Macro Organic Company Analysis

This report examines Woolworths' Macro Organic subsidiary, focusing on external factors influencing its operations. It analyzes the company's adoption of Porter's generic strategies and growth strategies to capitalize on the expanding organic industry in Australia. Despite facing challenges like high product costs and limited demand from lower-income groups, the report highlights Macro Organic's efforts to raise awareness about the benefits of organic products through market development and product development initiatives.

Running Head: International Strategic Management
International Strategic Management

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Contents
Introduction......................................................................................................................................2
Overview of the company................................................................................................................3
Porter 5 forces analysis....................................................................................................................3
Porter’s generic strategies................................................................................................................4
Cost leadership strategy...............................................................................................................4
Differentiation strategy................................................................................................................5
Ansoff matrix...................................................................................................................................5
Market development....................................................................................................................5
Product development...................................................................................................................6
Market penetration.......................................................................................................................6
Recommendation.............................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The demand for the organic products is growing in the Australian market. The organic
industry is on a boom in Australia. This is clear by the survey conducted which shows that the
total of the certified organic operation in Australia raised by 5 percentage. The country consists
of the 53% of the world's organic farmland. Along with the consumption of the product, the
export of the organic products from Australia shows a hike by 17% in the year 2017. More than
2/3 Australian families said that they bought at least 1 organic item for consumption in the
previous year. Australian people are able to identify the guarantee marks that are used on organic
products as a warranty of authenticity (Pulker, Scott, and Pollard, 2017). The authenticity mark
on the product gives the satisfaction and confidence to almost two-thirds of all shoppers.

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Overview of the company
Trade giant Woolworths have brought organic food chain Macro Wholefoods in order to
fast-track its growth into the great-margin gourmet grocery zone. As per the organic market
report from the Australian organic in the year 2014, the organic trade is worth of AU$1.72
billion in the trade deals and the exports. There is an rise of the 15% since the 2012 report.
Seeing the rise in the organic product the company started dealing in the organic products. The
macro organic comes under the Woolworths company. The aim of the company is to assist the
organic sector to unlock the key constraints that help in increasing the number of organic
suppliers or increased volume of organic supply (McCarthy, 2016).
Porter 5 forces analysis
The porter five forces model helps in identifying the elements that can affect the working
of the company (Rothaermel, 2015). The external factors also affect the working of the Macro
organic business under Woolworths.
Industrial rivalry: - The industrial rivalry for the Woolworths macro organic company is
increasing. Woolworths, Coles and Aldi supermarket throughout Australia stock a variety of the
private-label organic goods. Coles and Aldi give a tough competition to the Woolworths macro
organic company.
Bargaining power of buyers: - Changing society values shows that the purchasing behavior of the
customer shows the increase in the demand for the organic products. Woolworth company is
leading company, this is the reason customer will not switch and they will buy the products from

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the company. Along with that, the macro organic company of the Woolworth gives the
information related to the product.
Bargaining power of suppliers: - The availability and the distribution of the organic products are
increasing from the past few years. The suppliers of the organic product are increasing.
Woolworths has tied up with multiple suppliers including the overseas suppliers.
The threat of substitutes: - There is a presence of high level of threat to the company. The reason
being there is a rise in the organic, natural and GMO-Free products. The substitute of the
Woolworths macro organic company includes the Coles organic range. Though, Woolworths is
trying to create a strong market in the organic industry that is the reason company is expanding
in the business. The acquisition of the Macro Wholefoods in 2009 by the Woolworth shows a
step towards the organic industry.
The threat of new entrants: - The threat of new entrants is low, the reason being in Australia
there are only 6 out of 10 markets who are involved in the purchasing of the organic product.
The purchase is done by the markets on occasions. Though, there is a possibility of the
emergence of the new industry who only deals in the organic industry.
Porter’s generic strategies
There are 4 generic strategies such as cost leadership, cost focus, differentiation, and
differentiation focus. These strategies help the companies to create a competitive advantage over
its rivals (Moon, Hur, Yin, and Helm, 2014). Below given two strategies can help the company
in creating a competitive advantage.

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Cost leadership strategy: - The cost leadership strategy can help the Woolworths macro
organic company to enhance the competitive advantage over the rival. Through this strategy, a
company can lower the price of the organic products offered by the company to the target market
(Alizadeh, S., 2014). This helps the company in making a strong space in the organic products
over the competitor Coles. Though, the cost of the organic products is relatively high than the
other products. The price of the organic product is high because the organic products in Australia
account for less than 5 per cent of the Australia's overall food production by capacity. This is the
reason that the demand for the organic product is coming for the high-income customer. With the
rise in the production, the prices of the organic products decreases and this may lead to the
increase in the availability of the product at moderate prices.
Differentiation strategy: - The Company believes in the differentiated strategy that is the
reason the company is providing a wide range of the products (Grant, 2016). Woolworth’s macro
organic company should also try to bring the diversification in the product; this helps in
attracting the customer with multiple demands. This diversification helps in maximizing the
product quality and helps in delivering customer satisfaction.
Ansoff matrix
The company should apply its generic strategy along with the intensive growth strategy to
accomplish the business goals and objectives. The Ansoff matrix includes 4 approaches such as
market penetration, product development, market development and Diversification that can be
used by the company to enhance the profitability (Hussain, Khattak, Rizwan, and Latif, 2013).
With the implementation of the below 3 strategies company will be able to register growth on his
name.

