Analysis of Woolworths Limited

This document provides a detailed analysis of Woolworths Limited, one of the largest retailers in Australia. It covers the company's external and internal environment, competitive advantages, financial performance, workforce, and more. The analysis reveals insights into the company's strengths, weaknesses, opportunities, and threats, as well as its sustainability in the changing retail landscape.

Hi! I am (Insert your name). Today I am going to present before you the analysis of an
Australian organization. The organization that I have chosen for the task is Woolworths limited.
Slide 2
The presentation has been divided over the following sections
Slide 3
As I have said before I am going to conduct an analysis or strategic review of Woolworths
Limited. As part of the analysis I would scan the external and internal environment of the
company. Whereas porter’s 5 forces and PESTEL would be used to analyze the external
environment, SWOT analysis would be used for analyzing the internal environment. As a result
of this analysis we would arrive at the competitive advantages of Woolworths. A diagnosis of the
competitive advantages is performed to understand their strengths and weaknesses and whether
they are sustainable over the longer term.
Slide 4
Founded in the year 1924, Woolworths is one of the largest retailers in Australia. The company
operates 3240 stores in Australia and serves around 29 million customers every week.
Woolworths operates some of the most trusted brands like Big W, BWS, Woolworths, Dan
Murphy’s etc. The company has presence in Australia and New Zealand and partners with
several thousand producers, farmers and manufacturers.
Slide 5
The company has earned revenue of $ 56,726 million in 2018 which has led to an EBIT of
$2,548 million. The EBIT has increased by 9.5% over 2017. The return on capital employed has
also improved by 1.9pts to reach 24.1%. Additionally the company has paid a dividend of 103 ¢
which means an increase of 22.6% over 2017.
Slide 6
Woolworths has a workforce of 201,522 of whom 54% female and 46% male. A significant
portion of the workforce is young and less than 25 years old. In terms of representation at the
senior management level, the women hold 32% of the positions. The company supports diversity
and has 1875 people from refugee and indigenous population.
Slide 7
The first tool that is used to analyze the external environment is PESTEL analysis. PESTEL
analysis of Australia reveals several important insights. Australia is a parliamentary democracy
that works under a constitutional monarchy. Queen Elizabeth 2 of England is the reigning queen
of Australia. The head of government is Prime minister. The country has a safe and stable

political environment. Australia has recently won a sit in the Human rights council of United
Nations. However, the country has been severely criticized by the United Nations for failure in
treating refugees, inadequate protection of indigenous needs and human rights.
The GDP at purchasing power parity in Australia is 1.248 trillion which makes it 19th largest
economy in the world. The country follows a open market economy and has low barriers to
trade. Australia is also an important member of APEC, G20, OPEC and WTO. The country also
has signed free trade agreements with a number of countries including Thailand, Korea, Japan,
US, Malaysia, etc. The country has a low unemployment rate and Australians are generally
affluent.
Slide 8
The total population of Australia is 23,470,145. The population of Australia is aging and median
age of the population is 38.8 years. The population growth rate is 1.01% with birth rate of 12 per
1000. Infant mortality rates are 4.2 per 1000 births. 100% of populations have access to
improved drinking water and sanitation facility. The life expectance is 82.4 years.
Australia is one of the few countries in the world that is technologically very advanced. Over the
years, the country has witnessed tremendous growth in adaptation and development of latest
technology. The companies operating in the country are embracing latest technologies like cloud,
IOT, etc. to usher in a new era.
Slide 9
In terms of area, the country is 6th largest country and smallest continent in the world. There is
huge geographical diversity that exists in the country which makes the country beautiful.
Australia is party to several agreements on climate including Antarctic-Environmental Protocol,
Antarctic Treaty, Climate Change-Kyoto Protocol, etc. However, there are certain environmental
changes that are being faced by the country and these are deforestation, desertification, threat to
the Great Barrier Reef etc.
Each state and territory in Australia have their own supreme court. However, the highest
appellate court in Australia is High Court. The country has well defined consumer, fair trading
and competition laws. The fair work act enacted in 2009 governs employment in the country.
Slide 10
The retail sector generated $571.3 BN and employed 1,942,093 people. It is predicted that
between 2019 and 2024 the sector would grow at a rate of 4.6%. There are major winds of
disruptions that are growing in the sector including the rise of category killers as a nemesis for
discount department store business model. The retail sector is also battling with several
challenges including weak consumer confidence, competition from foreign and online retailers
and fall in the house prices.

