Strategic Management of Woolworths Group

This report analyzes the external and internal environment of Woolworths Group and provides recommendations for strategic management. It discusses the competitive advantage, vision, goals, and strategy formulation of the company.

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Strategic Management
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Executive Summary
Woolworths Group is a retailing company that provides retail as well as financial services to the
customers in Australia. It built on integrity with a mission to deliver quality and value products
to its customers. The report reveals the external as well as internal environment of Woolworths
Group. It has top competitive rivalries with Coles and Myer who are likely to decrease its market
share as well as add increased level of concentration. The company needs to focus more on
developing its competitive strategies to deal with such competition. There is a high threat of
substitute products which needs to be reduced by original, innovative products. The brand
reputation of the company forms as a core competency that brings goodwill to it. The goal of the
Woolworths group is to give priority to its potential customers by providing energy efficiency.
The vision is to offer financial services to its employees and superior quality products to its
customers.

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Table of Contents
Introduction......................................................................................................................................3
Evaluating the organization’s environment.....................................................................................3
Analysis of competitive advantage..................................................................................................5
Strategy formulation and choice......................................................................................................5
Recommendations and conclusion..................................................................................................7
References........................................................................................................................................9
Appendices....................................................................................................................................11

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Introduction
The primary purpose of the paper is to formulate a strategic plan for the Australian corporation
named, Woolworths Group. The firm mainly operates in supermarkets. It will also analyze the
competitive advantage and evaluate the external as well as internal environment of the company.
Porter's five force analysis, as well as PESTEL analysis, will also be conducted to know the
various factors that impact the company. Moreover, it will also discuss the competitive rivalries
of the Woolworths Group. The major goals and vision of the firm will also be evaluated. It will
provide recommendations on various strategies adopted by the organization.
Evaluating the organization’s environment
It is critical to evaluate the external environment of the Woolworths Group by analyzing Porter's
five forces and the political as well as economic factors (Zutshi, Creed, Holmes & Brain, 2016).
The porters’ analysis is as follows:
 Bargaining power of suppliers: Woolworths has the weak bargaining power of suppliers
because of the extensive amount of market share in Australia as well as the massive
number of products (Bayne, Schepis & Purchase, 2017)
 Bargaining power of buyers: The company has the strong bargaining power of buyers
because its customers are individual buyers which enable the company to deliver low
price products to its customers
 The threat of new entrants: This force is weak for Woolworths as it is a risk for the new
retailer to give high competition to the company. Because it has an enormous number of
stores with excellent quality products
 The threat of substitute products: The Company has to face the high threat from the
substitute products as various other retailers offer similar products at a meager price.
Woolworths requires to formulate innovative strategies for building the reputation of the
brand and inviting more customers (Morioka, Evans & de Carvalho, 2016)
 Competitive rivalry: The competitive rivalries are extensively high for the Woolworths
Group. Its top competitors are Coles and Myer who forces the company to create
effectively as well as competitive strategies to differentiate from them. The competitors

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are likely to limit the market share of the company and give a high level of concentration
(Bailey, 2016)
There are six factors in the PESTEL analysis. Among them, the two elements for the
Woolworths Group are discussed below:
Political factors Economic factors
 Pricing and trade regulations
 Taxation policies
 Importance of local government in
Australia
 Change in policies related to retail
sectors
 Exchange rate
 Rate of inflation
 Skilled level of workforce
 The efficiency of financial markets
The Woolworths Group is a company that operates in retailing of food and staples. The political
factors can impact the company in terms of various regulations in the different markets. The
local governments play a crucial role in making regulations and policies which the company
requires to follow for the business (Fleming, Wise, Hansen & Sams, 2017). Woolworths follow
the low taxation policies that give a high rate of profits, but there has been an increase in
inequality in Australia which could increase the rate of taxation policies. The economic factors
such as the rate of exchange impact the investment plans of Woolworths in the long-term. The
company can enhance global opportunities with the help of a skilled level of the workforce.
The internal environment of the Woolworths Group can be evaluated with the use of several key
core competencies and value chain analysis. Some of the core competencies that gained by
Woolworths Group for adding value to its strategic management practices are as follows:
 Marketing as well as sales
 Integration
 Innovation
 Market and brand positioning
 World-class supply chain

