Strategic Analysis of Woolworths Supermarket in Australia

This report provides a strategic analysis of Woolworths Supermarket in Australia. It includes a macro analysis of the industry in Australia, Porter’s five forces and industrial analysis, and a conclusion.

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Strategic analysis

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Table of Contents
Introduction......................................................................................................................................3
Macro analysis.................................................................................................................................3
Porter’s five forces and industrial analysis......................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Woolworth is a very popular supermarket in Australia which has been established by Percy
Christmas in 1924. There are many stores which have been opened in the country and by that
huge market share has been captured. In the supermarkets, all the products are involved and they
are provided to all. There was a high rate of competition which was faced by the company and
by facing it properly there was a competitive advantage which was gained by the company. In
this report all of the external aspects will be discussed and in that there will be carrying out of the
macro analysis of the industry in Australia. With that, the porter's five forces will also be
considered and discussed.
Macro analysis
In the Australian market, there is the growth which has been attained by the supermarkets and
grocery industry has provided various benefits to the complete economy. For the attainment of
the additional benefit, it is required that there shall be an undertaking of the appropriate analysis
of all the macro factors which are affecting the industry and the business. This will be done with
the help of pestle analysis in which all the areas will be covered.
Political factors
In Australia and New Zealand, there is an agreement which is made for the economic trade
relations and that provides great advantages to the company. The countries in which operations
are carried are politically stable (Oraman, 2014). There is a need for the disclosure of complete
dietary information on the products by the supermarket industry as that is required by the food
standards code.
Economic factors
In Australia, there was the economic crisis which was faced and due to that, the income of the
households has declined. With this, there is a decline in the purchasing power of the consumers.
The standard of living in these countries is high and due to that the cost of living has increased
and that has led to change in the purchasing perspective of consumers (Hughes, 2019). Another

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factor such as inflation is also considered in making the decision together with the economic
policies.
Social factors
In society, there are various changes which take place and with that, the lifestyle and the industry
are affected. The Australian supermarkets are affected by the changes which are taking place in
the lifestyle and attitude of all. In this, the more focus is made on the health as people are
becoming health conscious. There is an increase in the demand for the low-fat products and by
that sale of the same has noticed a hike. There is the different culture which is followed in
Australia s the income is low so the people tend to consume the products which are heavy and
provide them the energy at low cost in place of low-fat products or fruits. They have less
education and so do not know the nutritional facts and that affect the overall sale of the
supermarkets (Srdjevic, Bajcetic, and Srdjevic, 2012). The mindset of the society plays an
important role in this aspect as the people with higher thinking will be opting for quality products
thereby increasing the overall benefits attained by supermarkets.
Technological factors
The technology is developing faster in Australia and that affects the supermarkets as they will
also be required to develop their systems accordingly. The same is performed by the company
and there is the introduction of new applications by which the staff is operating more
collaboratively. By the help of this, there is an increase in the level of consumer satisfaction and
that is an advantage for the industry. With the benefits, there is a certain negative result also
which are faced as there is an increase in theft with the new technology that is used.
Environmental factors
In the supermarkets, it is necessary that the environmental factors are given the importance as
they affect the sustainability of the stores. There is the introduction of the organic and eco-
friendly products and with that, the environment is affected in a positive manner (Ho, 2014).
There are various policies and rules which are framed by the company in this respect and under
that, all the products which are provided shall be environment-friendly and suitable for the
consumers.

