ALDI THE DARK HORSE DISCOUNTER Case Study Solution
Case Summary
Aldi had remained as one of the least known grocers in 2013, despite the 2012 estimated sales of $73 billion from around 10,000 stores of the company that had been operating in 17 countries of the world. Aldi is a privately held grocer in Germany. The company was the eighth largest retailer in the world in 2013 and it had planned to accelerate the expansion in the US markets. The company was based in Germany and it was a hard discounter, which sold household items and limited assortments in the barebones stores and the private label grocery stores.
Despite its wider network, the company was unknown within the UShowever; it was also cited as one of the primary reasons for the exit of Wal-Mart from Germany. This case emphasizes on the competition that Aldi might face from Wal-Mart when it enters US and whether the company can survive in the US market. US isthe home market of Wal-Mart unlike Germany, which is the home market of Aldi. Within the US, Wal-Mart had a dominant market presence, wide rangeof the inventory and the buying power that Aldi could not match. The question remains unclear that whether Aldi had the capability of having the sustainable growth in US, which is the home market of Wal-Mart.
Analysis
First, we begin with a brief analysis of the competitive advantages and market powers ofWal-Mart and Aldi.
Question 1
Should Wal-Mart be worried about Aldi? Should Aldi be worried about Wal-Mart? Do you believe Aldi to be at a competitive advantage or disadvantage relative to Wal-Mart?
Wal-Mart should be worried about the expansion of Aldi in the US markets. This is because, although US is the home market of Wal-Mart, Aldi had certain capabilities that form its strength and the source of competitive advantage. This is because one of the central aspects of the Aldi’s model was the ubiquity of the private label brand in the stores of Aldi. These ranged from Frisco Dent Toothpaste to the LaMissa hot chocolate Mix.
The storeowners exercised quality controls over its stores lab tests. This gave a competitive edge to Aldi for selling the range of different assortments unlike Wal-Mart. However, Aldi should also be worried about Wal-Mart as US is the home market of Wal-Mart. Wal-Mart had a cost advantage in the US markets as the company owned proprietary warehouses for allowing the company to purchase the goods in bulk.
ALDI THE DARK HORSE DISCOUNTER Harvard Case Solution & Analysis
The company has already invested heavily in information technology capabilities and distribution logistics and Aldi should be worried about this, as the company will have to establish its base in the US market from scratch. Wal-Mart had experimented with the Super center and the smaller store formats in the US market however, Aldi is not aware of which format will most suit to the US customers based on the current assortments offered by the company. In 2011, the company had also announced the launch of the Wal-Mart express stores for creating the presence of the company in the rural and the urban areas. Therefore, looking at these factors, it can be said that currently Aldi is at a competitive disadvantage to Wal-Mart despite its own core capabilities in the German market......................
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