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The brand name acts as core competency as it can give goodwill to the company and attract
various customers (Rajabian Tabesh, Batt & Butler, 2016). The strategy of marketing also form
core competency.
The value chain analysis of Woolworths is: it increases its sales every year due to the modern
consumerism. It also achieved a high increase in sales with the use of various pricing strategy.
The company requires to formulate an approach for improving cost reduction as well as
convenience in stores and customer experience (Devin & Richards, 2016). It mainly focuses on
its growth. Hence, it requires to focus on other values to gain customer loyalty. The company
focuses on its work to increase the platform for the products in the market.
Analysis of competitive advantage
The top competitors of the Woolworths Group are Coles, Aldi, Amazon, and Walmart. Coles is
recognized as one of the top competitors in the market of Australia. Both Coles and Woolworths
Group hold 80% of the market share, but Aldi is another brand that challenges the leadership of
both the companies (Chavan & Carter, 2018). Both companies apply different strategies for
attracting customers as well as achieving competitive advantages. Woolworths Group
implements a slogan "the fresh food people" to achieve sustainable advantage whereas Coles
implement a slogan “there is no freshness like Coles freshness” through advertisement. The
company adopt innovative and competitive strategies that gives competitive advantage.
Following are the competitive advantages of the Woolworths Group:
o A positive environment, as well as social impact – The unique journey of the business,
provides a secure and substantial competitive advantage to the company (Carey,
Caraher, Lawrence & Friel, 2016). It maintains a positive environment in the market
o Offering popular clothing products to the customers – The company is continuously
offering the products of clothes that are fashionable which helps in gaining competitive
advantage (You, 2016). It can innovate the products as per the needs of the customers
o Operating at a low cost over the long-term – It will gain competitive advantage by
providing operational competences in a sustainable way
Strategy formulation and choice
Vision

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The vision of Woolworth’s group is to provide financial services to its employees along with
their intermediate families. It aims to help the members of Woolworth’s family to gain well-
being and financial security by offering financial services, lending, competitively and relevant
priced savings (Laurie, Faber & Claasen, 2018). The vision statement of Woolworths is to
become the market leader among the retail brands that ensures customers of providing
sustainability, innovation and quality products. Its vision is to transform itself from value-based
leadership to passionate brand advocacy to spread its values across all areas of its business. It
also aims to add quality to life by adding unique quality to every quality to enhance the customer
experience. The vision of Woolworths Group is to provide consumers a connected retail
experience and enhance loyalty proposition. The organization aims to inspire and engage
customers towards a digital era that helps employees to build a strong relationship with the
customers.
Goals
The goal of Woolworth’s group is to give priority to its customers by improving energy
efficiency. It aims to minimize the impact of the business environment and maximize its
economic and social impact across its value chain. As a result, it focuses on improving the
significant areas of the business such as health and wellness, social development, transformation,
ethical sourcing, sustainable farming, waste, water, and energy (Sewell, Mason & Venter, 2017).
It’s another goal is to become a responsible and committed member of the Australian society by
fulfilling the need of the customers. Woolworths aims to create a customer programme across
their support office, store team as well as brands to get regular feedback from its customers. This
will help the team members to focus towards constant improvement of products and enhance the
customers shopping experience. Woolworths also aims to activate the core values and new
purpose to provide benefit to the team members. This helps in connecting with the customers and
providing them a convenient and personalized shopping experience by maintaining cost.
Initiatives (cost leadership vs. differentiation)
Woolworths Group becomes a low-cost producer in the retail industry by adopting a cost
leadership strategy. Becoming a cost leader differs as per the services industry structure and
forces. While pursuing cost leadership strategy, Woolworths can assess the company name,
preferential to raw materials, diversification of suppliers, supply chain management options,

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proprietary technology and economies of scale (Nakandala & Lau, 2019). Thus, the entire cost
leadership strategy includes providing services and products to the customers at a lower price as
compared to competitors such as Aldi and Coles. This is determined to be a profitable strategy
for Woolworths as it increases their revenue by 12% in the Australian market.
Whereas, Woolworths can also adopt differentiation strategy related to retail industry forces.
With the help of differentiation strategy, Woolworths may become a unique retail industry by
offering a value proposition to its huge customer base. It helps the company to choose one or
more than one attributes based on its products or services as per the needs of the customers. It
will help the company to differentiate its products from its competitors and deliver high-quality
products to its customers (das Nair, 2018). It helps in focusing upon creating sustainable value
and maximizing profitable growth not only for the organization and the customers but also for
the stakeholders. The aim is to get premium price due to uniqueness as well as differentiation of
the offerings.
Recommendations and conclusion
 It is highly recommended that Woolworths must aim to create a consistent strategy where the
political conditions across the country are prevalent. It must aim at implementing the strategy
of fair price policy to its huge consumer base
 Another recommendation is to perform constant innovation that is determined to be the key
aspect of its strategy. This is due to the fact as consumers preferences and social trends show
dynamism that could be addressed efficiently and effectively by determining the strategy of
higher levels of growth
 It can be seen that the Woolworths strategy suggests that it must strongly enhance support to
its employees by providing development mechanism and additional training to its consumers
 Woolworths management team must implement strategies that will help in reducing the
operational costs of the products
 To minimize their domination, the management must involve a number of consumers. They
must communicate transparent and clear objectives and expectations of the associated
employees as they are determined to be a significant part of the business

