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Aldi Internationalization Strategy
Transcript of Aldi Internationalization Strategy
Factors of internationalization
Strengths and Weaknesses
Relation of performance and internationalization
17. February 2016
Strengths and Weaknesses
"We buy the best for less, so you can too"
ALDI Süd vs. Nord
1946: founded by Karl and Theo Albrecht
1961: Separation of the two branches
1962: the name ALDI is introduced
10 000 stores all over the world in
simplicity, consistency and responsibility
-Virtually the same from country to country
-Retail managers are recruited from other countries, bringing with them new ideas and retailing methods
- just in time delivery
A major acquisition in a non-European market (US, 1975)
The pattern of expansion (uppsala model (ish)):
Internal expansion or small scale takeover into nearby and culturally similar countries (for example Austria, 1960)
Expansion across a broad front involving small acquisitions and single store openings.
High founding cost (at least in the beginning)
Knowledge of the characteristics of the target market
More effective way to maintain the brand and utilize company advantages
finding a company to buy for FDI can be difficult
at the time of expansion there were no other retailers with the same business concept
low cost logistics --> local products
avoidance of trade restrictions: in this method they don't affect since the products are mostly produced locally
Influencing factors of internationalization
Fully owned subsidiaries: establishing business from scratch
Degree of freedom:
choice of suppliers
channel of distribution
no pre-defined operating procedure
higher degree of adaptation
sustain the brand name
Resources and efficiency:
seeking for less exploited markets
lower opportunity costs
compete with local supermarkets
FMCG: Fast Moving Consumer Goods supply on lowest cost
Economies of scale
Failure case of Aldi: Greenfield investment in Greece
38 stores opened near Thessaloniki
800 Million € investment
2 years later Aldi left the Greek market
Reasons of Failure:
More expensive than Lidl, not competitive prices as promised.
Lidl / hard competitor, Aldi could not take chance of economies of scales as expansion was delayed.
Problems in logistics and supply chain.
Disability to deal quickly with real estate issues. Lidl bought everything before them.
Delay to expand in the capital Athens and other big cities.
Relation of Performance to Internationalization
Thank you for your attention!
transparent hierarchical system
-FAZ (2015). Aldi bietet 50 Marken zusätzlich an [online]. Frankfurt: Frankfurter Allgemeine Zeitung. Available from World Wide Web. <URL:http://www.faz.net/…/aldi-bietet-mehr-marken-wie-lenor-und-…>.
-Erath, Clemens (2012). Der Internationalisierungsprozess von ALDI Süd. Hamburg: Bachelor + Master Publishing.