CSR Activities and Organizations Internal Culture

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 generating local projects. The company pays a special focus on using organics and clean energy as well as community and charity initiatives. Their efforts are reflected in their daily business activities (Hubbard, Rice, and Galvin, 2014). In fact, their CSR values reflect the cornerstone for the activities of their business partners, employees, and suppliers throughout Aldi’s areas of operations. The company has achieved its success through responsible operations with due respect to nature, people, and the environment. Responsibility, simplicity, and consistency are the core pillars of their CSR strategy as reflected in the following CSR strategies (MiLee, Park, and Lee, 2013).
Community Charities
Aldi actively participates in local charities and donations towards the United Way. In 2008, the company donated significantly as part of the United Way campaign. Moreover, Aldi has sponsored the Salvation Army Church. In the same year, it also gave millions directly to the Salvation Army’s programs and mission. The American Red Cross is also another beneficiary of Aldi’s donations, which provided them with relief to fire, flood and tornado victims (Haberer, 2010). Repeatedly, Aldi has tirelessly donated money and time on as needed grounds. Since its establishment, the firm has collaborated with local community hospitals to provide long-term shelter for patients and their families during treatment without imposing any costs on the family (Robbins, DeCenzo, Coulter, and Woods, 2016). Any patient whose treatment is set to be longer than three months is assigned to the Aldi House. This house features fully furnished apartments. Moreover, the company offers families with other amenities such as a library, a playground, a music room and movies. Such facilities are believed to make the families feel comfortable as they support their loved ones throughout the period when they receive treatment (MiLee, Park, and Lee, 2013).
Supporting Local Communities
Aldi is a champion in community outreach. It focuses its community and charity efforts in four key domains: education, arts, social services, and other local partnerships (Haberer, 2010). Since its establishment, the company has always provided a certain percentage of its revenue through community programs and grants in support of education, social services, and arts ranging from providing emergency services during a crisis, and supplying art materials to helping children read. Aldi shows its dedication to the community in some ways (Kleemann, 2013). A good example of how the firm supports the community is by encouraging red card owners to decide which local school that they wish to help via donations. Moreover, during holidays, Aldi offers seniors with a personal shopper to help them in wrapping gifts. Such are just a few examples of how Aldi supports the surrounding communities (Hubbard, Rice, and Galvin, 2014).
Reducing Carbon Emission
Carbon footprint is currently the new corporate word in the business fraternity that decrees the need for companies to be ethical. Most companies have incorporated this idea into their overall CSR strategies and business plans. Companies do not just seek to advertise and sell their products, .they are obliged to check how their operations and activities affect the stakeholder community (Robbins, DeCenzo, Coulter, and Woods, 2016). In this case, the stakeholder is the environment. Since its inception, Aldi emphasizes the use of an energy management mechanism, which optimizes energy consumption. The government reports that buildings generate at least 40% of all the country’s carbon dioxide and consume at least 70% of the country’s electricity (Hubbard, Rice, and Galvin, 2014). Aldi’s energy management mechanism is centrally situated and supervised at the head office to allow company-wide troubleshooting and energy policy (MiLee, Park, and Lee, 2013). Besides the tight energy consumption monitoring, Aldi is currently pursuing the feasibility of retrofitting its stores using on-site energy systems. In the end, it will incorporate energy systems such as fuel cell technology and solar cells aimed at reducing the carbon footprint of Aldi Corporation.
Eliminating Waste
This is also an important aspect of their CSR and ethical strategy. Aldi generates its revenue mostly through post-consumer items. The company has implemented programs to recycle plastics, corrugated cardboard, electronics, aluminium, and mixed paper. Moreover, Aldi has an internal policy that is stricter than the regional and local regulations to achieve compliance with the aim of safeguarding natural resources (Kleemann, 2013). Probably, corporations misusing the communities which they operate in and adopt proactive environmental positions are subject to fail (Robbins, DeCenzo, Coulter, and Woods, 2016). Therefore, Aldi has proven that it understands the power of stakeholders.
4. Aldi’s Internal Culture
Aldi and its employees are guided by a relentless dedication to their customers. This commitment is founded on the basic purpose of providing people with the best possible quality at the lowest possible price. This commitment can be traced back to 1913 when the founders opened the first store. Ever since then, the company has grown to serve millions of customers across the globe. Despite the decades of expansion and growth, Aldi has remained true to its philosophy of high-quality products at lower prices along with the belief that the company’s employees are the ones accountable for making the difference for the firm’s performance and its customers (Laforet, 2017). The culture did not arise as a matter of chance, the founders and management built it through strong leadership and focused; it was not a simple task. A recent report by Deloitte indicates that employee engagement and culture is ranked as a top challenge by 80% of world HR managers. However, Aldi, one of the world’s most recognizable retailers has managed to build a strong culture successfully (Hubbard, Rice, and Galvin, 2014).
The company’s culture emphasizes a commitment to its employees because they are the ones who drive the Aldi stores, logistics and other functions, which are critical to serving customers. The firm’s management value employee opinion because they believe employees play a vital part in driving the business (Haberer, 2010). For this reason, the leaders always listen to their subordinates’ ideas, opinions and concerns. The philosophy has encouraged the employees to come up with some of the biggest ideas, which has differentiated Aldi from its competition. As Aldi continues to gain recognition recently as the pioneer in environmental sustainability, some of the projects that helped them reduce waste and maximize energy efficacy were ideas shared by the employees. Aldi’s employees work together to help make the internal culture a reality, and in turn, they do the important things which make the customer’s experience unique (Kleemann, 2013). As a result, Aldi’s employees are proud because the company has changed the world.
