WAL-MART OUTLINE STEP 6: Porter’s Five Forces/ Strategic Analysis Of The analysis Of Lidl Case Study: To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used.       Diagram 2: Porters generic strategies www.tutor2u.net This has benefited Lidl especially during the recession (Gloger, 2012) as consumers were turning to the discount stores to reduce the expense of grocery bills. Funnel revenue back into the UK market by creating more stores across the UK. MKT2232 Branding and Integrated Marketing Communications Strategic Business Units (SBUs) identification Number of Pages:13 3. Lidl entered the market on the basis of being one of the most value-driven supermarkets in the industry (Dolgui & Proth, 2010). The majority of Lidl stores are laid out in a very linear and traditional manner. Based on the 7 P’s analysis, a SWOT analysis can be conducted in regards to Lidl. Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980).. Journal of Retailing and Consumer Services, 13(4), pp. If you need assistance with writing your essay, our professional essay writing service is here to help! Marketing and the 7Ps, s.l. By the end of that year the number had doubled to 80 million price changes during a single day. The Lidl can apply Porter's generic strategies model to explore how competitive advantage can be created. This is to aid consumers in finding their goods as soon as possible and having easy access to purchase and leave (Lidl, 2015). Registered Data Controller No: Z1821391. As well as operating in the UK, it has stores in the rest of Europe and Asia. However, as Lidl aim to improve the quality of the products they offer and introduce strategies to improve their shopping experience such as bakeries (Foottit, 2014), healthy tills and a unique nutritional labelling system (Lidl, 2015), this may change over the years to come. Cheap? Although Lidl’s market share in the UK is still relatively small, with them acquiring 3.5% at the beginning of 2015, they are one of the fastest growing grocery retailers. Furthermore, this could result in them following a combination of generic strategies, as the introducing of upper-class brands, in combination with their current business structure, would suggest a differentiation strategy is in place. As society shifts toward a healthier lifestyle, what is perceived as important by the buyer could be rewarded with premium prices (IfM, 2015) and Lidl could adapt its position to be more in line with a differentiation strategy? Lidl will often exhibit their brand colours, yellow and blue, throughout their stores or surrounding areas. Develop and implement upper-class branded products in order to target a new demographic and compete with the major supermarket retailers on a more even environment. Our History 2016. 319-336. These are shown in figure 1 below. Company Registration No: 4964706. Posted October 11th, 2020. Introduction 3 Hanoi, November 11st, 2012 Lidl expansion to crank up pressure on big stores. The Keys To Successful Competitive Strategy Word Count:1688 The SWOT acronym stands, Strategic Analysis of ALDI The Amazon pricing strategy crushes the competition due to the number of adjustments and speed in a single day. 2. 4.   Functional food. Michael Porter has argued that a firms strengths ultimately fall into one of two headings: cost advantage and differentiation. Content London: Kogan Page Limited. Customer orientated expansion. Famous author Micheal Porter in 1985, in his book Competitive Strategy: creating and sustaining superior performance, discussed three types of generic strategies which can be applied across industries. Giant Lidl distribution hub to create 500 West Midlands jobs. Bosshart, D., 2006. Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). PART 2 – Information Gathering and Accounting/ Business techniques, These figures show that Tesco’s market leader position is being threatened and intensity of competitive rivalry is high. The SWOT analysis will help an organisation measure and understand the internal strengths and weaknesses, and the external opportunities and threats facing the firm. Submission Deadline: 11:00 AM 6th December, 2012. Later he divided the focus strategy in t two sub categories namely Cost focus and Differentiation Focus. Introduction of new product ranges that cater to an upper-class demographic. Lidl’s business strategy includes a standardized supply chain which allows it to efficiently operate its business in different countries and also provides an economies of scale. Reference this. 4.1.2 Economical factors 6 However, due to the limited applicability of the 4 P’s, three more were added to form the 7P’s, which aims to encompass some service qualities the 4 P’s do not cover (Booms & Bitner, 1981; Lusch, et al., 2007). Contents If Lidl were to engage with a price war with other major grocery retailers then they could force competitor’s prices down. | Mihaela Palca | M00378081 |               They have a variety of distribution hubs across the UK and Europe to ensure that stores are maintaining a constant level of stock (Brown, 2015). 