Has a huge amount of stores across the whole of the UK and Europe giving Lidl great exposure. 4.1 PESTEL Analysis 6 Analysis of the competition faced by Lidl within the UK food retail industry 4 VAT Registration No: 842417633. Bowman’s Strategic clock is another useful tool to analyse the Macro-environment that surrounds Lidl. 2. Marketing and the 7Ps, s.l. Dolgui, A. Cost Leadership Strategy: To defeat its competitors in a market a firm may provide a low-cost product with minimum acceptable attributes. Employees’ are generally paid a very attractive salary, but have to work incredibly hard whilst on the job. 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. These are the sources and citations used to research Lidl Strategy. This will help Johnson controls complete their move towards a more focused company in building controls (Independent, 2016). Since then, Lidl has now become one of the largest grocery retailers in Europe, with over 600 stores operating in the UK, and thousands based across Europe (Butler, 2014). 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. 1. Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. Tesco sells approximately 40,000 food products in its superstores, as well as clothing and, The Warwick MBA The products that are sold the most are the private labeled products like eggs, meat, milk, fresh fruits and vegetables, and the baked goods. Funnel revenue back into the UK market by creating more stores across the UK. Lidl’s own range of private brands can be used to deter price wars and comparisons. If Lidl were to engage with a price war with other major grocery retailers then they could force competitor’s prices down. The majority of Lidl stores are laid out in a very linear and traditional manner. Why is cost leadership potentially so important? Students | Name | Student Number | Felsted, A., 2014. Table of Contents s.l. The four strategies to choose from are: These are shown in figure 1 below. Morschett, D., Swoboda, B. WAL-MART OUTLINE 2. 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. Does not quite have the market share of the other big supermarkets in the UK, such as Tesco or Asda. 3.2.4 Bargaining Power of Buyers 10 Marketing strategies and organization structures for service firms. In the Michael Porter’s Generic strategies, three main strategies are used as the base namely, Cost leadership, Differentiation leadership and Focus. Kumar, N. & Steenkamp, J. It also provides online services through its subsidiary, Tesco.com. Porter’s generic strategy is given after VRIO analysis Market expansion Strategies are given with the possible opportunities and threats for Lidl. | Maedh Marsha Zambrano | M00384704 | Cambridge: Harvard Business Press. 4.2 Key Trends affecting the industry 9 Porter’s Generic Strategies 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. 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. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. In doing so, the individual components of SWOT and PESTLE analysis are applied to Tesco. Story 1 A Verizon office building in Irvington, New Jersey in 2010. Module Title: Accounting and Financial Management Michael Porter uses 4 strategies that an organisation can choose from. : Chartered Institute of Marketing. He believes that a company must choose a clear course in order to be able to beat the competition. Chicago: American Marketing Association, pp. Wal-Mart competitive position and market potential evaluation. Half of UK shoppers visited Lidl, Aldi over Xmas. Haakon Winger Eide  Porter, M. E., 1980. Lidl’s projection of sales for 2018 is $1,041 Million, Lidl’s future sales growth prediction is 1,929 Million in 2019, $2,753 Million for 2020. The Generic Strategies can be used to determine the direction (strategy) of your organisation. However, if Lidl pursue the adoption of other strategies, they must ensure that their current consumer base is not alienated, or they could end up losing market share. Aldi, which opened its first US store in Iowa in 1976, has stuck with the model, insisting the deposit system is key to its low-price strategy. A firm’s success in strategy rests upon how it positions itself in respect to its environment. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). However, in order to maintain their current rate of growth and expansion, Lidl may have to diversify from their current strategies in order to stay competitive and innovative within the UK grocery market. 3.1.4 Technological 8 As their products are so cheap consumers can often think that the quality is not good enough. 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). 3. An explanation of research approach. Furthermore, Porter’s Generic Strategies will be analysed in order to aid in the understanding of Lidl’s current strategies. Johnson controls is thinking of a tax inversion merger with Tyco international to reduce their tax burden. 