CSR Activities and Organizations Internal Culture Term Paper

Summary

Albrecht Discount Inc is popularly called Aldi. It is a family owned discount chain supermarket headquartered in Germany. Aldi is composed of two distinct businesses. They include the Aldi Sud and Aldi Nord. The two are both economically and legally independent but family related. The company has dominated the market of global grocery retailing. It owns and operates a chain of other discount outlets across Australia, Europe, and the US. The company deals with general merchandise and food products among them meat products such as refrigerated foods, fresh meat, frozen meat, snacks, bakery produce, pantry items, beverages, dairy produce, and sweets.

Since its inception, Aldi has been gradually internationalizing its business. It started by entering Australia through acquiring Hofer retail chain. Then, the business expanded in the United States, Switzerland, Slovenia, Hungary, Ireland, and the UK. Today, Aldi is active in the European market and nine European countries. In fact, it has grown to become one of the leaders in the retail sector and one of the most popular retail chains worldwide.

Aldi’s core competency is to reduce prices through cutting costs, selling low quality and cheap merchandise. The company’s mission is “simply smarter shopping.” Some of their biggest competitors include Morrisons, Woolworths, Tesco, Asda, Sainsbury, Wesfarmers, Coles Supermarkets and Myer Pty Ltd. Though the Aldi has successfully expanded in various global territories, they have often guarded their company and never reveal their income margins due to commercial sensitivity. The company’s competitive pricing strategy has successfully shunned other premium big brands in the market because consumers are always seeking high-quality products at the lowest price possible, which Aldi provides. The global retail market is experiencing an increase in the intensity of competition, and giant retail chains are losing their market share to upmarket grocers and discount retailers like Aldi throughout in Europe and other international territories.

This report will discuss the corporate social responsibility and internal culture of Aldi. It will detail the activities undertaken by the company’s employees and management to contribute towards the benefit of the community and society in which the firm operates. Moreover, the case will investigate the industry environment and analyse one environmental factor that influences the business.

Table of Contents

Management Report for ALDI Australia 4

Introduction 4

1. Purpose of the Organization 4

2. Aldi’s Specific Environment 5

3. Aldi’s Corporate Social Responsibility and Ethics 7

Community Charities 7

Supporting Local Communities 8

Reducing Carbon Emission 9

Eliminating Waste 9

4. Aldi’s Internal Culture 10

Conclusion 13

References List 15

Management Report for ALDI Australia

Introduction

Aldi is a German retail chain popular for selling high-quality merchandise at low prices. The company started operating in the Australian market in 2001. As of 2004, it had already acquired 3% of the retail market share. The following study discusses the company’s purpose and mission followed by a diagnosis of its business environment as a way of determining the success factors in the retail industry. Whereas both the internal and external factors are balanced to some level, an analysis of the industry reveals that the current retail market has turned out to be less profitable because of the increasing intensity of competition among existing players and the political trends in the country. Nowadays, nearly all firms have realized the benefits of adopting the low-cost strategy. However, leading competitors such as Cole-Myer and Woolworth have captured almost a third of the market share due to their nationwide distribution and wide product portfolio. Therefore, Aldi should differentiate itself through organizational culture and corporate social responsibility. By analysing its internal and external business environment, this report has discussed some of its CSR strategies that could be a factor in determining the company’s corporate culture. Moreover, the internal culture illustrates that the firm focuses on increasing customer value by improving product quality and reducing the price as an appropriate strategic necessity within the industry.

1. Purpose of the Organization

Aldi Australia operates in the highly competitive retail sector as a supermarket chain. In this industry, firms strive to provide customers value for their money while customers seek the quality products at affordable prices. With such intense rivalry, Aldi understands what the customers want; value for their money without compromising the quality of products (Haberer, 2010). Aldi was established in 1913, and since then, the firm has earned a positive reputation across the globe. With over 7000 stores spread worldwide, Aldi uses its competitive pricing approach without compromising with product quality to differentiate itself from other players. In fact, some of Aldi’s products are 30% cheaper unlike rival firms. Aldi achieves this because of its internal culture of efficiency (Kleemann, 2013).

Therefore, Aldi’s existence is premised on its need to provide its customers with perfect quality products at the lowest price possible with the hope that its customers will enjoy the best offerings for less money. Moreover, the company seeks to sell items that are produced from the best possible materials, products that are popular with consumers and above all products that reflect value for the customers’ money (Babnik, Breznik, Dermol, and Širca, 2014). Such factors determine the products that Aldi sells. Therefore, the mission of Aldi is to offer the best quality products at lower costs.

2. Aldi’s Specific Environment

Aldi conducts its business operations in a globalized environment with its main operations in Germany, the United Kingdom, and Australia. As such, the legal and political conditions of these nations greatly affect the operations of the company. In the UK, the political landscape is stable. The political leaders are mainly interested in the financial crisis that affects world economies and how they can strengthen Australia’s financial standing globally. Therefore, the government encourages companies to offer diverse job opportunities from locally based, low-paid, flexible to highly skilled, high-paying jobs (Robbins, DeCenzo, Coulter, and Woods, 2016). Moreover, Aldi knows that the retailing industry greatly affects the people and job factors. For instance, the creation of new stores destroys other jobs within the retail market because some traditional stores are displaced while others have to practice cost cutting to compete in the market. Aldi has a history of employing the elderly, the disabled and students normally paying them lower salaries (Haberer, 2010). Typically, this industry is characterized by a high employee turnover thus provide a great level of loyalty to the company.

With the increasing acts of global terrorism, the most recent being in Paris, world governments are worried about impending attacks. With such worries, governments have introduced new laws that may influence the operations of Aldi. All companies including Aldi must adhere to Australian law such as the Computer Misuse Act and the Data Protection Act. If Aldi fails to comply with such legislation, it may lose revenue, face financial fines, and damage to its corporate image. The increment in tax can also affect Aldi’s business because the firm will have to increase the cost of its products. Any company operating in Australia cannot avoid tax influence (Haberer, 2010). However, for Aldi to deal with this issue, they must reduce their operational costs to retain their competitive advantage over rivals.

Currently, Aldi faces a challenge. The company cannot compete with online retailers because they do not pay Goods and services tax (GST) on products below $1000. Here, the problem is that cost differential between Aldi and online competitors is not 10%; the issue is much bigger. Therefore, Aldi is finding it hard to compete with online stores because, unlike Aldi, they do not have to maintain physical facilities and pay their employees high salaries to deliver goods to customers (Robbins, DeCenzo, Coulter, and Woods, 2016). Moreover, the Australian dollar is currently high which means the cost of imported goods is relatively cheaper unlike retailers in Australia. This has further eroded Aldi’s competitiveness because it is forced to slash prices further to entice consumers to buy their goods. However, it erodes the company’s bottom line and causes its stock prices to plummet.

Despite the unpleasant situation for Aldi, the government cannot intervene to help the retail sector (Kleemann, 2013). The Australian government tends to make this mistake whenever a vulnerable industry is subjected to unfair competition. The government has lauded the rise of online shopping because it grants consumers a vast pool of products which otherwise would not be available thereby boosting consumer utility (Robbins, DeCenzo, Coulter, and Woods, 2016). Since the Australian government interferes in the market, for instance, by taxing retailers who import their goods to protect the local industry, consumers are likely to lose this utility gain, and there will be no incentive for the present retailers to innovate and compete for sales.

3. Aldi’s Corporate Social Responsibility and Ethics

Corporate Social Responsibility (CSR) is a vital component of Aldi’s corporate structure. The company’s CSR initiatives throughout various external and internal activities include being environmentally conscious, community issues and…