Aldi, a discount supermarket retailer, has grown from its German base to the rest of Europe, Australia, and the United States by replicating a simple business format. Aldi limits the number of products (SKUs in the grocery business) in each category to ensure product turn, to ease stocking shelves, and to increase its power over suppliers. It also sells mostly private-label products to minimize cost. It has small, efficient, and simply designed stores. It offers limited services and expects customers to bring their own bags and bag their own groceries. As a result, Aldi can offer its products at prices 40 percent lower than competing supermarkets. (30 marks-350 words)

1. A. Identify and critically discuss the business level strategy adopted by Aldi to outperform rivals and achieve competitive advantage.

2. B. Explain the potential pitfalls of Aldi’s strategy and how it can improve company competitive position vis-à-vis the five forces.