3.2.3 Bargaining Power of Suppliers 10 During 2008 they recorded a growth sales of over 25% (Keynote, 2010). These are the sources and citations used to research Lidl Strategy. However, this does not imply that the University answers    for the methods that are used or the conclusions that are drawn. Primary process of Lidl is to purchase and sell as many goods as possible on a low-cost basis. Which strategy will be more effective for Lidl is discussed in this part. Michael Porter identified three generic strategies (cost leadership, differentiation, and focus) that can be implemented at the business unit level to create a competitive advantage. Middlesex University , BA Marketing 1. Tesco’s famous loyalty club card can still be named, Tesco Retail Business Analysis 2.2 Bowman’s Strategic Clock Introduction 3 The products sold in Lidl are often very similar to the goods sold in other supermarkets, such as Tesco or Asda. An analysis of Lidl’s current marketing strategy will be conducted, with particular emphasis on the 7 P’s of marketing. Porter S Generic Strategies. Journal of Retailing, 83(1), pp. The three recommendations are; In order to stay competitive in the UK grocery industry, and continue to build upon their UK market share, Lidl should utilise the aforementioned strategies. An explanation of research approach. These products generate over 80% of sales. Increased revenue could then be funnelled into UK development. Porter’s Generic Strategies. 5.2 Weaknesses 11 Poulter, S., 2014. Brief Background on Aldi 3 Booms, B. H. & Bitner, M. J., 1981. Reasons for choosing the project topic These three generic strategies are defined along two dimensions: strategic scope and strategic strength. 3. With regards to business operation, both companies follow Porter’s cost leadership strategy. 5.1 Strengths 10 [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11736662/Supermarkets-could-increase-prices-to-pay-for-living-wage.html. 3.1.3 Social 8 University of Agder, 2010  Faculty of Economics and Social Sciences, MARKETING ASSIGNMENT However, Paul Polman, Unilever’s, AN EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF WM MORRISON SUPERMARKETS PLC BETWEEN 31ST JANUARY 2005 AND 3RD FEBRUARY 2008 Lidl have a plethora of stores across the UK and Europe. Through this research, he created Porter’s Generic Strategies. Furthermore, Porter’s Generic Strategies will be analysed in order to aid in the understanding of Lidl’s current strategies. He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus." Lidl have adopted a cost leadership strategy by selling high volumes at low margins and their scope is broad. This means that it is imperative to have stores in reasonably close proximity to national distribution centres. 3.1.2 Economic 8 Strategic development and SWOT analysis at the University of Warwick. Market Identification of Aldi 4 631-640. 5th ed. As their products are so cheap consumers can often think that the quality is not good enough. However, depending on the country, they operate in different segments of the supermarket industry, ranging from value to high-end goods (Butler, 2014). Competitive Strategy. The Generic Strategies can be used to determine the direction (strategy) of your organisation. By applying these strengths in either a broad or narrow scope, three generic strategies result:, cost … Although developed over 20 years ago, these strategies play a very significant part in any digital marketing campaign today. Competing through service: Insights from service-dominant logic. Michael Porter uses 4 strategies that an organisation can choose from. Marketing strategies and organization structures for service firms. 2. CONTENTS PAGE Porter (1985) presented this strategy as one where a competitive advantage is engineered by minimising costs and lowering prices. The Strategic position of Lidl 5 However, in ord… Submission Date: 26 January 2014 Study for free with our range of university lectures! Bowman’s Strategic clock is another useful tool to analyse the Macro-environment that surrounds Lidl. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. 4.1.5 Environmental Factors 8 Lidl often have in store promotions, but they do not discount their goods as highly as other retailers due to the low prices that already exist. Lidl have a reliant focus on selling quality products at the cheapest cost possible. 4.1 PESTEL Analysis 6 Consumers could have a negative perception of the quality of Lidl’s products as they are sold for such a cheap price (Siro, et al., 2008).     4.1.4 Technology factors 8 Cambridge: Harvard Business Press. WAL-MART DEVELOPMENT RECOMMENDATIONS PART 1 – Project Objectives and Overall Research Approach. Half of UK shoppers visited Lidl, Aldi over Xmas. This module was set out by M E Porter in 1985 and is known as Porters generis strategies (Mindtools, 2015). As they offer goods at an incredibly cheap price, consumers may believe that the goods they sell are poor quality, however this is generally not the case (Siro, et al., 2008). 