Quality Management and Continuous Improvement Uni 2 DB SA Third Week - Essay Example

Quality Management and Continuous Improvement Quality Management and Continuous Improvement Aldi has established itself as one of the most reputable retailer stores, which offers products at guaranteed low prices compared to their competitors in the same market. Since its establishment, the company has been effective in using this strategy to penetrate and widen its market share in the grocery market. In spite of the current success enjoyed by the company, this marketing approach proves to be more expensive towards the company’s future prosperity.

Firstly, low product pricing and discounts pose a challenge to Aldi in the sense that, with the changing business environment and fluctuating costs involved in product development, it may be difficult for them to charge full-rate prices in future, which eventually may affect its profitability and productivity growth. Secondly, low-price strategy carries a risk that the cost leader, in its single-minded desire to reduce costs may lose sight of changes in customer’s tastes, eventually, the company might make decisions that reduce costs but drastically affect product demand.

Furthermore, competitors’ ability to imitate cost leader by lowering their cost structure is another threats posed to Aldi, they might be beaten at their own game causing them to struggle to compete in future (Hill & Gareth 2011).Q1.Aldi stores focuses on low-cost leadership strategy to win its market share and encourage customer loyalty. The company focuses on low-income customers and offers limited amounts of product assortment, which has made them a more competitive store. The low-price strategy together with discounts offered on products by Aldi has forced other organizations to lower their prices in an effort to survive in the market.Q2.Yes, this strategy affects the amount allocated on adverting because these companies tend to keep their costs low by minimizing advertising expenses on television and the internet.

These organizations tend to achieve the lowest costs possible; adverts on television and the internet are associated with high costs, which these firms seek to minimize. ReferenceHill, C. & Gareth, J. (2011). Essentials of Strategic Management. London: Cengage Learning.