Organizational Analysis of the Company - Essay Example

Organizational Analysis Organizational Analysis: ALDI Submitted Submitted by: : 2nd March 2009 This paper is based on identifying certain basic aspects of any organizational culture and the environment. The analysis will make use of an effective tool which is used by all companies in order to gain insight into the external and internal functioning of the company and its market position is gauged as a result. The tool that was used for the purposes of this analysis was a strategic planning method which is used in order to identify the strengths, weaknesses, opportunities and threats. It allows any company to identify its major or corporate objectives while at the same time looking for the internal and external factors that result in the achievement of those same factors. This strategy comes into play whenever any organization has a certain aim or objective to reach as otherwise the entire strategy becomes an ineffective one. This strategy is used in order to be incorporated in the entire strategic planning model. For any company to be competitive, efficient and at par with the market, it has to be able to scan the internal and the external environment at that results in the fulfillment of the corporate aims. This analysis would allow the organization, to have valuable information resulting in the matching of the firm's resources and its capabilities to the sort of competition that exists in the market in which that company is operating and functioning in at present. For all companies in the present times, this tool has become highly important as it results in the strategy formulation and selection. Source: Hill & Westbrook (1997). The above diagram depicts all the four aspects which make up this analysis framework and which are used in order to scan the environment as well. The company that would be analyzed for the purpose of this paper would be done in a manner which would allow its internal and external factors to be highlighted while at the same time looking at the best possible strategy that could be used by this organization in order to achieve its corporate aims and all. Hill, T. & R. Westbrook (1997). The company that would be analyzed would be the ALDI which stands for Albrecht Discount; a discount supermarket chain which is based in Germany. It would be viewed in terms of the different areas which make it one of the biggest supermarket chains of Germany. This organization operates on a global level and delivers world class services to its global clients. This organization falls within the commercial sector which has recently had had to take a severe hit due to the recession and yet this particular organization has remained strong and steady enough-it even managed to score highly on the list of top companies operating within the European region proving that his chain has the strength which has allowed it to gain a good and strong position in the market despite such a strong setback. This organization's business services are made up of the provision of a range of goods which are available at discounted prices. The global strength of this organization can be gauged from the fact that it has over eight thousand stores worldwide and almost a new store opens up in Britain every week. The strengths of this supermarket have been this very ability to deliver quality services to a wide range of clients who have access to a number of in-house products and the outside products are unusually quite limited in number... The fact that this organization has always stressed on maintaining a low price policy which has allowed it to keep itself on its toes and hence, the ability to sustain itself during one of the worst financial scenarios to have ever existed. The innovative ideas such as having weekly special offers on more expensive products and by having a wide range of stores has translated into a strong and confident clientele. The ability of this chain to listen to the customer and value the feedback, efficient checkout system, has made it recognizable by its numerous clients as a place where things are available as per their requirements at the prices that they desire. The cost cutting strategies employed by this supermarket chain have allowed it save a considerable amount of money and this is passed on to the customers in terms of discount on the products. The fact that this supermarket has been quick to response to criticism and claims that that it does not carry out advertisement by advertising its awards base in the UK outlines the sort of quick responsiveness that this organization has. This organization has stood strong in the fact of criticism and also in the presence of competition by having created a niche for itself and by having a well-spread out chain which has allowed it to create a large consumer base. The recent employment strategy consists of hiring top management from highly ranked universities which has allowed it reputation as a quality store to improve and its standing in the market to rise even further This chain started off merely as a small company and is now of the largest supermarket chains existing in the world of today. This chain's superiority has been gauged from the fact that it has always been committed to creating innovative services and products which have been customized which have translated into a committed clientele force as well which had been eager to pursue long term relationships with this organization. Another major strength of this organization has been the fact that it has always made the consumer the center force of the corporate chain and has taken actions in order to ensure that it position is sustained. It has corporate aims of integrity and openness which allow the company to deliver sustainable value. In the world of today, besides providing the necessary services and goods what is equally significant and important is the fact that the consumers be made to feel that they are indeed important and that can be done by taking extra steps such as the community investments, corporate giving initiatives. The act of diversifying itself and making itself a global leader has allowed it to distinguish itself as a true market leader. By spreading itself, it has allowed its risk factor to be truly diversified and hence, the regional profitability has allowed the supermarket to emerge as a success. By having this global network, it has made the task of reaching out to its global clientele force an achievable task while at the same time improving its connectivity across countries. Strength of this organization has been its ability to easily ease into the cultural and environmental settings of its different regional offices and centers by making use of local workforce and by carrying out the necessary market research before establishing itself in the local market. Some of its strengths have been its focus on maintain