5-18. This bibliography was generated on Cite This For Me on Monday, May 23, 2016. Lidl will often exhibit their brand colours, yellow and blue, throughout their stores or surrounding areas. Analysis of the competition faced by Lidl within the UK food retail industry 4 2.1 Porter’s Generic Strategies 5 Retail Pricing – Higher Profits Through Improved Pricing Processes. Has not been able to spread their operations outside of Europe very successfully. A Stakeholder Approach  Originally, the 7 P’s was only comprised of 4 P’s which aimed to address certain issues that would allow a firm to have a more developed understanding of their internal operations. Supermarkets could increase prices to pay for living wage. VAT Registration No: 842417633. In: Retailing in the 21st Century. Figure 1 highlights the variation in market share, and how much market share each supermarket currently holds. The Strategic position of Lidl 5 2.1 Porter’s Generic Strategies 5 2.2 Bowman’s Strategic Clock 6 3. The UK is the company 's largest market operating under four banners: Extra, Superstore, Metro and Express. Potential to expand in the UK and acquire a higher share of the UK grocery market. Free resources to assist you with your university studies! 1. Expand their website to actually accept orders and sell products. Felsted, A., 2014. & Proth, J. M., 2010. 3.1 PEST Analysis 7 Has a huge amount of stores across the whole of the UK and Europe giving Lidl great exposure. Supervisor  Andreas Falkenberg  3.2.1 Threat of New Entrants 10 Based on the TOWS matrix, and the analysis of Lidl’s current market strategies, three recommendations can be laid that would help Lidl acquire a greater share of the UK grocery market. 4.1.3 Social and cultural factors 7 3.2 Porter’s Five forces Model 9 | Nils Wurl | M00367256 | Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. This would suggest that they are utilising a cost leadership strategy, and are implemented it with incredible effectiveness (Morschett, et al., 2006). Their main competition as a value supermarket is Aldi (Bosshart, 2006). 6. International expansion of other global brands would cause more competition. Porter, M. E., 1980. The products that are sold the most are the private labeled products like eggs, meat, milk, fresh fruits and vegetables, and the baked goods. Seminar tutor | Dinesh Nanayakkara | Tesco sells approximately 40,000 food products in its superstores, as well as clothing and, The Warwick MBA Competitive scope Table of Contents A Verizon office building in Irvington, New Jersey in 2010. Principles of Marketing. Date/Year of Module: July 2012 In other words, it is a way of analysing a business, its resources and environment (Riley 2014). Furthermore, Lidl should continue to open more stores in the UK in order to expand their presence and accessibility, which will allow their operations to have similar exposure to the other major supermarket retailers. 2.1 Porter’s Generic Strategies This Master’s Thesis is carried out as a part of the education at the  University of Agder and is therefore approved as a part of this    education. Whilst many supermarkets are losing their market share, Lidl’s was increased by a stagger 15.1% from 3.1% to 3.5% (FT, 2015). In the early 1980s, Michael Porter researched the ways that successful companies maintain long-term advantages over their competitors. This will help consumers know there is a Lidl nearby. Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. It also provides online services through its subsidiary, Tesco.com. Business : Chartered Institute of Marketing. 3.2.5 Competitive Rivalry within the Industry 10 Story 2 Also, on top of the main competitors, Aldi and Lidl have taken over the grocery market in times of recession. Pricing strategies and models. Morschett, D., Swoboda, B. Module Code: IB8010 Question: [Question Number and Title, or Description of Project] The reason of how ALDI does it is supported by the generic strategic implemented by ALDI. What makes the Company “Strong” in the Market. 5. [Online] Available at: http://www.theguardian.com/business/2014/jun/27/lidl-launches-store-expansion-programme. 456-467. The five core concepts of marketing are; consumer needs/wants/demands, products and services, value/satisfaction/quality, exchanges/transactions/relationships and markets (Kotler, et al., 2008). European Journal of Operational Research, Volume 152, pp. Siro, I., Kapolna, E., Kapolna, B. An analysis of the external business environment and how it affects Lidl 7 3.1 PEST Analysis 7 3.1.1 Political 8 3.1.2 Economic 8 3.1.3 Social 8 3.1.4 Technological 8 3.2 Porter’s Five forces Model 9 3 Upon entering a foreign market, they set up regional distribution centres (RDCs) to service a … In 2013, Amazon had changed prices on about 40 million products in just one day. Berlin: Springer Berlin Heidelberg, pp. 3. Product (Quality, brand name, service line, warranty, capabilities, facilitating goods, tangible clues, price, personnel, physical environment and process of service delivery): Price (Level, discounts and allowances, payment terms, customers own perceived value, quality/price interaction and differentiation): Place (Location, accessibility, distribution channels and distribution coverage): Promotion (Advertisements, personal selling, sales promotion, publicity, personnel, physical environment, facilitating goods, tangible clues and process of service delivery): People (Personnel training, discretion, commitment, incentives, appearance, interpersonal behaviour, attitudes and customer behaviour/degree of involvement): Process (Policies, procedures, mechanisation, employee discretion, customer involvement, customer direction and flow of activities): Physical (Environment, furnishings, colour, layout, noise level, facilitating goods and tangible clues): Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). 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