• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Market entry strategy of Aldi and Lidl. Plans for expansion.

Extracts from this document...

Introduction

Aldi and Lidl Introduction In our globalized world it Is becoming more and more challenging for companies to create their own unique brand. Competition is high and companies have to decide which strategy is the best for their business evolvement. This report is focused on two different companies Lidl and Aldi operating in the food retailing industry. Lidl and Aldi mostly was entering markets through Greenfield investments. These two companies chose greenfield investment as they wanted to have a full control over their business, promote their own brand and manage their business on their own. Advantages and disadvantages of entering market through greenfield investment is included in this report. Aldi's main objective, when entering other market like UK and Switzerland, is 'recognising customers needs and meeting the requirements of the demand in that country'. Lidl and Aldi have completely different strategies in global expansion. Aldi was entering big markets like the USA and Australia and this was good strategy for company's expansion as target markets of such countries are much bigger than European target market. But it takes much more effort to control such big markets. As for Lidl's future I would recommend to expand in other European countries before entering big markets like Russia, although it would be a great opportunity for Lidl to enter Russian market. About Aldi and Lidl Both companies Aldi and Lidl were founded in Germany. Aldi was founded in 1946 by two Albrecht brothers and Lidl was founded eleven years after Aldi was founded by Dieter Schwarz. These two companies were opening and still open, grocery discount stores which means selling products at the lowest price possible reducing ...read more.

Middle

Such investment was primarily considered by Aldi and then by lidl because the companies wanted to promote their own brand, and they promoted their names in the host countries. These companies did not need to share any profit with anyone else as well as controlled and operated their business and organizational culture in their own way and in the way they wanted it to. They also created new production capacity and linkages to the global marketplace. For the host countries where Lidl and Aldi invested, greenfield investment was beneficial as such investments create new job opportunities , the companies invest in research and development and invest in additional capital programs. Disadvantages of greenfield investment Although starting from the scratch ( investing through the Greenfield type investment) was not easy for them. Aldi and Lidl did not understand anything about the host country's culture, market or country's regulations in which they wanted to invest. Investing in the host country through the Greenfield investment was also risky because the companies did not know how well local companies were established in the country, they did not understand how did everything work in that country , so it took a long time for them getting to know that country. So reactive reasons ( actions for getting the information about the foreign market) were not enough to get understanding of the foreign market. Also Greenfield investment costs much more than cross-border acquisition investment, so mostly only big companies ( like Aldi and Lidl) which can invest good amount of money in another country can afford to invest through the Greenfield investment. ...read more.

Conclusion

Slovenia � Spain � Switzerland � USA As from the map it is clear that Lidl was mostly focusing on Western countries, so I would recommend to enter Baltic countries markets and other Eastern European countries first. There is no Aldi in Baltic countries as well, and if talking about these countries markets they are not as competitive as other European countries. So it would be a great opportunity for Lidl. Entering the Baltic countries markets and other Eastern European countries would help Lidl to gain recognition of European countries as 'strong brand throughout Europe'. Afterwards, I would recommend to enter Russian market. Russia is the biggest country in the world and target market is huge. Russia doesn't have very competitive market and supermarkets, I would say , would become very popular over there. Also Aldi doesn't have any store there. Although this country's culture differs from other European countries and at first it would very challenging for Lidl. Conclusion To conclude with, the grocery retailing industry will always be profitable, especially knowing that worldwide annual sales volume of� 3.7 trillion in 2007 and an average annual sales growth is 2.7 percent during the past ten years. And it is obviously the most important sector in the world as people cannot survive without food , drinks and other groceries. Although companies operating in this sector and considering going global must decide which strategy would be best for their expansion, promotion and prosperity. Lidl's and Aldi's expansion became very successful and for the future these two companies must consider their expansion very carefully to achieve their goals and enlarge their revenues. ?? ?? ?? ?? 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. Marked by a teacher

    Business Culture & Strategy Analysis Of JD Wetherspoon

    4 star(s)

    The share price is also declining. * Weak marketing skills. In 2004, it removed price incentives to drink larger measures of spirits and reduced the amount of alcohol in its cocktail pitchers. This has had an adverse effect on the sales of spirits and cocktails. This is due to the weak marketing skills in the company.

  2. Unit 9: Marketing Strategy

    The four main competitive positions are: * Market Leader - the dominant business with the highest share in the market. * Market Challenger - a non-market leader which is striving to become the market leader. * Market Follower - a business with a low market share and no desire to challenge the market leader.

  1. Unit 12 - International Dimensions of Business Task 1

    table I was able to find on the money section of the CNN website and it clearly shows the top 10 airlines named the best 10 in the world in 2005. It is clear to see that from British Airways being named in 5th place, that have failed to achieve

  2. Comparison of the Honda & General Motors in terms of internationalisation theory

    GM move to internationalise was mainly to reduce costs, attract a larger market and forming strategic allies. The GM strategically allied with Fiat in 2000 by acquiring 20 percent of Fiat's equity to establish a joint procurement venture of 50 percent capital each for concentrated purchasing of about $32 billion

  1. Small Business Strategies - identifying the target market, necessary skills, plans for development and ...

    National Diploma Business Unit 37: Starting a small business M1 - Explain and justify methods used to identify the target market for the proposed business Primary research Primary research (also called field research) involves the collection of data that does not already exist.

  2. NETFLIX CUSTOMERS SATISFACTION

    The review of the liter?ture suggests th?t the most common component of ev?lu?tion is previous expect?tions of the purch?se experience by the consumer. It c?n thus be st?ted th?t consumers ?re s?tisfied when purch?se results exceed their expect?tions, in ?ccord?nce with the "disconfirm?tory p?r?digm" (Oliver, 1980).

  1. Unit 32 P3 Explain how developments in the consumer market have impacted on food ...

    Increased Mobility Increased mobility has made a massive development. This is because there are a number of ways people can get to a store without walking. This can be done by getting the bus, taxi, tram, car, train etc. Increased mobility is about increase in people being able to move around via cars that many have purchase as there

  2. Unit 32 P3 explain how the developments in the consumer market have impacted on ...

    different businesses such as having mini supermarkets like Morrison?s and Tesco and even fast food store such as KFC and McDonalds. The larger petrol station offers a larger variety of food products for their customers whereas the small petrol stations offer products that are for on the go such as snacks.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work