Strategic Issues in Woolworths: Analysis and Recommendations

This report analyzes the strategic issues faced by Woolworths, Australia's largest retail chain, and provides recommendations for business growth and profitability. The report focuses on technology challenges and competition issues, and suggests strategies to improve service efficiency and maintain a competitive advantage.

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Title: Strategic Issues
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Executive Summary
Strategic management is the recognition and interpretation of strategies that managers will take
in order to improve organizational performance as well as a competitive advantage. If average
profitability is immense and higher than the other companies, the organization is said to be
competitive. The key to success is management. In this highly competitive market and business
environment, strategic management strategies work well in terms of coordination. But some
organizations face few strategic issues and there is a need to work on these strategic issues for
business growth and profitability. This report includes strategic issues that Woolworths will face
in the next 3 to 4 years. Recommendations to manage these strategic issues are also included in
this report.
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Contents
Introduction......................................................................................................................................3
Identification and Analysis of Strategic Issuesthat Woolworthsis facing.......................................3
Main Strategic Issues...................................................................................................................4
Issues Regarding Technology Challenge.....................................................................................4
Competition Issues.......................................................................................................................5
Recommendations for Woolworths.................................................................................................7
Recommendation 1......................................................................................................................7
Recommendation 2......................................................................................................................7
Recommendation 3......................................................................................................................8
Woolworths’ Strategic Management Practice.............................................................................8
Framework Employed.....................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................13
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Introduction
Woolworths Supermarket is Australia's famous retail chain with at least 78% market
share and strong competition from some retail stores like Coles, another grocery store and
supermarket. Woolworths has a monopoly in the supermarket of Australia with 82% of market
share. The specialization of the company implicates the sale of vegetables, fruit, meat, everyday
stationery, DVDs as well as magazines. There are more than 981 stores in various cities in
Australia, and the company is headquartered in NSW. Brad Banducci is the director of
Woolworths Supermarket, whose slogan is The Fresh Food People. At the end of 2015, the
corporation's sales revenue exceeded AUD 40.123 billion. The main goal of the Woolworths
organization is to provide totally fresh produce to Australian growers and farmers.
Identification and Analysis of Strategic Issues that Woolworths is facing
Australia's retail industry operates only some large retailers in the supermarket industry,
including Woolworth, ALDI, IGA, Foodworks, Coles Group, SPAR, and Macro Wholefoods.
However, there are few small retailing stores growing very quickly and will surely give strong
competition to Woolworths in the coming years. These retailers offer customers a wide variety of
grocery and food choices, and the entire retail industry contributes more than 4% of Australia's
GDP. Woolworths is Australia's largest retailer, but as supermarkets grow, the retailer is facing
fierce competition from its major competitors (Abd-El-Salam, 2015). Most retailers in coming 3
to 5 years in the retailing market have margins that are almost similar. The only difference that
all these stores will create for their consumers is service delivery as well as retail efficiency. In
order to maintain and must build enduring competitive advantages, in future Woolworths need to
improve service efficiency with innovation. If companies can leverage technology innovation to
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achieve superior systems, they can increase service efficiency in the store. Lean principles focus
on improving organizational efficiency and can be used to address retail challenges. This part of
the report explores the challenges Woolworth's retailer will face in the next 3-5 years (Akbar &
Ahsan, 2014).
Main Strategic Issues
Woolworth’s current business growth is based entirely on a better understanding of
management's actual needs and standards for Australian consumers. The idea of retail has been
continuously changing in the contemporary era because of its broad scope and possibilities for a
dynamic as well as exciting business future. Also, customer's shopping behaviour and their
attitudes are changing constantly, which is the main reason for the growth of Australia's
Woolworths supermarket business. Woolworths' business experts, as well as marketers, have
developed effective and strong strategies to identify a new opportunity as well as growth phase.
Like other firms, Woolworths also prioritizes consumers, and with new change in the
business strategy is designed to provide them with the wonderful shopping experience for high-
class products (Amaldoss, Desai & Shin, 2015). Woolworths Supermarket also helps its
consumers and customers use perfect shopping facilities when shopping online. Technological
innovation has rapidly changed the online shopping trend around the world, along with
Woolworths' management has hired software developers to change online shopping sites to
provide consumers with more facilities and product availability. There are even virtual store
facilities for mobile apps along with their perfect home delivery options. All the strategies and
methods are developed by the company's top management to increase customer base and
customer loyalty.
