The organizations purpose as mentioned on its website is to provide high quality products at low prices. Aldi does attempt to deliver the best quality. This is evident in their quality statement on the website. Both in the food items and the non-food items, Aldi undertakes rigorous independent testing. They check if their suppliers meet the necessary standards. They have also adopted strict auditing standards. The Global Food Safety Initiative auditing standards are applied (Aldi, 2017a). The GFSI was a collaboration of food safety organization and regulatory standards and was established in international trade under the Belgian la. Benchmark food safety standards are propagated under this collaboration. Aldi’s follows these guidelines to ensure food quality.
Aldi is a profit organization. An organization whose primary goal is making money for itself can be called a profit oriented organization. On the other hand, an organization which serves some higher purpose like humanitarian needs, environmental initiatives and more with a major part of its income, excepting that which is spent on operational costs can be called a non-profit organization. Now Aldi’s is involved in charity and focuses on CSR initiatives in environmental sustainability, however at its core, it is a for profit organization.
Specific Environment: Suppliers
The specific external environment of an organization is those elements in the environment whose impact can be felt on the operation of the organization. The specific environment is different from the general environment in that the effects are felt immediately. Usually the specific environment of an organization includes the suppliers, the competitor’s industry regulations, even the customers.
The supplier collaboration is what helps Aldi sustain its low prices to a large level. In costs control, Aldi has to work from end to end to ensure that it is able to give maximum savings to the customer. This has been a unique strategic vantage point for Aldi’s. The supplier is hence a significant influence in the specific environment of Aldi’s. With the supplier as specific environment, it could be a said a strategic partnership has been fostered by Aldi. Aldi has a close collaborative relationship with its supplier compared to the competitors Woolworths and Coles. Woolworths and Cole have been working with a traditional business model. The traditional business model is one where the supermarkets basically act as landlords that lease out spaces for the brands (Lambin, Chumpitaz and Schuiling, 2007). Supermarkets are invested in brands based on their own study of what sells and how to sell it and their retailing of the lease space will happen only with respect to that level. In terms of price to supplier, the supplier will not have much of a say in the price. Prices are usually dictated strongly by the retailer, like Woolworths and Cole. The reason that super markets do this is because they rely on a brand based strategy. The better the brand they sell, the better they make a profit. On the other hand, Aldi has a more reasonable negotiation space with its suppliers. It can offer flexible rates to the suppliers and includes them in the negotiation for price. Aldi does not believe in the brand strategy, but does invest only in quality brands. However, for the same product, it does not stock more than two brands. For the two brands it stocks, it ensures that suppliers are given one price only. They do not have a shelf allotment or marketing fee, which are some of the ways Aldi controls total costs to the customer. In addition, Aldi pays its customers upfront when placing an order and the Aldi supplier gets a check from Aldi, asking for more suppliers. This has resulted in 20-c per cent uplift. Suppliers are happier and this reflects in as success in the Aldi business model.
In theory, it could be argued that every specific environment factor is not a standalone factor. For instance, the supplier factor that was discussed just now is one that is seen to result in low prices and value for the customer factor. Similarly, the supplier factor almost becomes a strategic partner of Aldi’s, too. Strategic partners are another factor of the specific environment. Suppliers in providing the right input to the organization, and the organization in adapting the right style of working with the suppliers have made the price element relevant (Fahy and Jobber, 2012). Aldi promised its customers that it would be able to give them quality in products at low prices. Research reports show that around 38 per cent of shoppers needed this low price as they came from low income groups (Barrowclough, 2016). Aldi was able to fulfil this promise. Therefore, there is a good correlation between what is in theory and what is in practice. This also reflects the integrity of Aldi, as it has indeed followed upon with what it promised.