Investigating Business of Aldi Group - Case Study Example

Investigating Business Aldi Group Institute Aldi Group Aldi is a discount supermarket chain that has over 9000 stores spread across 18 countries (Aldi, 2014). The estimated revenues of the company exceed €50 billion (Aldi, 2014). It is originally a German company, founded by Karl and Theo Albrecht in 1946. At the moment the company has stores spread across Germany, Australia, Austria, United Kingdom, United States, Spain and many other countries. The Aldi group also owns Nord. This report covers the SWOT and PESTLE analysis for Aldi group, assuming that it will be opening departmental stores across Qatar. Towards the end a verdict is given whether Aldi should or shouldnt open their stores in the Middle Eastern economic giant, Qatar. SWOT Analysis Strengths Qatar offers a unique mix of strengths and weaknesses. If a giant departmental chain of stores like Aldi opens its business in Qatar the biggest advantage they have is that the business environment is just right for a huge departmental chain like Aldi to start operating. People have money; the economy is doing well, and there are many mega departmental stores operating there. It means that they have many business models to shape their business after. It will help them significantly in the market research and other areas of operations. Weaknesses One of the greatest weaknesses of Aldi is its inexperience of operating in the Middle East. A world map of Aldi’s stores shows it is operating in mostly in Europe, Australia, and America. It does not have any departmental or grocery stores within the Middle East. This is a weakness of the group because they have to make a lot of modifications and do intense market research before opening a shop in Qatar. Opportunities There is no real competition in Qatar for Aldi from foreign companies as the state owns the major businesses. It is an opportunity in itself, but it also offers a threat because Aldi does not have a business model to follow. They have to innovate and discover everything on their own to identify what it takes for a westernized business like Aldi to move their business to the Middle East. They have a significant opportunity because Qatars economy is doing well, meaning that a lot of people are willing to spend money on shopping. Spenders are ready, now, it is the job of marketers to convince the shoppers that Aldi would be their best choice for shopping. Threats There are many other stores such as Al-Ansari and Partners Trading LLC, Ahmed Salmin Shamlan and Partners, Al Jazi supermarket and many others, which are operating in Qatar for years. It will take advertising and marketing efforts to attract these customers and make them loyal to Aldi. Similarly, there are specific supermarket such as Giant Stores, Maggie Mart, Blue Hypermarket, Family Food Center, and Spinneys that can be a business threat for Aldi. The mall culture in the Middle East is more like a subversion of the expectations, an opulent version of the American malls (Schulte-Peevers & Shearer, 2010). Usually, they have a themed entertainment and Starbucks (Schulte-Peevers & Shearer, 2010). Then there will be an abaya shop selling womens Islamic cloaks and prayer beads counter next to a waffles stand (Schulte-Peevers & Shearer, 2010). The City-Centre-Doha is the largest of the Middle East shopping palaces. It has 350 shops ranging from family development center to Debenhams. It has the Islamic architecture, marble flooring; glass fronted lifts, ice-skating, bowling alleys and climbing walls. There is always a crowd of juice sipping Qataris and the huddles of homesick ex-pat community. There are trolleys packed with eggs, packets of khobz and Egyptian olives (Schulte-Peevers & Shearer, 2010). Usually, shopping at these places is more of an event than in an errand. Similarly, Landmark Shopping Mall is the second biggest chain of stores in Qatar (Schulte-Peevers & Shearer, 2010). Whatever isn’t available in the City-Centre-Doha will certainly provide it in its enormous shopping center. It is complete with a multiplex cinema, Marks & Spencer departmental store, virgin megastore and many other international store chains (Schulte-Peevers & Shearer, 2010). And then right alongside Khalifa Sports Stadium there is the Hyatt Plaza another addition to the mall phenomenon growing in Qatar. Aldi has the right opportunity to invest in this region. PESTLE Analysis Political Just like any other country, Qatar offers a unique mix of political opportunities and threats for a business like Aldi. Qatar is an Emirate type government. It is not a truly democratic parliamentarian style of government. This is relevant because any business matter is directly related to the decision of Amir of the state. They make the foreign policies, rules, and regulations. Without the knowledge the political dynamics in Qatar, one cannot expect to score favorable negotiation or expect an environment such as in the Western democracies for businesses. There are plans, as reported by the Qatari government, that there will be a constitutional monarchy in the country soon, but at the moment there are no significant political parties or an election culture in the country. Aldi will have to closely monitor the political situation of the country for their business. Economic Oil and natural gas run the economic engine of the country. Oil discovery transformed the economy, and now the country has a high standard of living. The major competition is in the bigger industries such as oil production and export. For instance, the report on Qatar 2012 states that Qatars prospects have attracted an increasing number of competition seeking work in a few markets where tenders are on offer (Oxford Business Group, 2012). In less than two years giant corporates such as Consolidated Contractors Company, Saudi bin Laden, Sino Hydro and China Harbor have already