long term relationships with its clients in order to ensure a successful relationship by emphasizing on response to customer feedback, innovative ways of payment and the launch of the low cost mobile in the year of 2006 allowed this chain to expand its clientele force even further. It also came up with newer television commercials and a new website in the year of 2008 which has allowed it to redefine its image. And to create a competitive edge for itself in a hugely competitive market and hence, the reason for its ability to sustain itself despite such fierce competition and strong odds. However, despite all the above pointed strengths and competitive advantages there have been certain disadvantages and weaknesses which have not allowed this organization to be the market leader which it has the potential to do so. By having diversified itself on such a huge level, its scale of operations has resulted in the imbalance of power and resources across the different regions. The external environment of each country differs from the other and these political, economical, social factors have to be considered and researched before setting up stores on such a massive level. The need to diversify should be met by a forecasted model of the market and the dangers that could crop up in the near or forecasted future. It needs to ensure that the diversification does not create issues in terms of operating activity as otherwise that could weaken the entire structure. Some of the criticism that has been borne by this organization has been the fact that this organization has included the fact that most of the stores still do not have a bar code scanning facility, delays in scanning, lack of widespread advertisement in comparison to its peers and the lack of credit card acceptance. Also, the practice of charging for credit card usage is a mundane practice which has been removed by many operating supermarket chains. The recent scandal that ALDI was involved in shows the extent to which this organization has compromised itself and its corporate aims. The scandal involved the firing of an employee who had HIV and the recent environmental scandal which resulted in quite negative publicity for a company which could certainly not afford to have such sort of publicity. It was revealed that the supermarket was making use of furniture which was not sourced legally and hence , in today's economic and social world when each environmental is such a huge part of the laws and the social set up of today. Hence, such a flagrant abuse and violation resulted in a strong criticism from the customers. Thus, proving the fact that ALDI needs to pay closer attention to the way its different offices and regional centers are run in each different area and market. These weaknesses could result in this organization being severely affected unless it does not take active steps to ensure that this sort of scandals are altogether avoided by keeping a constant state of monitor in its operating activities. There are a number of threats and opportunities which are in connection to this organization which if tackled effectively and efficiently could mean a world of difference for this particular organization. The current economic situation has been quite dismal especially for the domestic sector as the stock market crashes on the global level have severely affected the borrowing and lending capacity of the major financial "movers and shakers" and hence, the financial breakdown which resulted in major decrease in the consumer spending pattern due to the credit crunch and hence, lower sales and profits. Armstrong (1982). In these present times, the company has had to face number of issues ranging from the fact that the recession has not only crippled the operating activity in a particular region but on a worldwide level leaving no option but for this organization to take active steps in order to consolidate its position in market which has been facing a severe crisis position which is showing no signs of improvement for the next couple of years. In such an environment the company has had to face demotivated workforce and a weakening relationship with the clients as well who all have had to fear the actualization of a major financial breakdown. Some have had major losses to face while at the same time others have had to face the risk of losing out on employment; current or potential. In a way, this economic recession has been vicious in all ways and mannerisms and the commercial sector has been affected in a way that could not even have fathomed by a number of leading supermarket chains. In this sense, the best possible option for this chain has been closing and ending a number of its operational offices and centers in order to save on its costs etc. The fact that this store operates within certain timings means that it loses on a number of clients who conduct late shopping activities especially in areas such as US etc where the people have various other occupations during the day. The internal demotivation and loss of profitability along with an externally unfavorable environment has meant that this company has a number of issues to deal with and to cope with as well. The opportunities that have come the way of this organization have risen from the external environment as well in terms of unfulfilled customer demand and need in certain regions which do not offer such strong competition or have a clear case of demand which has not been met as yet. In order to build its success story even further and to create a viable position for itself in this hugely competitive market, this company would have to identify such areas and regions. Menon (1999) What is not important is the fact that the more lucrative opportunities be chased but it could be a more useful strategy to create a balance between the strengths and the opportunities that could be arising for this organization. There are a number of management issues that clearly came across from the SWOT analysis that was conducted for the purposes of this paper. This analysis showed that there are a number of fundamental issues and weaknesses that need to be addressed by this organization before it moves in a position strong enough to fend off any threats to its stability and position. The recent scandals involving ALDI have meant that this company's operating activities have not been at par level which has meant that this company has to face severe criticism and serious setback issues. In order to pursue its compelling opportunities, ALDI would have to overcome these basic weaknesses and issues. In order to reach the sort of corporate aims and objectives that ALDI is aiming for, it would have to identify all these SWOTS and develop the subsequent steps as only then can this organization truly achieve its aims. It would have to be seen by the decision makers of ALDI that whether the sort of aims and corporate goals