2.1 Porter’s Generic Strategies 2. Very solid brand name from being one of the cheapest supermarket retailers in the industry. However, the main distinction would be the different brand names of the products in Lidl stores. 3. The bargaining power of buyers in the grocery industry is fairly high. Although developed over 20 years ago, these strategies play a very significant part in any digital marketing campaign today. This would suggest that they are utilising a cost leadership strategy, and are implemented it with incredible effectiveness (Morschett, et al., 2006). The Generic Strategies can be used to determine the direction (strategy) of your organisation. 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). Verizon Communications, Inc., the parent company of Verizon Wireless, has a generic strategy (Porter’s model) and intensive growth strategies that emphasize quality as a competitive advantage in the telecommunications industry. Porter's Generic Strategies Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage. 2016. It serves as a useful tool for companies, thereby aiding their evaluations, giving them clarity in direction as well as the ability to strategies with others to make well-informed choices and decisions. Although the amount of stores that Lidl have in operation is staggering, it is made even more amazing by the fact they only expanded out of Germany 20 years ago (Lidl, 2015). Identification and evaluation of the Strategies, Introduction [Online] Available at: http://www.ft.com/cms/s/0/2465c426-fd53-11e3-bc93-00144feab7de.html#axzz3giD80B9c, FT, 2015. Assignment Cover Sheet Berlin: Springer Berlin Heidelberg, pp. 1. These ideas were introduced in the book Competitive Strategy by Michael Porter.. SWOT analysis is a method or ‘framework’ used for business analysis. Functional food. This means that it is imperative to have stores in reasonably close proximity to national distribution centres. Harvard professor and world famous business strategist Michael Porter has a simple view to business and how you can generate superior returns from your business – the generic strategies – but you can get stuck in the middle, not one thing or the other.. He goes on … Vizard, S., Rogers, C., Hobbs, T., Roderick, L., Gee, R., Woollen, P., & Joy, S. (2017, February 7). 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). Yes, We Can Help! 1. LIDL’s main strategy is the extensive use of private labels and they ensure that they sell only high-quality products to its customers. Registered Data Controller No: Z1821391. The government is considering a levy on sugar as part of a national strategy to tackle childhood obesity. Journal of Retailing, 83(1), pp. Get help with your Porter's generic strategies homework. Being able to identify these elements will help an organisation to formulate and develop strategies which may build on the strengths, negate the weaknesses, exploit the opportunities or counter the threats (Dyson, 2004). 5.2 SWOT Table 12 Annual Reviews in Control, 34(1), pp. Introduction of new product ranges that cater to an upper-class demographic. Lidl have a reliant focus on selling quality products at the cheapest cost possible. The proper generic strategy will position the firm to leverage its strengths and defend against the adverse effects of the five forces. Brown, G., 2015. By the end of that year the number had doubled to 80 million price changes during a single day. 2.2 Bowman’s Strategic Clock [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11736662/Supermarkets-could-increase-prices-to-pay-for-living-wage.html. Lidl have a plethora of stores across the UK and Europe. Bosshart, D., 2006. 4.1.1 Political factors 6 The Keys To Successful Competitive Strategy 3.1.2 Economic 8 2. International strategy Porter (1985) presented this strategy as one where a competitive advantage is engineered by minimising costs and lowering prices. 5.2 Weaknesses 11 LIDL Integrated Marketing Campaign Competing through service: Insights from service-dominant logic. This would expand their presence in the UK market. This will help consumers know there is a Lidl nearby. 3.2.5 Competitive Rivalry within the Industry 10 & Schramm-Klein, H., 2006. Introduction… Michael Porter is a professor at Harward Business School. The products sold in Lidl are often very similar to the goods sold in other supermarkets, such as Tesco or Asda. With this strategy, the objective is to become the lowest-cost producer in the industry. A Verizon office building in Madison, New Jersey, U.S.A. in 2010. The 4Ps are comprised of; product, price, place and promotion (CIM, 2009). 