started businesses in that country (Oxford Business Group, 2012, p. 178). The import and export of goods and services forms a huge part of the structure of Qatars GDP (IBP, 2005). This is good news for Aldi Group because their business focuses on importing and selling quality products in Qatar. The Arab spring of 2011 gave another investment opportunity to Qatar and the observers saw the Qatar investment Authority putting an amount of US$542.8 million in Egypt which created an almost 4000 jobs in the countrys hard-hit economy (Kamrava, 2013). Similarly before the start of Libyas 2011 Civil War the Qatari investment in the country were about $10 million (Kamrava, 2013). With such high-level investments Qatar has expanded its investments throughout the world. Theyre not limited to the Middle East they have already invested about 2 billion pounds in Britain (Kamrava, 2013). In short, there is major economic activity in Qatar offering a friendly environment for business like Aldi to open their chain of stores across the country. Social Estimation 2013 suggested that the total population of Qatar was 1.8 million (Snoj, 2013). Only 278,000 Qatari citizens live there which gives 1.4 million expatriates the chance to reside in Qatar without the citizenship or the nationality (Snoj, 2013). There are only 30% holding citizenship and the non-Arab expatriates make up the majority of its population (Snoj, 2013). Indians are in the largest numbers with over a half million Indians in 2013 (Snoj, 2013). Nepalese, Filipinos, Bengalis and Sri Lankans and Pakistanis make up the majority of other nationalities (Snoj, 2013). There is a huge male population because of the influx of male laborers from other countries. This leaves the proportion of women in the total population to only 25%. Qatar has Islam as its main religion and by celebrating the Muslim holy days they can generate significant revenues by offering a variety of food and other delicacies that are popular among the Muslim community. Technological Relatively speaking Qatar enjoys a high place among its neighbors when it comes to technology. Its IT services are especially on the rise that they have beat the hardware and software industry within the country. It is difficult to measure technological advancement in a country but there are certain proxy indicators that can be used for Qatar. The World Economic forums Global Competitive Index is one such indicator. Qatar and UAE have made significant progress and jumped up several ranks (Araya & Marber, 2013). Qatar went from the ranking of 38 in 2006 to 17 in 2010. Later Qatar ranked 23rd in 2010 in the innovation and sophistication factors (Araya & Marber, 2013). The predictions are that with such rising technology it will become the mainstream employment generating activity within Qatar. Moreover, technology has also played a significant role for landing it the hosting of the FIFA 2022 World Cup. Aldi group can take significant advantage of this information because they can offers several departments in their store where they can offer latest technology devices and software that can help grab the interest of Qatari people in technological innovation and advancement. The company can support as well as the lead the rapidly growing technological sector in Qatar. Environmental The country has an efficient ministry that keeps a keen eye on the environmental activities and the pollution problem in Qatar. The environmental protection committee has been active since 1984 for monitoring environment problems. Similarly, the Mesaieed Industrial City lists environmental issues and implementing Qatar’s Environmental Laws in its region among its core objectives (Qom, 2013). Conserving all supplies and preserving the natural environment and heritage, as well as water supply through desalination, are among the top priorities of the Qatars environmental policies. Land, water, and air pollution are also a significant environmental problem for the country. Pollution from oil and gas industry also poses a threat to the nations water system. Due to damage by pesticides and fertilizers there is a huge danger of desertification. There are very limited national freshwater resources, and there is an increased dependence on large-scale desalination facilities. Even though there is no direct reciprocity between environmental problems and Aldi group but they can incorporate the image of protecting the environment and promoting green planet campaigns in their company promotions. This will project a positive image of the company and people will feel loyal and comfortable in buying environmentally friendly products. In conclusion, Qatar offers a major opportunity for the Aldi group to open their departmental stores. However, it is a huge challenge considering the giant superstores already operating in Qatar. The main advantage is that this will be the first truly foreign investment in terms of departmental stores in Qatar. Financially, Qatar is in a good place which is encouraging because there is an opportunity for attracting high spenders in the country to Aldi stores. References 1. Araya, D. & Marber, P. 2013. Higher Education in a Global Age: Education Policy and Emerging Societies. London: Routledge. 2. Aldi. 2014. [online] available at https://www.aldi.co.uk/ [Accessed 20 November 2014] 3. IBP. 2011. Qatar Business Law Handbook. International Business Publications. 4. Qom, I. 2013. Qatar Mining Laws and Regulations Handbook. International Business Publications. 5. Oxford Business Group. 2012. The Report: Qatar 2012. Ministry of Business and Trade. 6. Kamrava, M. 2013. Qatar: Small State Big Politics. Cornell University Press. 7. Snoj, J. 2013. Population of Qatar. [online] available at http://www.bqdoha.com/2013/12/population-qatar [Accessed 20 November 2014] 8. Schulte-Peevers, A. & Shearers, I. 2010. Oman, UAE and the Arabian Peninsula. Lonely Planet. Read More