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Issues Regarding Technology Challenge
After the Australian competitive retail market faced serious strategic issues, Woolworths'
management recently launched an online shopping site. As a result, management analyzes
current trends and begins offering products online (Arli, Dylke, Burgess, Campus & Soldo,
2013). Even Woolworths' innovative strategy provides customers with fresh sushi bars to provide
them with appropriate healthy meal options. There are also export development strategies,
including to come facilities that collect seafood from certain counters and choose a delicious
sauce that the experts and put in the ready-to-cook cooking bag, so it offers quality seafood at the
family restaurant. Business strategy helps organizations achieve their goals and objectives for a
fixed period of time, and is in the best position in the market, maintaining an ideal market share
at year end. Woolworths' mutton and beef strategy are also excellent because employees store
their perishable products in strict accordance with Australian meat standards. Woolworths’ CEO
Ian Moir has always focused on profitability and cost reductions and has adopted appropriate
implied strategies. Woolworths' another strategy named as credit card plan involves
automatically tracking the purchases of supermarkets. The shopping cart also provides a reward
point to the card, so consumers can take advantage of the discount they make next time.
Competition Issues
Woolworths will face huge competition from existing competitors such as Coles as well
as Aldi in the near future. Also with the possibility of the new entrants, innovative strategies may
be adopted to destroy Australia's leading position (Balasubramanian, Bhattacharya &
Viswanathan, 2011). Therefore, Woolworths must change its current strategy to avoid the
possibilities of new tactical risks and hazards that impede its trade moreover the brand name. The
In addition, Woolworths Supermarket offers the seasonal discounts to provide customers with
coupons for flash purchases and purchases of specific products. Through all of the above
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strategies, Woolworths enjoys its superior management as well as unique retailer status in
Australia. All strategies are developed by business experts will be used to increase the sales
revenue and make the organization easier to succeed (Baumann & Stieglitz, 2013). Woolworths'
brand strategy plays a strategic role as the company always provides customers with fresh
products to maintain customer loyalty. By adopting this specific business strategy, Woolworths
has built a strong and a large customer base in each of Australia's cities.
Forecasting is also considered as the most significant function in retailing organizations
because it enables managers to anticipate future needs and desires furthermore perform all
connected functions accordingly. If customers order the next supply, manage inventory, and
staffing is also relevant to the forecasting function. Quality of business depends on the basis of
its forecasts. In today's unstable economic situation, forecasting is a little difficult. Woolworth's
branch of the Sydney Central Business District is struggling with forecasting problems because
the grocery store manager lacks considerable performance. Today's retail organizations should
strive to meet the unique needs of each customer (Coombs & Holladay, 2010). Those days are
gone where the mass market, with a single breed, standard pricing as well as a single “average
position” forecast that will satisfy the consumer needs of all stores. To be effectual and effective,
today's forecast must take into account the differences in demand across different stores, product
lines, and geographies.
Due to the less interest as well as the availability of old programs, store managers are also
unable to provide commendable performance. There is an insufficient resource available and
there is no evidence. Managers' fully reliable quantitative methods include past historical data or
random variables that predict demand, while predicting the demand for selling goods also
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requires a qualitative approach, a combination of factors, for example decision makers' emotions,
value systems and personal experience (Dos Santos, Svensson & Padin, 2013).
Recommendations for Woolworths
Recommendation 1
It has been recommended that Woolworths must develop an extremely effective and
consistent market share simply by gaining the effective market share in Australia and to solve all
strategic issues. An organization can develop an efficient framework by increasing the market
benefits and advantage to achieve sustainable results. Despite spending lots of money on non-
successful strategies, a structured model needs to be put in place. These units create a burden that
affects overall profits.
Secondly, a customer-centred approach needs to be developed. This method will assist in
managing the goals and objectives. There are a few other companies in the market that can
achieve effective and sustainable market growth. However, this is possible if in case Woolworths
is capable to provide competition to other brands in the market. Of course, to develop in the
industry, business organizations must focus on ensuring market capacity (Kwamega, Li &
Abrokwah, 2018).
Finally, the organization's strategic ability is to focus more on their online services.
Brands must develop effective and consistent market growth simply by helping or supporting
customers and manage sales. Such type of strategic interventions is essential to help Woolworth
to achieve sustainable market growth. Woolworths must create a strong strategic marketplace
growth structure to help them restructure. All of these diagnostic tools can deliver results by
restoring market competitiveness. The growth and scale of the strategic market will contribute to
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creating an effective market position. This will help improve systemic growth by upgrading the
system.
Recommendation 2
Although Woolworths is a leader in the Australian retail industry with its excellent business
strategy, following are some suggestions that will assist the enterprise to upsurge its market
share:
1. Woolworth’s management should adopt a strategy that reduces operating costs.
2. Management should hire more suppliers than ever to reduce their domination.
3. Management should adopt a new strategy that is more popular with consumers.
4. Business experts should provide policies to attract more foreign investors as well as
trading partners.
Recommendation 3
Management must communicate clear as well as transparent expectations along with
goals to relevant employees as they likewise have a significant part of the compelling business in
the future.
Woolworths must encourage a good open communication between their suppliers,
consumers as well as employees to completely understand all their business activities in an
appropriate manner (Mathivathanan & Haq, 2017).