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 Woolworths must adopt customer-focused strategies that will satisfy the needs of the
customers. The business experts of Woolworths must follow appropriate policies that will
help attract the trade partners and foreign investors
 The company must implement an open communication process between employees,
customers, and suppliers to understand the organizational activities better
 Looking forward to enhancing food strategy Woolworths must also implement a recycling,
hygiene and disposal programme to improve cleanliness in the environment
 Woolworths must invest more in advertising to promote its products and provide healthy
meals to the customers
 It must focus upon investing in new businesses that will help in increasing the sales growth
of the company
The paper helped in carrying out a critical strategic analysis of Woolworths to focus upon the
significant strategies undertaken by the organization. It has been observed that the company is
highly focusing on gaining an increased level of growth in its business operations. The growth of
the company is mainly supported by its strong commitment towards its employees and
consumers. Moreover, based on the external analysis it can be seen that adverse social
conditions, changing social patterns, political conditions and competitive business environment
puts an impact on the company. The paper also presents a competitive advantage of Woolworths
that discusses its competitive rivalry. All these factors affect the growth and strategy of the
Woolworths Group. On the other hand, the internal environmental conditions also put a direct
impact on the growth potential of the company. Furthermore, it has been noticed that
Woolworths have understood the business adequate and proper usage of processes and strategies
for the organization. These strategies will be beneficial not only for the organization but also for
the employees and the customers.

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References
Bailey, M. (2016). Marketing to the Big Middle: establishing Australian discount department
stores. Journal of Historical Research in Marketing, 8(3), 416-433.
Bayne, L., Schepis, D., & Purchase, S. (2017). A framework for understanding strategic network
performance: Exploring efficiency and effectiveness at the network level. Industrial
Marketing Management, 67, 134-147.
Carey, R., Caraher, M., Lawrence, M., & Friel, S. (2016). Opportunities and challenges in
developing a whole-of-government national food and nutrition policy: lessons from
Australia’s National Food Plan. Public health nutrition, 19(1), 3-14.
Chavan, M., & Carter, L. (2018). Management students–expectations and perceptions on work
readiness. International Journal of Educational Management, 32(5), 825-850.
das Nair, R. (2018). The internationalisation of supermarkets and the nature of competitive
rivalry in retailing in southern Africa. Development Southern Africa, 35(3), 315-333.
Devin, B., & Richards, C. (2016). Food waste, power, and corporate social responsibility in the
Australian food supply chain. Journal of Business Ethics, 1-12.
Fleming, A., Wise, R. M., Hansen, H., & Sams, L. (2017). The sustainable development goals: A
case study. Marine Policy, 86, 94-103.
Laurie, S. M., Faber, M., & Claasen, N. (2018). Incorporating orange-fleshed sweet potato into
the food system as a strategy for improved nutrition: The context of South Africa. Food
Research International, 104, 77-85.
Morioka, S. N., Evans, S., & de Carvalho, M. M. (2016). Sustainable business model innovation:
exploring evidences in sustainability reporting. Procedia CIRP, 40, 659-667.
Nakandala, D., & Lau, H. C. W. (2019). Innovative adoption of hybrid supply chain strategies in
urban local fresh food supply chain. Supply Chain Management: An International
Journal, 24(2), 241-255.

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Rajabian Tabesh, A., Batt, P. J., & Butler, B. (2016). Modelling the impact of environmental and
organizational determinants on green supply chain innovation and performance. Journal
of food products marketing, 22(4), 436-454.
Sewell, W., Mason, R. B., & Venter, P. (2017). Socio-economic developmental strategies as
retail performance indicators: A balanced scorecard approach. Development Southern
Africa, 34(3), 365-382.
Siebers, L. Q. (2018). Opportunities and challenges of international retailing in China. The
World Financial Review, (SepOct), 31-34.
Woolworths Group: Quality Brands and Trusted Retailing. (2019). Woolworthsgroup.com.au.
Retrieved 15 April 2019, from https://www.woolworthsgroup.com.au/
You, K. (2016). Employer association renewal and adaptation: The experience of the national
retail association. International Journal of Employment Studies, 24(1), 62.
Zutshi, A., Creed, A., Holmes, M., & Brain, J. (2016). Reflections of environmental management
implementation in furniture. International Journal of Retail & Distribution
Management, 44(8), 840-859.

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Appendices
Figure: Woolworths Group
(Source: Woolworths Group: Quality Brands and Trusted Retailing. 2019)
Figure: Competitive analysis of Woolworths Group

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(Source: Siebers, 2018)