Slide 11
Competitive Rivalry-
Although, not totally fragmented there are numerous players in the industry. The customers have
low switching cost and thus the companies try to offer low price in order to keep customers and
increase brand loyalty. Thus, the competitive rivalry is high.
Threat from new entrants-
Foreign players like Aldi and Lidl have entered the market in recent years and intensified the
competition. The category killers or retailers specializing in a particular category have grown in
recent years thereby eroding profitability and market share of departmental stores. There are low
barriers to entry which has made the threat from new entrants high.
Threat of substitutes
The rise of online shopping with the entry of Amazon has increased the threat of substitutes.
Although the total amount spent by customers in online store stands at A$28.8 billion or 9% of
the amount spent in brick and mortar stores, it is rising exponentially. Thus the threat of
substitutes is high.
Bargaining power of customers
Since there are so many options from which the customers can make their purchase, the
bargaining power of the customers is high.
Bargaining power of Suppliers
Being a large supermarket, Woolworth has tremendous buying power and it has the ability to
exert pressure on the manufacturers to lower prices. In fact that Woolworths is locked in a
deadlock with several manufacturers like Nestle over price rise.
Slide 12
Strength
Woolworths has a huge presence in Australia and is one of the largest retail players not only in
Australia but in the world as a whole. Following different strategies from the upper and the lower
strata of the market the company has good penetration in all spheres of market. Their efficient
pricing and promotion strategy has enabled them to manage the perception of customers well.
The company also has a good gender ratio and exhibits high employee satisfaction.
Weakness

There exists some confusion in the positioning strategy and some allege that the company favors
wealthy customers. The highly competitive environment has forced it to undergo price costs and
suffer losses. The company is not quick in responding to change.
Slide 13
Opportunity
The company can get more information about customers and try to increase brand loyalty
amongst them. It needs to be more agile while responding to change. The company can make use
of social media to understand and connect with customers.
Threats
The changing tastes and preferences of customers coupled with the rise of online retailers and
category killers poses a big threat for the company. This has led the company close 30 Big W
stores over a period of 3 years. In the process the company has incurred significant loss.
Slide 14
Woolworths has been in business for a long period of time in the year 1924. Among the global
retailers it comes at no. 17. Starting as a variety chain in entered into supermarket business in
1960 and diversified into other formats later. The company has good gender balance amongst its
workforce. The retailer has survived through several ups and downs in market but has still
remained strong. The financial position of the company is good as evidenced by revenue, growth
of return of capital employed and EBIT.
Slide 15
The most important positive and negative for Woolworths is its size. The size has helped the
company tide over of the extremely challenging retail landscape in Australia. At the same time it
has made the company less agile in responding to change in the environment. In future its future
sustainability would depend upon its response to changing environment.
Slide 16
Woolworths cares for environment and has embraced environment friendly processes that have
resulted in reduction in C02 emissions by 13% compared to 2015. The company generates
2,211MW from solar power. The company has also shared 26 million fruits from free with
children and saved food for 8.12 million meals.
Slide 17
The high GDP rate combined with urbanization presents an excellent opportunity. The aging
population is however a challenge. The retail environment is highly challenging with severe

competition among the participants and decreasing customer sentiment. Woolworths has been
able to tide over the challenges due to its size. Woolworths however needs to be agile to be
sustainable in future.