Question 4 (20 Marks) The grocery discounter ALDI was founded in 1913 as Albrecht Discount in Essen, Germany. Currently, ALDI operates in 18 countries in Europe, Australia, and the United Kingdom. ALDI's strategy revolves around providing good-quality groceries for low prices. Quality is important to ALDI, which guarantees products sold with a no-question-asked-money-back guarantee. ALDI achieves its low-cost strategy by using a variety of methods. First, it buys large quantities of items from vetted suppliers capable of delivering good-quality products, taking advantage of quantity discounts and economies of scale. ALDI stores are typically small, around 15,000 square feet, and are standardized with respect to appearance and layout while allowing for small differences between countries where they operate. A typical store sells around 700 products, compared to approximately 25,000 items stocked at a traditional supermarket Usually, there are only one or two brands of a certain item, and 95% of the items are store brands. ALDI chooses inexpensive locations, usually outside town or on side streets, to minimize overhead. ALDI products are displayed on pallets rather than on shelving. Employees are cross-trained to be able to operate the checkout as well as restock items by replacing pallets. This results in flexibility, more cash registers are open when the shop isn't busy. Customers must pay for bags (or bring their own) and bring carts back to a standard location to recoup a coin deposit. ALDI stores typically operate with a 13% margin for overhead and labor, in contrast to the typical margin around 30% for other grocers. 1. How does ALDI's strategy lead to a competitive advantage? How does the company achieve this strategy? (5 marks) 2. What could be two possible ethical issues that managers at ALDI may face? (Please explain)