Woolworths Market Analysis

This assignment requires you to conduct a comprehensive market analysis of Woolworths, a major Australian supermarket chain. You will apply Porter's Five Forces framework to assess the competitive intensity within the industry and identify key factors influencing its profitability. Additionally, you will utilize the PESTEL framework to analyze the external macro-environmental factors impacting Woolworths' operations. The analysis should delve into challenges and opportunities facing the company, providing insights into its future strategies.

Running head: BUSINESS ENVIRONMENT
Business Environment
Name of the Student
Name of the University
Author note

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Woolworths Limited is one of the major Australian organizations wherein it has
extensive kind of retail throughout New Zealand and Australia (Woolworths.com.au, 2018). It is
second largest companies in terms of revenue in Australia after Wesfarmers and it is the second
largest retail store in New Zealand. Furthermore, it can be seen that Woolworths is the second
largest liquor retail store in Australia and it was ranked as the 19th largest kind of retailer in the
entire world in the year 2008. Percy Christmas, Ernest Williams and Cecil Scott Waine founded
Woolworths Limited in the month of September in the year 1923. The Chief Executive Officer of
the respective company named Woolworths is Brad Banducci.
The main operations include the supermarkets that are working under the brand of
Woolworths in both New Zealand and Australia. The respective company is retailer of liquor as
Dan Murphy and BWS in Australia. The Woolworths Holding has also contributed towards the
leisure and hospitality group along with departmental stores under name of Big W name in the
entire Australia. The number of employees who are working under Woolworths is around
202,000 and the operating income ad revenue generated by the company is $1.6 billion and $59
billion.
The detailed PESTEL analysis of Woolworths explained the external factors that affect
the retail industry and company. The PESTEL analysis includes political, economic, social,
technological, environmental and legal factors.
Political Factors is one such factor wherein Woolworths Company is famous name in
the entire retail industry that helps in fulfilling the requirements of the customers in the different
retail outlets. The entire political environment of the entire country is linked with the different
performance of the organization (Calder, Malthouse & Maslowska, 2016). The different retail

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organizations are affected by the political climate the entire region just like different entities of
business in different other sectors. The entire political condition shapes the entire business
environment that will provide the organization with different growth opportunities that is suitable
in nature. Furthermore, the company along with the business sector grows with the help of
potential stability as the different investors and different traders in foreign countries in different
activities related to business. On the other hand, the disturbance that has been done politically
discourages business along with investors from entering into market due to risk of return that is
low in nature (Mathooko & Ogutu, 2015).
Economic Factors is the second factor wherein there are different economic factors that
include recession and unemployment has strong effect on the performance of the company
financially. These different factors can affect the sales and causes financial decline in the
company (Zhao et al., 2016). The condition of the company has diminished in nature, as there
was global financial crisis as there was a major loss in the company when the operations shut
down in The United Kingdom. The financial crisis had hit the company in an ineffective manner
and it had affected the sales of the company. However, the company had performed well in an
effective manner despite of different disruptions financially. It can be seen that the Australian
retail industry has been stable and it has supported Woolworths in continuing operations of
business despite the huge setback in the market of UK.
Social Factors is the third factor wherein the customers are the major source of revenue
in different business entities. Woolworths has recognized importance of the different customers
and emphasized on notion of delight of customers. The management of Woolworths has
understood different changes that have been occurred in the social context (Ingenbleek,
Meulenberg & Van Trijp, 2015). The location of the stores is critical in nature as customers

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expect retail stores in order to provide convenience. The respective company has been able to
understand the preferences of the customers such as removal of items of confectionary is one
such step in this regard. The respective company has identified the shift towards healthy eating
along with grocery items that helped them in appealing customers in an effective manner (Kotler,
2015).
Technological Factors is the other factor wherein the advancement in technology will
help in enhancing experience of shopping of customers. The entire company has integrated
service architecture that helps in supporting technology in an effectual manner. This helps in
identifying the technologies, as this becomes means of gaining stronger kind of position in the
market.
Environmental Factors is the factor wherein the entire environmental factors help in
reflecting usage of business that is environmental friendly in nature. Woolworths has invested
resources that helped in minimizing the footprint of carbon of organization. The organization has
been participating in different activities related to recycling materials. The different sustainability
practices help in establishing image of the respective company as the responsible business
socially (Ingenbleek, Meulenberg & Van Trijp, 2015).
Legal Factors is other factor wherein the different taxation policies along with
regulations of employee engagement are part of legal framework for entire retail industry.
Furthermore, the requirement of licensing of foods is essential in nature and the companies need
to comply with such regulations. The quality of food items is made available in stores in
accordance to regulations of country. Furthermore, opening of retail stores requires approval
from authority of government and it needs to follow such legal requirements.