Aldi’s business approach is a direct result of their internal culture focused on inclusivity, achievement, entrepreneurial and faith. Some of the leading retailers in the industry such as Woolworths, Wesfarmers, Coles Supermarkets and Myer Pty Ltd often associate themselves to a patriotic impulse. As for Aldi, it has been intense on such connections beginning with their abortive advertising campaigns to their modern initiatives of celebrating their employees in overseas markets.
When entering the overseas markets, Aldi experienced some considerable challenges. Although they had a distinctive culture, they realized they needed to protect and reproduce the same set of ideological and organizational structures in their foreign markets, too. However, Aldi succeeded. This enabled the company to fight the completion and spread through one level to the next both in the rural and exurban markets.
The company internationalized by opening and acquiring other stores. Therefore, it needed to hire a pool of outstanding talent almost different from other companies. The core business of Aldi does not happen at the head office but in the thousands of its discount outlets. Employees are the most important people in these stores (Kleemann, 2013). They are the ones who deal directly with the customers and hence are responsible for achieving the organization’s sales targets. The firm’s internal culture makes it easy for employees to do their daily tasks.
The founders greatly influence the internal culture; their cultural values and rules reflect the company’s business strategy and guiding philosophy. Moreover, it is easy for the customers, managers, employees and any individual to understand Aldi’s internal culture and business model of providing high-quality products at low prices. It tries to avoid unnecessary expenses wherever possible as the managers and employees across the organizational levels are cost conscious and concentrate on economic efficiency to reduce waste. A good example is the company’s internal rule that requires all employees to turn off lights in their offices whenever there is adequate sunlight (Kleemann, 2013). Therefore, the firm’s idea of cost watching is evident across the entire value chain such as in the creation of new methods for transport of goods and warehouse management.
Besides the focus on economic efficiency, Aldi concentrates on achieving small successes in all areas and being contended with small improvements. Such a culture of continuous improvement is linked to a focus on the creation and execution of solutions. Aldi encourages its employees to try new solutions and ideas. A good example is the company’s practice of testing new products in three shops rather than subjecting them to a detailed market research and analysis. With success measured by a fast turnover, the company introduces them in all its stores as empowered by its employment strategy. The leaders select managerial staff from internal talents and then develop them (Kleemann, 2013). Moreover, potential managers must demonstrate significant qualities such as modesty, fairness towards others and economic efficiency.
Besides focusing on talent recruitment and hiring, people power is also a component of Aldi’s internal culture. The company has made some heavy investments in employee recruitment and training programs. To prove this, Aldi has created an Academy at its Mitchelstown offices to provide training and development courses to new and existing employees. In Ireland, Aldi provides induction and training courses to develop their technical, professional and interpersonal skills. In essence, the company has also come up with a new performance review process that helps ensure each employee gets the appropriate feedback and that employees openly discuss their career progression and personal development (Kleemann, 2013). Recently, Aldi launched some new courses like well-being and health; this program is aimed at ensuring the staffs are supported with the necessary skills to do their daily tasks effectively.
Employees are treated fairly through the provision of equal opportunities and diversity. Aldi’s internal culture values and treats all employees the same regardless of the differences in their backgrounds. In essence, Aldi treats its job applicants, customers, employees, visitors, suppliers and contractors with equal respect and fairness (Kleemann, 2013). The company provides equal opportunities for all regardless of sexuality, disability, age, religion, ethnicity, social background or gender, which is extended throughout the company levels.
Conclusion
Aldi is a giant retailer in the worldwide market. Throughout its operations, the company focuses on giving consumers with high-end quality items that reflect value for their money. The company achieves this by ensuring that all its activities are guided by their core values of responsibility, consistency, and simplicity. Through adopting an internal culture of inclusivity, the company can provide its customers with the lowest prices possible. Culture is also another factor that contributes to the success of Aldi. Their internal culture is incorporated into each aspect of their business. Their culture depicts the beliefs and values of the organization, which makes employees, strive to live them daily. In turn, this radiates through the entire organization. It will be fruitless to define such a winning culture if it fails to radiate through the organization. The company gives its employees a humane treatment and these employees, in turn, treat the customers the same. The result is happy and satisfied customers, which translate into increased sales.


References List
Babnik, K., Breznik, K., Dermol, V., and Širca, N. T. 2014. The mission statement: organisational culture perspective. Industrial Management & Data Systems, 114(4), 612-627
Haberer, J. 2010. Strategic Management - Aldi: Is Aldi being deprived of the German discounter-throne? Mu?nchen: GRIN Verlag GmbH.
Hubbard, G., Rice, J., and Galvin, P. 2014. Strategic management. Pearson Australia
Kleemann, F. C. 2013. Supply chain strategy analysis for Aldi. Grin Verlag Ohg.
Laforet, S. 2017. Effects of organisational culture on brand portfolio performance. Journal of Marketing Communications, 23(1), 92-110
MiLee, E., Park, S-Y. and Lee, H. J. 2013. Employee perception of CSR activities: Its antecedents and consequences. Journal of Business Research, 66(10), 1716-1724
Robbins, SP, DeCenzo, DA, Coulter, M, and Woods, M 2016. Management: The Essentials 3e. Pearson