues may also influence` the growth of the company negatively (Bell, 2016).

Economic factor: There are various economic factors could impact on the profitability of the firm. The given case study shows that Mainland China is highly protective of its brand and reputation in the global market. The economic factors include GDP rate, exchange rate, interest rate, unemployment rate and growth rate. The GDP of the country is 11.2 lakh crores US. Apart from this, potential urban growth and high rate of savings can influence the progress of Aldi in Chinese market positively. At the same, some challenges and issues can also be faced by the company that includes high inflation rate and high property prices. The inflation rate of the country is 1.8 percent which was measured by the company to implement the business operations in Chinese market.

Segmentation, Targeting and Positioning Strategies

Social factor: The social and cultural factors play a significant role to flourish the business in the Mainland China. For example age distribution and population growth are fluctuated frequently. This can affect the progress of the adversely. Along with this, social values, customs and languages of the Chinese could have direct impact on the sustainability and outcomes of the negatively. On the other hand, the employees of Aldi would be failed to understand the language of the Mainland China therefore ample of issues will be faced by the company while entering into the Chinese market.

Technological factor: Although, Mainland China  has greatest opportunities in the technology in the fields such as biotechnology and computers where generates a chance for the country to make innovation in these areas but due to lack of effective and talented staff, Aldi is failed to get ample of technology opportunities in the Chinese market.

Environmental factor: After the various researchers, it can be analyzed that Mainland China ’s industrial development is the serious adverse impact on the environment these include declining natural resources, and rising pollution as well. Global warming is also a biggest issue in the Mainland China that would have direct impact on the efficiency and effectiveness of the Aldi in such market.

Legal factor: In order to promote the foreign companies to invest in Mainland China, the government of the country has gradually set up a relative compete law system. In today’s era, the country is focusing on its existing laws and statutes in accordance with the model of the WTO. The legal factors in Mainland China have direct as well as indirect impact on the productivity of the firm (Wang & Ap, 2013).

To enter in the international market, various marketing theories can be used by the company in the Chinese market. One of the significant theories that implemented by the company is marketing mix theory that includes product, price, place and promotion. This theory helps Aldi to stay in the competitive market by analyzing and identifying the prices and products of the competitors (Papadopoulos & Heslop, 2014). The marketing mix for Aldi in Mainland China has been detailed below.

Product: It is one of the significant and foremost strategies that should be used by the company while initiating the business activities and action in the Chinese market. By using this strategy, the company has been able to provide best and high quality of the products to the customers in the Chinese market. It should focus on the products of the competitors to distinguish its products from them.

Competitive Analysis

Price: The Company should make strong base to offer the products and services in the Chinese market. It should render the products at reasonable and cheap prices. The ample of pricing strategies can be used by the firm that includes market penetration, competitive pricing and unit pricing strategy that help the company to overcome the competitors in such market.

Place: It is one of the effective strategies for the expansion and development of the business in Mainland China. Online sites shall be used by the company in Mainland China to check the quality and details of the products. It should focus on its new and existing stores in the global market. Currently, the company has around 600 outlets in Britain and 650 in America that can help to generate more revenue in the Chinese market.

Promotion: One of foremost strategies that used by the firm is promotion and advertisement strategy. It is the cost saving strategy of the firm. It has been analyzed that Aldi must concentrate on its advertisement and promotional strategies to attract the maximum number of the customers in the competitive market (Czinkota & Ronkainen, 2013).

There are enormous market entry strategies that can be used by Aldi for entering into the Chinese market. Some of the market entry strategies include franchising, exporting, licensing, turnkey projects, foreign direct investment, joint venture, outsourcing, merger and acquisition and strategic alliance. After the various studies, it has analyzed that Aldi can use franchising strategy to enter in the Chinese market. Franchising is a system in which semi independent business owners pay royalty and fees to a parent company in return for the right to be evaluated and identified by its trademark, to sell its goods and services and usually to use its business system or format (Song, 2014). The company should use franchising strategy just because it is less risky and provides ample of advantages to the company. Along with this, the company can take advantages of the high skilled and experience workers by using franchising entry strategy. Highly motivated employees can be used by the firm for implementing the business activities in the international market. This strategy is not risky as compared to the other. By using this strategy, the Corporation has been able to focus on the potential and needs of the customers in the Chinese market. In this way, the organization can select franchising strategy to enter in the China for conducting the business actions effectively and successfully (Mintu-Wimsatt & Winston, 2013).

Conclusion and recommendation

The above analysis shows that how Aldi enter into the Chinese market flourishing the business operations and activities. The given case study explains profile and profit of the company in the international market. The above mentioned analysis shows that how situational analysis is done by the company to cope up with competitors in the Chinese market. Along with this, it discusses effective marketing strategy and unique market entry mode that helps the company to uplift its profitability and outcomes. Now it is recommended that Aldi should use franchising entry mode to enter in the Chinese market and further it should also focus on the diversification strategy to stand out against the competitors. Besides this, attractive pricing strategy shall be initiated by the company to set the suitable prices of grocery products.

References

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