ALDI THE DARK HOUSE DISCOUNTER Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Aldi The Dark House Discounter Case Solution

Aldi

Aldi came into existence in 1984 after the German brothers, Theo and Karl Albrecht, became responsible for their mother’s Essen grocery shop and started their business operations by selling basic items and commodities at low prices. Germany was severely affected by the destruction caused by the war that took place; very few consumers in the European market were still having the ability to spend money. In addition to this, the region was not only facing difficulties with respect to their decreased buying power and lower levels of disposable income but there were only limited products available in the stores which were essential.
Albrecht brothers were able to visualize their opportunities in such a market for their stores, which had limited product availability for the consumers. They planned on providing the market with an expanded product range to local market once the economic conditions of the company improved. While the Albrecht brothers had their plans set to increase their business activities and operations in the region, a number of competing grocers already existed in the market and they also had the same intentions with respect to their businesses.
As the economic condition of the territory prevailed, these grocers also had their focus set on increasing the product selection and range. This made the brothers realize that they cannot operate while creating a point of difference through increasing their product range, as the point of difference was eliminated and neutralized by their competitors in the market. Followed by this realization, the brothers decided to divert their focus from providing an increased product range to providing the market with the most feasible and low prices while maintaining their operations effectively, in order to sustain their strategy of providing lower prices constantly to the market. The Albrecht brothers had strategically analysed the market transformation and their decision of changing their approach to the business operations and focus to providing low prices which adequately served them as a driving force for helping them in growing rapidly. The decision of the store owners proved to be beneficial for them as they were able to increase their business reach and activities, as they efficiently and adequately were able to sustain their low pricing and professional operations. The business grew rapidly and they owned and operated 300 outlets across Germany, growing from small revenue numbers to exceeding the 100 million milestone.
The Albrecht brothers collaboratively agreed to split or divide the company in two, caused by disagreements over the decision of selling cigarettes in their stores. The two divisions of the company were separately located in different regions of Germany, Aldi Nord was located in north of Germany and run by Theo Albrecht, whereas Aldi-Sud was located in southern part of the country and was run by Karl Albrecht. The division of the company was not a total separation of their operations, as it allowed them to take decisions on individual basis while sharing information, costs and performance metric, vendor comparison of both the divisions and some purchasing agreements as well.

Operations

Aldi’s model centrally focused on the convenient presence of private label brands in its stores supported by sufficient quality control methods. The organization exercised extensive quality control techniques for their private label products and items. Aldi frequently tested the private labels through lab testing of their daily samples and they also compared their products with their competitors who were the leading brands in the market. The company also manufactures a number of private products; these products were also able to create a good brand name for them in the industry. The company firmly believes that it provides the market with high quality products, which can adequately meet the quality standards of any of the leading brands of the global market. The company claims that the product they offer to the market have the potential to exceed the standards of the leading national brands with respect to taste, appearance and even performance. They double check the quality standards of their products, which gives them an opportunity to double check the quality standards of their products. The quality maintaining steps of the company appeared to be helping the company in growing. Due to their high quality maintaining procedures and methods, they did not face a large a number of replacement or refund for their products...................

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