Family Feud at Aldi Nord
| Case Code: BECG170 Case Length: 10 Pages Period: 2012-2019 Pub Date: 2021 Teaching Note: Available |
Price: Rs.500 Organization: Adli Nord Industry: Retailing Countries: Germany Themes: Family Business, dispute,succession planning |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
The Germany-based Albrecht family owned and operated the Aldi discount supermarket chain in several countries across the world. The Albrecht family members regularly featured on the list of the world’s richest people, but maintained a highly private and reclusive lifestyle.
Aldi traces its origin to a small store in Essen in Germany, which was started by Anna Albrecht in 1913. The store survived the attacks of the Allied forces during World War II, and was one of the few standing structures in the town. Anna’s sons (Theo Albrecht and Karl Albrecht) started operating the store after returning from the war. In post-war Germany, people were looking for basic necessities that were available at low price. The brothers catered to those shoppers and kept the prices low by operating barebones stores without any paraphernalia. Later, the brothers divided the business between them. Theo took over the business in the north of Germany (Aldi Nord), while Karl operated the business in southern Germany (Aldi Süd).
Aldi entered several markets over the next few years, and the US was the only country where both Aldi Süd and Aldi Nord operated. Aldi followed the same business practices that had made it popular in Germany to other markets too and grew popular in these markets as well. The rapidly growing business made the brothers among the richest in the world. To ensure that the business remained in the family for generations to come, the brothers created foundations in 1973, and transferred their assets to these foundations. The business was managed through these foundations. After Theo and Karl passed away, their heirs took over the business. Aldi Nord was managed by Theo’s sons, Theo Jr and Berthold. Theo’s wife, Cäcilie, who had taken an active part in the business from the beginning, was the matriarch of the Albrecht family that owned Aldi Nord and was head of one of the three foundations that managed the business.
Though the Albrechts were among the richest people in the world, they led a very simple life. It was reported that they did not own private jets or vacation homes. They did not appear in public, nor were they part of any major events.
The family was so secretive that it even sued some of the magazines that published articles about the family members. But ironically, such a reclusive family made it to the headlines of the magazines not only in Germany but across the world due to a dispute that arose among the family members who owned Aldi Nord.
The dispute that had been brewing between the family and Berthold's wife Babette took a turn for the worse after Berthold died in 2012 of liver cancer. Babette and her children then started splurging money, and it was alleged that they had spent € 100 million on supporting their lavish lifestyle. This was totally against the philosophy of the Albrecht family. Babette appeared on television shows, and luxury auctions. Before his death, Berthold who was heading one of the foundations, the Jakobus Foundation, changed the way it was managed and decided to reduce the role of his family and include an outsider as a member of the foundation. Babette refused to honor the change made by Berthold and approached the courts and said that at the time when the change was made in the foundation, Berthold’s critical abilities were impaired. Babette’s luxurious lifestyle and her decision to take the matters of the Foundation to the court were opposed by Theo Jr. and Cäcilie.
In the process, both Babette and Theo Jr. took their dispute to the media. Theo Jr. even said that several decisions about the business had been left unattended as they had to be approved by all the three foundations, and Babette and her children were not agreeing to them. Cäcilie, who died in November 2018, excluded Babette and her children from the will and from the future decisions of Aldi. In the will she reiterated the family’s need to follow a ‘restrained and moderate’ way of life and expressed unhappiness over the behavior of her daughter-in-law and grandchildren. She also said she was apprehensive that they might misuse the funds of the foundation.
Meanwhile, the business was suffering. For the first time in its history, Aldi Nord posted losses in its German operations. With competition sneaking in swiftly, the family feud left the company behind. Theo Jr. needed to take some tough decisions to bring the company back on track. He was looking at making huge investments to revamp their stores. This called for unanimous consent from the family members, which appeared unlikely in the existing scenario.
Issues
The case is structured to achieve the following teaching objectives:
- Understand conflicting ethos of the family members and the family business – The Family Dilemma.
- Get insights into the different development models of the family business.
- Analyze the reasons for conflicts in family businesses and the stages of business family conflict.
- Draw a conflict intensity continuum for a family business.
- Find different approaches to managing organizational conflict.
Contents
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The Matriarch’s Will
Origins of Aldi
The Reclusive Billionaires
Aldi Nord and the Three Foundations
Point of Contention
Amended Articles
Cäcilie’s Will
Impact of the Feud
Exhibits
Keywords
Family business; Aldi Nord; The Albrecht Family; Deep Discounter; The Family Dilemma; Development models of family business; conflicts in family business; stages in family business conflict; conflict intensity continuum; organizational conflict
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