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Market development: - Woolworths uses market development as an intensive growth
strategy. The company wants to develop a long-term, viable and sustainable supply of the
organic products. This will help the company in making the development of the market
(Australian organic, 2013). The acquisition of the Whole Foods by the Woolworths Company
shows that company is expanding the business in the market.
Product development: - The company wants to develop new organic products; this is
possible with the help of the high supply volume; supply volume is depended on the suppliers.
The categories in which company wants to bring the diversity of the organic products include
fruit and vegetables, deli, bakery, dry grocery. The company can also think for targeting the new
market or new segment to enhance the growth of the company.
Market penetration: - Market penetration is the second intensive strategy that is followed by
the company. Through the advertisement of the product, the company can make the customer
aware about the organic products. The image shows the benefits of consuming the organic
product.
(Source: Australian organic, 2017)

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Awareness among the customers related to the organic products will lead to the demand of the
product (White, & AgInnovators, 2015). This intensive growth strategy will help the
Woolworths macro organic company to enhance the profitability.
Recommendation
Each and every company uses some of the business strategies that help the company in
expanding the business. The business strategy develops competitive advantage within a business
segment (Chang, 2016). The company uses Differentiation strategy and cost leadership to create
a competitive advantage over its rivals. The company should try to target the new segment in the
near future this will help the company in increasing the sales of the product. The company
should try to make the product available online with a free home delivery that may lead to the
increase in the usage of the product. This will also enhance the customer loyalty towards the
company.
Woolworths operates functional strategy at the level of operations, marketing and finance
to ensure that each level and department of the company is following the same strategies to
accomplish the business objectives (Wheelen, and Hunger, 2017). The marketing is done by the
company to enhance the awareness about the benefits of the organic products. The finance
management is required to reduce the cost of the products. To reduce the cost, the operation team
of the company should try to increase the number of the suppliers. This will foster the growth of
the company by increasing the demand for the product at the moderate price. Proper strategy
related to the business and function level will help the company to grow in the industry.

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Conclusion
The report talks about the macro organic company that is under the Woolworths
Company. The report shows the investigation of the external factors that create an impact on the
operations of the company. The organic industry is growing industry in Australia, and to create
the competitive advantage Woolworths follows the generic strategies of porter. The company
also follows growth strategies to enhance the growth in the organic market. Though, the demand
for the organic products is quite low because the cost of the organic product is quite high. These
products are mostly preferred by the people of the high-income group. To enhance the awareness
about the benefits of the organic product company follows the company growth strategies. The
company follows the market development and the product development to enhance the
profitability of the company.

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References
Alizadeh, S., 2014. Evaluation Of The Impact Of Implementation Of Resource-Centered
Approach On Cost Leadership Strategy-Based Export Performance In Industry. International
Journal, 3(1), pp.531-543.
Australian organic, 2013, WOOLWORTHS FRESH FOOD GRANT, viewed on 18th
September 2017 https://austorganic.wordpress.com/2013/09/10/woolworths-fresh-food-grant/
Australian organic, 2017, Market Report, viewed on 18th September 2017
http://austorganic.com/ao-market-report/
Chang, J.F., 2016. Business process management systems: strategy and implementation.
CRC Press.
Grant, R.M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment,
and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
pp.196-206.
McCarthy, M., 2016, Australia's organic industry worth almost a billion dollars, as demand
from high income earners soars, ABC News, viewed on 18th September 2017
http://www.abc.net.au/news/rural/2016-10-28/organic-industry-approaches-billion-dollars-
as-demand-increases/7973834
Moon, H.C., Hur, Y.K., Yin, W. and Helm, C., 2014. Extending Porter’s generic strategies:
from three to eight. European Journal of International Management, 8(2), pp.205-225.

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Pulker, C.E., Scott, J.A. and Pollard, C.M., 2017. Ultra-processed family foods in Australia:
nutrition claims, health claims and marketing techniques. Public Health Nutrition, pp.1-11.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.
White, M., & AgInnovators, 2015, 6 booming Australian organics sectors – $1.7 Billion
reasons to get in the market, viewed on 18th September 2017
http://www.aginnovators.org.au/news/6-booming-aussie-organics-sectors-%E2%80%93-and-
why-cleaner-greener-farmers-are-raking-it