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All of the factors by which the position of the supermarkets is affected in the industry are
analyzed. It has been determined that there is the coverage of all the aspects by Woolworth and it
is gaining the advantage of the same. The company is using all the resources which are
appropriate in the environment and will make it able to deal with the competition which is
prevailing in the market.
Porter’s five forces and industrial analysis
In the competitive environment, there is the position which is attained by all the businesses and
the same can be evaluated with the help of porter five forces. In the factors which will be
affecting the competition will be considered and then the analyzation will be made accordingly.
The main parameters based on which final decisions will be made are as follows:
Rivals among existing competitors: In the supermarket sector there are various businesses
which are present and that increase the competition. Among all of them, there is rivalry due to
being involved in the same industry and the conflicts arise due to the price wars and other
similarities. There is a high level of competition which is faced by Woolworth and to deal with
the same, there is the adoption of such strategies by the company which will be providing it with
the competitive advantage (Dobbs, 2014). There is the limitation which is set due to the
competition and that can be dealt with the appropriate use of the advanced features which are
new for others and in this way the company will be able to deal with the rivals which are present
in the existing market such as Coles and Aldi.
Bargaining power of buyers: The consumers have a wide range of options from which they can
choose and this is due to the availability of several products from various supermarkets. Many
sellers offer them the deals and offer and by that buyers enjoy a high level of power and control
the complete market (Tanwar, 2013). In the supermarket industry, many are involved together
with the new entries and that way have high bargaining powers.
Bargaining power of suppliers: The suppliers also have a high rate of bargaining power as they
have many buyers to whom they can supply their products. They can easily demand the price and
can sell it at that rate but that should be reasonable as they are highly affected by the seasonal

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changes. There is the attainment of the appropriate supply chain management so that all the
products can be supplied effectively.
The threat of substitute: There are certain products which can be used in place of the ones
which are already present and are identified as the substitutes. They are the threats as they can
replace the products and that will be an adverse situation for the company. To deal with this
situation, the consumers are offered with a wide range of products which meet their expectations
and this way they will not be considering the other products (Woolworth, 2014). There are
various competitors and so an effective pricing strategy will be required to be adopted by which
the others will not be able to substitute the products and there will be a rise in the sales which is
made.
The threat of new entrants: In the supermarket industry there is a high rate of the threat of new
entries that can take place in the market. As there is already high competition and the same will
have to be faced by the new entrants and this will be making it difficult for them to make the
position in the industry. There will be a risk for them concerning the investment which is made
by them as if they fail then the same will be a loss for them (Lee, Kim and Park, 2012). They will
be required to be highly experienced and skilled as then only can make the position in the
industry and this is an advantage for the company as others will not be much willing to enter the
market.
The analysis is performed and it can be noted that there is the relation which exists among all the
factors as if there will be new entries then the threat of substitutes will be there and also the
rivalry will be increased.
Conclusion
The above-presented report elucidates all the factors which are essential for the consideration of
the macro analysis. In that, there is the use of pestle analysis and that way all of the aspects
which need to be focused and by which the industry is affected have been determined. There is
an understanding which is gained about the forces which are present and which affect the whole
supermarket industry. They all are related as there will be more bargaining power which will be

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available with the buyers due to the new entries which are made and similarly others are also
related and the same has been identified in the report.

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References
E. Dobbs, M. (2014) Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Ho, J.K.K. (2014) Formulation of systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Hughes, M. (2019) The social and cultural role of food for Myanmar refugees in regional
Australia: Making place and building networks. Journal of Sociology, 55(2), pp.290-305.
Lee, H., Kim, M.S. and Park, Y. (2012) An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modelling, 36(4), pp.1783-1795.
Oraman, Y. (2014) An Analytic Study of Organic Food Industry as Part of Healthy Eating Habit
in Turkey: Market Growth, Challenges and Prospects. Procedia-Social and Behavioral
Sciences, 150, pp.1030-1039.
Srdjevic, Z., Bajcetic, R. and Srdjevic, B. (2012) Identifying the criteria set for multicriteria
decision making based on SWOT/PESTLE analysis: a case study of reconstructing a water
intake structure. Water resources management, 26(12), pp.3379-3393.
Tanwar, R. (2013) Porter’s generic competitive strategies. Journal of business and
management, 15(1), pp.11-17.
Woolworth. (2014) Response to Competition Review Issues Paper. [Online] Available at:
http://competitionpolicyreview.gov.au/files/2014/06/Woolworths.pdf [Accessed 20 July 2019]