that are being aimed at are attainable given the circumstances and the position that ALDI currently holds in the market. The sort of strategic options that are available to ALDI include cost leadership, differentiation and lastly, focus. All these strategies would allow ALDI to attain a distinctive competency in order to gain a competitive advantage. The business differentiation strategy results in the product differentiation element while cost leadership allows the company to be truly cost effective while the last strategy allows the company to be particular about its products and its market. Considering the SWOT analysis and the sort of options that were available to this company considering its market size and its operations scale, this company has to make certain imperative decisions in order to improve its market position and to solidify it even further as well. Considering all the above, the most effective and viable strategy that could possibly be available to this company would have to be the cost leadership strategy as that mean cutting back on unnecessary diversification and segmentation at a time when it is imperative that the currently relationship status quo be maintained and build upon even further. In the case of the focus strategy, the level of product innovation is certainly low and so is the market segmentation and the distinctive competency is adopted without being really particular. This sort of a strategy would allow this company to build further and to create a number of opportunities for itself by having a viable market position. This strategy is one that is affected by the competitor's entry into the focuser's market segment, the suppliers capability to increase the costs, buyers defection from the market, substituted products and the new entrants overcoming entry barriers,. This strategy would be affected by all the above but in order to remove the chances of that happening, this company would have to take initiatives in order to consolidate its position firstly. At present, the external and internal environment is clearly not favoring any attempts to increase the size of operations or expansion as well. What is needed at present and for the coming few years is the need to focus on the current operating strength. It can only than happen that the opportunities are converted into strengths and the weaknesses overcome as well. This company has to face stiff competition from a number of other chains and before adding to its customer base, it has to ensure that the current lot is not lost to the competing force. In order to gain a competitive edge, what is important for this the investment strategy also plays an important role in any part of the organizational structure and the overall business strategy's aims and goals. The sort of investment strategy that would be required for this company would be one that would be more of a conservative approach as the strengths are there but the weaknesses and the threats are at the present time too strong for the element of diversification to be even considered by this company. The organization would be able to make effective use of its resources whether they are human, functional or even financial. The life cycle effect shows that this organization has achieved its maturity position and in order to maintain that, it would have to hold -or-maintain or else would have to liquidity which has taken place in certain areas resulting in a weak competitive position for this organization. Therefore, before weakening itself this organization would have to take active steps to ensure that its focus is on particular areas and departments as only after it after it is able hold and maintain its position, can it strive for true success and achieve what it sought to achieve in the first place. This paper sought to seek provide an understanding of the sort of organization that the ALDI is and what are the issues being faced at present by it on an external level and internal level and the upcoming opportunities which would have to be analyzed by examining the sort of resource strength this organization actually holds and its ability to hold onto that strength. The SWOT analysis pursued the analysis on an external and internal level by examining the various areas that this company could be affected by and what areas it could seek to improve by making use of certain options which are available but not be used. The options are that are available include the ability to strengthen the operating activities within the different countries itself which is facing severe financial meltdown while at the same time trying to cut back on any expansionary plans as that could only mean leaving the company open to even greater risk exposure which at this point in time cannot be afforded by any company of whatsoever sector. By being an element of the commercial sector , ALDI is already under dire threat of facing a collapse even further due to the dismal future and therefore, in order to avoid that the management would have to refocus its strategy of rebuilding a stronger relationship with its customers and clients. At this point in time, focus is essential and imperative in order to hold and strengthen this company and in order to allow it to follow the "match and convert" strategy to its truest sense. It would have to match its strengths with its opportunities and its weaknesses with its threats in order to realize the extent and to overcome them. In conclusion, the several stages of corporate planning were covered ranging from the environmental scanning; internal appraisal of the organization's SWOT while at the same time assessing the present situation of the market and also looking at the present existing strategies to identify the results of the internal and the external appraisal. This paper identified certain strategic issues which need to be addresses by this organization and it would have to develop and revise its present strategies in order to achieve the corporate aims and objectives. This could include preparing its operational, resource, projects plans for strategy implementation and the results would have to be carefully examined as in the present times, and even one wrong decision or mistake can mean a world of difference. References Menon, A. et al. (1999). "Antecedents and Consequences of Marketing Strategy Making". Journal of Marketing 63: 18-40. doi:10.2307/1251943. Hill, T. & R. Westbrook (1997). "SWOT Analysis: It's Time for a Product Recall". Long Range Planning 30 (1): 46-52. doi:10.1016/S0024-6301(96)00095-7. J. Scott Armstrong (1982). "The Value of Formal Planning for Strategic Decisions". Strategic Management Journal 3: 197-211. Doi: 10.1002/smj.4250030303 ALDI Group Company Profile". Yahoo! Finance.. Retrieved on 2006-06-18. ^ "The World's Richest People". Forbes Magazine. http://www.forbes.com/lists/2006/10/Worth_1.html. Retrieved on 2007-01-14 Read More