All of these above recommendations apply to Woolworths to carry on its overall business
operations in nowadays competitive marketplace. Competition is the best choice for
organizational development; however, excessive competition can hinder the organization's entire
business activities. Woolworths has a perfect understanding of the future of their business
through appropriate and sufficient strategic integration, opening up vast spaces and possibilities
for suppliers and customers.
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Woolworths’ Strategic Management Practice
Woolworths' vision is to give customers the right and most appropriate shopping
experience every time. Their goal is simply to understand and to identify their consumers and
customers through superior business and the right knowledge about all their products. The
entity's main strategic focus is to grow multiple types of retail, including low product prices,
high-class goods, and products to meet customer requirements. Additionally, expanding its
strong leadership in all areas of the market, the use of portfolios and maintaining appropriate
financial records are some of the other strong and strategic management they have implemented
to expand business growth and achieve higher rankings in competitive markets (Minoli, Sohraby
& Occhiogrosso, 2017).
The organization innovates must innovate good quality products based on customer tastes
and preferences to best meet these needs. The company's strategy for employees is designed to
provide a good quality business environment and appropriate compensation for their good work.
The company's strategic priorities followed by the entity include-
i. Expanding the leadership of liquor: Woolworths must launch a marketing campaign to
promote business growth and provides stakeholders with the value of expanding market
share within Australia.
ii. Develop its portfolio to maximize shareholder value
iii. Putting enabling factors in new growth areas: Woolworths must implement new rules and
policies to build relationships with shareholders over the enduring and attempts to
provide the value to these shareholders through investment operations (O.Oparanma &
Wechie, 2014). They also try to change personnel policies to get the benefits of using the
most suitable international talent. Also, the entity's supply-chain helps them achieve
greater profitability in their business.
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Framework Employed
Woolworths must focus on areas that will help them strengthen management practices
and implement strategies. These include:
a) Cost-leading races: Woolworths has taken action to deliver the products at very low
cost. Although the strategy will be successful in lowering the prices, the company also
faces huge price competition from its competitors (Smith, Heley & Stafford, 2011).
Hence, it is recommended that the cost leadership programs be considered in order to
achieve maximum productivity at a low cost.
b) Diffusion of commodities: As an alternative to the industry, Woolworths must
implement this commodity diffusion strategy to provide customers with new product
lines and meet their needs.
c) Strategic alliances: They establish strategic alliances between the various businesses of
the business to understand targeted markets including competitors and customers. To
benefit from this strategy in future they are advised to combine strategic alliances with
the reward agenda. This agenda will help companies build customer loyalty over the long
term by providing reward points to consumers (Wang & Feng, 2012).
Strategic interventions are related to extracting most of the sensible and effective forms of
strategic behaviour and communication, thus starting a series of disciplines. The purpose of the
strategic intervention is to develop training through the development of an extremely practical
method of action. This ensures a strategic growth and completes the work within an effective
framework. Meet and enhance human needs based on market needs and opportunities to meet
expectations. Strategic change is critical to organizational survival. This will contribute to
strengthening the maximum results (Ward, 2018).
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Woolworths understands the importance of retaining employees. Employees are a necessary
means for the organization to focus on its mission and goals. In order to incorporate changes,
everyone has to deal with examples. The organization wants to make changes to its employees.
The importance of developing short-term objectives for long-term existence has been understood
by the company (Culcasi, 2016). Sustainable results are only possible by achieving lasting
objectives. Strategic implementation and execution is an important means to achieve the lasting
change and revolution in your company. The organization has strategically implemented this
policy to achieve the lasting change. The company must develop and execute an effective
marketing strategy to support and back up the senior management. Woolworths’ management
has lost confidence in the organization. This will affect the sustainability of our employees.
Woolworths reported a $ 1.235 billion loss in FY2019. Woolworths suffered losses due to brand
failure. Given the biggest loss in 20 years, business intervention is important for developing
tough strategies for developing effective organizational change. Business intervention is very
important for changing the organization. These interventions help improve the organization's
capabilities and capabilities (Das Nair & Dube, 2017).
Conclusion
It can be concluded from the above mentioned discussion that strategic management is
crucial for companies that expand their business as well as improve and develop their financial
performance. Although the company has earned a goodwill over the years, the incorrect
execution of the plans and strategies have reduced its brand value and business progress.
However, Woolworths has been designed to emphasize on several strategic priorities so that it
can reach the top position in the industry. Also, it is suggested to recognize the competitive
pricing strategies and customer preferences formerly before upgrading new and innovative
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products. It also concluded that to conduct a strategic analysis of Woolworth Limited's position
in describing the company's financial situation and analysis. Based on such issues, this report
recommended measures to improve the financial and strategic position of Woolworths Limited.
As can be seen from the document, while quantitatively analyzing Woolworth's financial
position, the balance sheet and the company's income statement facilitate analysis of whether the
performance caused negative and positive losses to the company. Effective social responsibility,
it is recommended that the company inform all stakeholders about the strategy.
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