Business Environment and Strategic Management

The report intends to shed light on the notions of business environment and strategic management in the particular context of the organization Woolworths Limited. The report begins by conducting an analysis of the organization on Porter’s Five Forces model and finds that it faces a substantial amount of competition in the business market of Australia.

Running head: BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
Business Environment and Strategic Management
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1BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
Executive Summary
The report intends to shed light on the notions of business environment and strategic
management in the particular context of the organization Woolworths Limited. The report
begins by conducting an analysis of the organization on Porter’s Five Forces model and finds
that it faces a substantial amount of competition in the business market of Australia.
However, the political as well as economic factors of Australia reveal that the nation is a very
congenial one for the business operations of Woolworths. The report also conducts a value
chain analysis and core competency analysis of the organization. Furthermore, the competitor
analysis of the organization also reveals the fact that the organization is facing high level of
business competition. The report on the basis of these factors offers new mission and vision
that the organization can follow and suggests the use of cost leader and product
differentiation for the attainment of the same. Lastly, the report concludes by recommending
the use of omni-channel business strategy and digital marketing strategy which the
organization can use for the enhancement of its prospects.

2BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Business Environment................................................................................................................3
Porter’s Five Forces Analysis................................................................................................3
Political Factors......................................................................................................................5
Economic Factors...................................................................................................................5
Core competencies.................................................................................................................6
Value Chain Analysis.............................................................................................................6
Analysis of competitive advantage............................................................................................8
Strategy formulation and choice................................................................................................8
Recommendations....................................................................................................................10
Conclusion................................................................................................................................10
References................................................................................................................................12

3BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
Introduction
The organization Woolworths Group Limited, established in 1924 is the 2nd largest
retail organization of Australia and caters primarily to the retail needs of the people of
Australia (Woolworthsgroup.com.au, 2018). More importantly, although the organization is
the 18th largest retail organization of the world yet for the year 2016 it incurred a financial
loss of more than $1.235 billion (Woolworthsgroup.com.au, 2018). This can be attributed to
the ever increasing business competition which the concerned organization is facing in the
retail business industry of Australia. This report will focus on the business environment in
which the organization Woolworths Limited is operational and also the strategic direction
that they need to follow.
Business Environment
Hanson et al. (2016) have stated that the fortunes of an organization depends greatly
on the effectiveness as well as efficiency with which it is being able to resolve or mitigate the
threats offered by the business environment in which it is operational. Furthermore, the
fortunes of a business enterprise also depend greatly on the efficiency with which it is being
able to exploit the business opportunities presented by the business environment (Prajogo,
2016).
Porter’s Five Forces Analysis
Threat from New Entrants Woolworths has been in business for more than 80 years and
enjoys a positive brand image (Woolworthsgroup.com.au,
2018). The organization offers a plethora of products or
services to the customers which are much appreciated by the
customers. In addition to these, the large number of

4BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
supermarkets that the organization owns also ensures a steady
sale of products offered by the organization (Chimhundu,
Kong & Gururajan, 2015). Thus, it can be said that the
organization faces a very low level of threat from the new
entrants.
Threat from Substitutes The organization is currently facing a high level of threat from
its various substitutes like Coles, Amazon and others (Zakaria
et al., 2014). It is pertinent to note that these organizations are
not only using cost leadership and other business strategies for
the sale of their products but also taking the help of digital
marketing strategies to reach out to a much larger customer
base (Grimmer, Miles & Grimmer, 2015). In addition to these,
it is seen that the quality of products and price charged by
them is better than that of Woolworths (Medlin & Ellegaard,
2015).
Bargaining Power of
Suppliers
As opined by Lewrick et al. (2015), if the bargaining power of
the suppliers is high then this can adversely affect the business
prospects of an organization. The organization in order to
reduce the bargaining power of the suppliers takes the help of
multiple supplier system. This not only ensures that the
organization gets timely supply of raw materials but at the
same time reduces their bargaining power as well.
Bargaining Power of
Buyers
The number of options which are available to the customers in
the contemporary times has increased in a substantial manner
because of the increasing number of retail organizations in the

5BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
business market of Australia (Wei et al., 2018). Sutton-Brady,
Kamvounias and Taylor (2015) are of the viewpoint that if the
bargaining power of the customers is high then this can
adversely affect the prospects of an organization. Thus, it can
be said that the high bargaining power of the customers is
adversely affecting the business prospects of Woolworths.
Industry Rivalry The organization is facing a high level of competition from
organizations like Coles, Amazon, Wesfarmers and others. It
is pertinent to note that these organizations use different kinds
of business as well as marketing strategies for the process of
their business which has helped them to attain competitive
advantage in the business market of Australia (Leiblein, Chen
& Posen, 2017).
Political Factors
As opined by Davcik and Sharma (2016) a stable political environment is one of the
most basic requirements of the contemporary business organizations. It is pertinent to note
that Australia has one of the most democratic governments of the world. In addition to this, it
is seen that the nation does not experience any major political struggles or strikes (Wei et al.,
2018). Moreover, the national government of the nation takes active initiative for the
promotion of commerce and trade. Thus, it can be said that the political environment of the
nation is an ideal one for the business operations of the concerned organization.
Economic Factors
Australia has one of the most stable economies of the world and as a matter of fact the
individual per capita income of the people of Australia is one of the highest ones of the world

6BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
(Leiblein, Chen & Posen, 2017). More importantly, the economic recession which adversely
affected the majority of the nations of the world has very less impact on the national economy
of the concerned nation (Lewrick et al., 2015). This ensures the fact that the people of the
nation have the necessary capital to purchase the products that the concerned organization
offers.
Core competencies
The core competencies of Woolworths are listed below-
 Quality: The organization is known for the high quality as well as diversity of
products or services offered by it. As a matter of fact, the customers can get the best
quality branded products of different organization under one roof of the Woolworths
supermarkets (Woolworthsgroup.com.au, 2018).
 Communication: The organization conducts regular seminars, events and other kinds
of marketing campaigns with the objective to convey the relevant message regarding
the products and the strategies followed by them to the stakeholders
(Woolworthsgroup.com.au, 2018). This has enabled it to maintain an effective
relationship with the stakeholders.
 Teamwork: The organization has segregated its entire workforce into different teams
so as to enhance their efficiency. This has contributed in a substantial manner towards
the growth of the organization.
 Problem Solving: Woolworths takes into effective consideration the perspective of
the employees for the resolution of various problems that it faces
(Woolworthsgroup.com.au, 2018). This has not only helped it to earn the trust of its
employees but also to improve their performance as well.

7BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
Value Chain Analysis
Primary Activities Weak/ Strong/ Moderate Under Armour
Inbound Logistics Strong Third Party
Operations/ Manufacturing Strong Third Party
Outbound Logistics Moderate Third Party
Marketing and Sales Moderate The organisation has a team
which is entrusted with the
work of marketing and sale
of the products
After Sale Service Moderate The customer support team
of the organisation takes care
of this
Support Activities Weak/ Strong/ Moderate Under Armour
Firm Infrastructure Strong The organisation is well
structured and boasts of a
great culture
Human Resource
Management
Strong High employee engagement
and attractive remuneration
offered by the organisation
ensures the effective
management of human
capital
Technology Development Weak There is a need for the
organisation to integrate
modern technology within

8BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
the framework of their
business
Procurement Moderate Third Party
Analysis of competitive advantage
Woolworths is facing a substantial amount of business competition in the retail
business market of the nation of Australia from organizations like Coles, Wesfarmers,
Amazon and others. It is pertinent to note that these organizations through the effective usage
of different kinds of business strategies like cost leadership, e-commerce, omni-channel
business strategy and others have been able to attain competitive advantage and a higher
amount of revenue (Sakas, Vlachos & Nasiopoulos, 2014). In addition to these, the product
line offered by these organizations is much more diversified than the ones offered by
Woolworths. More importantly, Woolworths is still taking the help of traditional means of
marketing whereas these organizations are actively using different digital marketing and
promotion strategies which has enabled them to gain competitive advantage. Thus, the
organization under discussion here has not only experienced a decline in the number of
customers that it used to get in the earlier times but also in revenue as well.
Strategy formulation and choice
In the light of the increasing amount of business competition that the organization
Woolworths is facing presently in the retail business market of Australia the vision of the
organization should be to offer the best quality cost effective products to the customers. The
mission of the organization, on the other hand, should be to not only increase their customer
base but also to enhance their annual revenue in a substantial manner. For the achievement of

9BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
this mission the organization can take the help of two strategies, namely, cost leadership and
product differentiation.
Hanson et al. (2016) are of the viewpoint that the effective utilization of the strategy
of cost leadership has become an imperative one for the organizations in the light of the ever
increasing business competition. As opined by Sutton-Brady, Kamvounias and Taylor (2015),
the usage of the cost leadership enables the organizations to offer the best quality products or
services and that too at very reasonable prices. This is important from the perspective that the
number of choices or options that are available to the customers in the present times has
increased in a substantial manner keeping pace with the developments in the field of
business. More importantly, the primary focus of the majority of the customers is to get the
best quality products or services and that too at the lowest possible prices (Lewrick et al.,
2015). The net result of this is the fact that they often conduct various kinds of market
researches which enable them to select these kinds of products or services. Thus, it is likely
that the effective utilization of this strategy is likely to help the concerned organization to not
only enhance its customer base but at the same time to increase their annual revenue as well
in a substantial manner.
Zakaria et al. (2014) have stated that the buying behavior of the customers have
changed in a substantial manner in the recent times on the score of similar kind of products or
services offered by different companies. The net result of this is the fact that the different
organizations need to innovate as well as reconfigure the kind of products or services that are
offering to the customers both in terms of quality as well as quantity to grab the customers. It
is precisely here that the strategy of product differentiation gains prominence since it helps
the organizations to offer similar yet different kind of products or services to the customers.
These differences in the products or services can be in terms of quality, quantity, appearance
and others. Furthermore, in the recent times it is seen that many organizations have been able

10BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
to gain a considerable amount of success through the effective use of this strategy (Grimmer,
Miles & Grimmer, 2015). Thus, it can be said that the organization Woolworths will be able
to gain competitive advantage and also enhance their customer base through the active usage
of this strategy.
Recommendations
Woolworths for the attainment of competitive advantage in the retail business market
of Australia can take the help of omni-channel business. I believe that the effective use of this
strategy will help the organization to offer both online as well as offline business services to
the customers. It is pertinent to note that the majority of the contemporary customers feel
more comfortable taking the help of online business services because of the effectiveness of
e-commerce services. Thus, the use of this strategy will help the organization to capture these
customers and thereby to earn a higher amount of profit. The second strategy that the
organization can use is digital marketing. I believe that this strategy will help the organization
to promote and market the products or services offered by it through the online platforms.
The organization can not only convey the information about the existing services offered by it
to the customers but at the same time can promote the new products or services that it would
be launching in the future. However, at the same time, it needs to be said that the use of this
strategy requires the organizations to take into effective consideration various factors and the
prospects of various organizations have been adversely affected through the use of this
strategy.
Conclusion
To conclude, the overall prospects of an organization depend to a large extent on the
kind of business strategies which it is following for the process of its business. Furthermore,
for the formulation as well as usage of business strategies the organizations need to take into

11BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
effective consideration the business environment in which they are operational and also the
level of business competition faced by them. In addition to these, the organizations at the
same time need to ensure the fact that the strategies used by them are in synchronicity with
the mission as well as vision of the concerned organization and also with the demands of the
customers.

12BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
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