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Aldi. A critical evaluation and audit of its Structure, strategy, culture and management/leadership

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Management Report A critical evaluation and audit of its Structure, strategy, culture and management/leadership CONTENTS Page 1. Introduction 1.1 Terms of reference 1.2 Background of Aldi 2. Methods 2.1 Data collection methods 2.2 Issues and challenges 2.3 Analysis 3. Results 3.1 Strategy, Mission and Goals of Aldi 3.2 Explanation of organisational structure 3.3 Analysis of organisational culture 3.4. Critical evaluation of Management & Leadership practices 4. Conclusions & Recommendations 4.1. Conclusions 4.2 Recommendations References List of appendices A - organisational chart B - SWOT Analysis C - Copy of questionnaire 1. Introduction 1.1. Terms of Reference This report critically evaluates Aldi's organisational structure, strategy, goals and missions, culture and management/leadership practices, provides an audit of existing arrangements and activities and the priority areas for future improvement. The research methods of understanding the functioning of Aldi were obtained through a brief review of the relevant Organisational Behaviour Literature during the lecturers. Having attained the relevant knowledge, a brief review of Aldi were obtained through the websites, questionnaires related to structure, culture, management/leadership style were carried out with the focus group. However, strategies of Aldi were understood by conducting interviews with the manager through a comparative analysis of its competitors. Key findings include: * Clear overall organisational strategy, linked with business goals and missions. However, not all strategies could be tracked. * Appropriate organisational structure with the chain of command * The existing culture of the organisation * Significance of management for maintaining customer relationships * Leadership of the organisation with the executive class, first line of leadership could not be done * Some indication of need to change strategy for the betterment of Aldi Recommendations: * Conduct a survey on the customers related to satisfaction of shopping at Aldi, obtain a general feedback and report to the executive line as a suggestion for improvements. * A suggestion on the products that Aldi should include so that customers do not have to compromise on their needs of having to shop what Aldi offers. ...read more.


This also indicates that Aldi follows a decentralized structure where-in lower level managers are skilled and capable of making decisions all by themselves. As a part of decentralization which happened when Aldi was split into Aldi Nord and Aldi Sud in 1961, an autonomous corporation was formed for every sixty to eighty stores in the locality. This lead to the formation of a large number of autonomous corporations, which competed with each other in a healthy fashion to help the growth of the organisation. In a geographically dispersed organisation like Aldi this has proved to be a good decision considering the growth and success of Aldi ever since its formation. Due to the small size of the corporations there will be less bureaucracy and almost all issues can be handled at ground-level quickly using the knowledge of the local market. Decentralised structure of Aldi allows regional managers to involve in decision making and also helps effective implementation of the company's strategies. These views of a decentralised structure have been adapted from Robbins and Coulter (2001). Aldi's structure is a flat one when defined in terms of span of control. The Managers have a wide span of control, thus leading to a flat structure rather than a hierarchical one. Aldi does not have separate planning, human resources, public relations or marketing departments. Managers have clear specifications for goals, responsibilities and authority. It is the manager's job to delegate these to the sub-ordinates in an efficient and clear manner. Random checks and evaluation of performance and results is done to maintain the culture and exercise authority. The chain of command at any Aldi store is depicted in the following figure : Figure: Chain of command at an Aldi store From the above figure it is quite evident that the chain of command at any Aldi store follows unity of command. It is the job of the manager to delegate the sub-ordinates in accordance with organisational policies and rules. ...read more.


Aldi manager uses reward power (Schermerhorn,2001), some of the incentives provided for good performer are more pay for employees who perform well and opportunities for promotion. Common issues evident in leadership are in the use of power to influence work actions and other decisions, in building credibility and trust(which can be done by practicing openness, being fair, speaking out, speaking the truth, keeping promises), in empowering employees, gender differences in leadership, embarrassing individuals in public, altruistic motivation and difference in opinion(Robbins2002,). In Aldi, since the size of the staff is kept minimal there are no conflicts or issues experienced regarding leadership. Leadership thus is a relationship through which one person influences the behaviour and actions of other people. Appendix B-SWOT Analysis Strength: * They rely on their home brands (95% of its products are home branded). * Minimal staff, so it is easy to exert influence and improvise their ability. * Record share of the UK grocery market at 29%. * Since company follows low price strategy the valued capital can be utilized for the betterment of organization. * Since Aldi perceives cost-leadership strategies, it can exert its reputation through hard discounting. Weaknesses: * Paying for shopping bags gets customers fruited. * Less number of working tills. * Threats from core competitors such as M&S and Lidl are established in the same surrounding. * Unlike other supermarkets, Aldi focuses only on grocery business. Opportunities: * Concentrate on other services other than grocery, provision. * A direct feedback from customer about the home branch would foster towards a better economy * Taking over a new region, a definite number of customers are target marketed. * To increase customer base, the store need to be run 24/7 so as to cope with the demand of the customers. Threats: * The awareness created by the competitors Ex.Tesco,Lidl are varying by the hour. * The system followed by other stores, running 24/7, a lot of working customers are getting benefitted by this. * The availability of the product or service is very important so the store has to have a complete product line. ...read more.

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