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It is essential for Woolworths Company to understand the influence of the entire external
environment on profitability and achievement of the strategies of business with the help of
Porters’ Five Forces Analysis. The external factors have significant effect on the performance of
the business. The respective company needs to focus on the strategy implementation that is based
on five-force analysis.
Bargaining power of the suppliers is one of the factors of analysis wherein suppliers are
of huge importance, Woolworths have less kind of dependence on their suppliers, and it means
that Woolworths have weak bargaining power of suppliers. The main reason behind this is
considerable amount of market share in retail in Australia and New Zealand. Suppliers in the
market play a dominant position in the entire market and this can decrease the margins that have
been earned by Woolworths in the entire competitive market (Rothaermel, 2015). The retail
industry needs to use the negotiating power in such a manner that this will help the company in
extracting higher prices and this can help Woolworths in improving the overall profitability in
the entire market.
Bargaining power of the customers is other factor wherein majority of the different
buyers are individual kind of buyers having strong financial and bargaining power. The strong
kind of power of the different customers enables them to force company in decreasing price in
attribution of purchasing. Woolworths is delivering low priced products and services in order to
meet the needs of the customers (Rothaermel, 2015).
Threat of new entrants in Woolworths is not considered significant in nature, as there
are different reasons wherein setting business with large number of stores along with quality that
is excellent in nature is essential. This will help Woolworths in being in competition with Coles

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and there is huge number of startup capital that will help the business in operating in an effective
manner (McDonagh & Prothero, 2014). Furthermore, it has been seen that the existing
competitors and Woolworths are the dominant players with different accesses to the channels of
distribution in the entire retail industry. The different new entrants in the market may face risks
of losing the investment and they are highly competitive in nature as well. Woolworths need to
implement different innovative strategies of pricing, as this will help the company in gaining
competitive advantage.
Threat of substitute products along with services is other factor wherein business of
Woolworths has to face tough competition for Woolworths. The different kind of substitute
products is offered to different Australian major supermarkets. The market in Australia needs to
come up with different innovative and other strategies that are competitive in nature. This will
help the company in building reputation in the entire retail industry. The competitors of
Woolworths are Coles that helped in providing rewind strategy of price for the different
consumers. Therefore, it can be concluded that there is high level of threat to Woolworths in
terms of the different substitute products and services (Solvell, 2015).
Rivalry among the existing competitors is essential, as there is huge presence of the
different competitors in the Australian grocery and retail stores (E. Dobbs 2014). This will help
in contributing towards the high level of proper concentration and the intensity of different
competitors has forced the entire company in order to make them competitive in nature (Graham,
2018). The rivalry among the different competitors in the market has helped the company in
differentiating themselves from the potential competitors in the market. Proper collaboration
with competitors is essential in nature as this will help them in increasing the market share and
this will help them in competiting in an effective manner (Yunna & Yisheng, 2014).

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There are different kinds of measures and strategies that can be adopted by Woolworths
in order to perform successfully in the competitive environment. Firstly, Woolworths need to
improve along with invent new marketing strategies in such a manner that will help them in
understanding the tastes and preferences of the customers in an effective manner. Woolworths
need to analyze the different tastes in such a manner that this will help Woolworths in being the
best among the other competitors in the competitive market. The performance of the Woolworths
has to be improved in terms of developing new category of products and other innovative
strategies of delivering their services and products to the customers (Sheth & Sisodia, 2015).
The second strategy that can be adopted by Woolworths is to offer the customers the
different requirements in such a manner that this will improve the core offer in an effective
manner. The innovative strategies have to be used by Woolworths to meet the different needs of
the customers (Takata, 2016). The performance of the Woolworths has to be improved in an
effective manner, as this will help in developing strategic relationships that is known as strategic
sourcing. Woolworths need to include different strategies such as introduction of healthy and
hygienic food items for the customers who are fitness freak and ultra fresh ready to cook food as
well.
The third strategy used by Woolworths is to create efficiency that helps in providing
value to the customers in an effectual manner. The pricing strategy has to be established in such
a manner that will target customers of Aldi, Coles and other supermarkets. The efficiency is
essential and effective in nature, as this will help them in introducing different innovative
techniques in such a manner that will increase the convenience of the customers. Woolworths
need to introduce new stores and it involves rebalancing the capital expenditure between the
existing and new stores (Wu, Chen & Dou, 2017).

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Lastly, Woolworths need to deliver new products along with better experience in such a
manner that this will help in development of new categories of food and other supply chain
strategies for the consumers. This will help Woolworths in performing better than the
competitors perform. The performance of the company has to be analyzed in such a manner that
this will help in strategy for food and this will help in harnessing the existing strength of
Woolworths in Australia. Woolworths need to invest different strategies in such a manner that
this will help them to grow in an effective manner and increase the channels of investment in an
effectual manner (Daunt & Greer, 2017).
Therefore, it can be concluded that Woolworths is performing well in the entire
competitive market. The respective company is performing comparatively well as compared to
other supermarkets in the competitive market of Australia such as Coles and Aldi. From the
Porter’s Five Forces analysis and PESTEL analysis, it can be seen that the Woolworths
Company is far ahead of the other competitors in the market. The objective that has been adopted
by Woolworths is different from one another wherein they have created different innovative
strategies in such a manner that has attracted their customers towards their company.
Woolworths has created supply chain management that is efficient in nature, as this has
developed by them in increasing their bargaining power. Woolworths has increased the cost
switching for their customers in such a manner that they are service oriented and not product
oriented. Woolworths has built sustainable differentiation strategy in such a manner that this has
helped them in competing better with the competitors in the competitive market.
Woolworths has been collaborated with their competitors in such a manner that it helped
them in increasing the size of the market. Woolworths has implemented different strategies and

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has analyzed the different political, economic, social, environmental and legal factors and it can
be identified that Woolworths is still in the second position in the entire retail industry.

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