5.1 Strengths 10 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). | Nils Wurl | M00367256 | How Lidl adds value, With the introduction of a deluxe range (Lidl, 2014) they have seen a shift in their strategic position and as they move more towards selling higher/premium quality goods so have they been able to increase their market share within the UK (Potter, 2014) Reference this. The strategies proposed depend on: The Competitive Advantage of the company. Utilise extensive network in of operations in other European countries to bring new products to the UK. This module was set out by M E Porter in 1985 and is known as Porters generis strategies (Mindtools, 2015). However, depending on the country, they operate in different segments of the supermarket industry, ranging from value to high-end goods (Butler, 2014). Online presence that showcases the products they have and any deals they may be running. An analysis of the external business environment and how it affects Lidl 7 Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Lidl entered the market on the basis of being one of the most value-driven supermarkets in the industry (Dolgui & Proth, 2010). 3.1.3 Social 8 I. Aldi and Lidl to force ‘big four’ supermarkets into price war to stop stampede of customers to discount chains. Study for free with our range of university lectures! However , Tesco likewise incorporates the differentiation technique (Baroto ainsi que al., 2012), hence chasing a crossbreed strategy merging the two, whilst Lidl only follows the no-frills cost leadership approach (Geppert ain al., 2015). All work is written to order. 3.2.2 Threat of Substitutes 10 [Online] Available at: http://www.dailymail.co.uk/news/article-2539064/Aldi-Lidl-force-big-four-supermarkets-price-war-stop-stampede-customers-discount-chains.html, Ruddick, G., 2015. Booms, B. H. & Bitner, M. J., 1981. Consumers are not very involved in any of the processes or procedures of Lidl, and would have little power over their business operations. 3.1 PEST Analysis 7 5. 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? Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980).. Journal of Retailing and Consumer Services, 13(4), pp. All external references and sources are clearly acknowledged and, The Strategic Evaluation of Lidl’s within the UK Market. 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. Generic strategy 3.2 Porter’s Five forces Model 9 Introduction 3 4.1.5 Environmental Factors 8 Lidl’s history begins in the 1930s, when their first store was created in Germany acting as a grocery wholesaler. Porter uses the industry framework and the generic strategies to develop many interesting ideas about what he terms the "generic industry environments": fragmented industries, emerging industries, mature industries, declining in-dustries, and global industries. Increased revenue could then be funnelled into UK development. s.l.           Dyson, R. G., 2004. Simon, H., Gathen, A. V. D. & Daus, P. W., 2010. This rapid expansion has made them one of the most dominant and feared competitors in the UK grocery market, with major grocery retailers constantly trying to minimise Lidl’s portion of market share. 5th ed. The Strategic position of Lidl 5 2.1 Porter’s Generic Strategies 5 2.2 Bowman’s Strategic Clock 6 3. Their main competition as a value supermarket is Aldi (Bosshart, 2006). Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. Siro, I., Kapolna, E., Kapolna, B. The TOWS Matrix — A Tool for Situational Analysis, San Francisco: Long Range Planning . If you need assistance with writing your essay, our professional essay writing service is here to help!       Submission Deadline: 11:00 AM 6th December, 2012. As well as operating in the UK, it has stores in the rest of Europe and Asia. 2. Competitive Strategy. 1. Contents 1. 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. Wide range of private labels gives them exclusivity and security. Do you have a 2:1 degree or higher? Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). Supermarkets could increase prices to pay for living wage. 3.2.1 Threat of New Entrants 10 These products generate over 80% of sales. | Sara-Sofia Broberg | M00373321 | 4. Determination of the specific market for SBU Date/Year of Module: July 2012 Submission Date: 26 January 2014 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. The UK is the company 's largest market operating under four banners: Extra, Superstore, Metro and Express. 4. | Mihaela Palca | M00378081 | Potential to expand in the UK and acquire a higher share of the UK grocery market. However, this does not imply that the University answers    for the methods that are used or the conclusions that are drawn. Expand their website to actually accept orders and sell products. A Porter’s Five Forces analysis of Verizon Communications, Inc. determines competitive rivalry as the highest-intensity force on the business, including wireless telecommunications services, based on the external factors in the information and communications technology and services industry. 3, SWOT and PESTLE analysis. Question: [Question Number and Title, or Description of Project] It can be used to analyse a firm’s competitive advantage and scope. 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