Woolworths Business Strategy: Cost Leadership, Differentiation, and Focus

Organization Strategy and
Leadership
Student’s Name

Strategic Management 1
Introduction
Designing of the business strategy includes the decisions and the actions taken by
the company to accomplish the goals of the organization and to secure a competitive
position in the market. It is considered as a roadmap based on which the actions are
undertaken by the company. It is the strategy that gives the way to the business plan
and helps in analyzing the strength and the weaknesses of the organization which
are further used to analyze the competitive advantage of the company. It controls the
activities of the company to assess whether the activities are in line with the
business goals of the organization. The designing of the business strategy can be in
three forms which include corporate level, business unit level and the functional level
strategy (Hubbard et al, 2019).
Woolworths is an Australian supermarket chain that currently operates 1008 stores
across Australia and focuses on attaining long term profits and creates sustainable
value for the stakeholders. It ensures to provide connected retail experience and
deliver value to the customers. The company employs 2, 01,522 team members and
serves 29 million customers (Woolworths Group, 2019). It focuses on delivering the
best to the customers in terms of quality, convenience, and value. The company has
developed a retail team which understands the changing needs of the customers
and based upon the research the business strategies of the company are designed.
It provides differentiation in the product or service and takes continuous feedback
from the customers to provide improved products and services (Woolworths Group,
2019).The further paragraphs will reflect upon the generic business strategy adopted
by Woolworths and will also cover the culture and the structure of the organization.
Generic business strategy of Woolworth
The company applies Porter’s generic business strategy to sustain its competitive
advantage over its competitors. It consists of three strategies cost leadership,
differentiation and focus. The cost leadership strategy focuses on designing the
products at a lower cost by removing the frills and another cost. The price of the
product is the same as the parity but the company is able to sustain the competitive
advantage at the lean times. In this strategy, the company efficiently applies logistics

Strategic Management 2
and cuts the cost in comparison to its competitors. Another generic strategy includes
the differentiation strategy under which the company creates differentiated products
and services (Salavou, 2015).
Woolworth focuses on the differentiation strategy by taking continuous feedback
from its customers and creates innovative product and services. Through the
adoption of the differentiation strategy the company charges premium prices from its
customers and are able to generate higher profits. It focuses on making continuous
innovation and satisfies the diverging needs of the customers. The last generic
strategy is the focus strategy under this strategy the company focuses on delivering
the products and the services to the niche market. The company focuses on
understanding the needs of customers of the niche market and deliver unique
products at the low-cost pricing. It focuses on developing loyal customers from the
niche market (Plouffe et al, 2016).
It is analyzed that Woolworths applies integrated competitive strategy under which it
focuses on adopting the cost leadership and the differentiation strategy. In the
competition to the Coles, the company focuses on lowering its prices to gain the
market share and controls the large chain of supermarkets which in turn lower the
prices from the suppliers (Mitchell, 2017).
The main objective of the company is to deliver value to the customers by providing
the core products to the customers and makes innovation in accordance with the
changing needs of the target market. It applies new pricing and value strategy to
neutralize the impact of Coles on the performance of the company and provides a
high-quality better-priced product to gain the trust of the customers. It fosters to
develop new products and provides fresh quality products to the customers. It cost
leadership strategy allows the company to earn above-average returns and faces
vigorous competition with Coles. To implement the cost leadership strategy the
company efficiently manages the logistics and reduces the expenditure upon the
technologies and the supplier’s relationship. It reduces the unnecessary expenses
and reduces the production cost to provide the products at similar prices to its
competitors and gain the market share (Van der Voet, 2014).
Considering the differentiation strategy of the company it has developed a three-year
strategy under which the customers are placed at the first and aims to neutralize the

Strategic Management 3
competition by enhancing the customer experience. Its three-year strategy mainly
focuses on improving the core offer, development of new products and services and
initiating new efficiencies through the lean retail model. The current strategy will help
in lowering the prices of the products and provides more compelling offers and
greater innovation (Jie and Gengatharen, 2019)
(Source: Woolworths Group, 2019).
To improve the customers experience the company has designed a retail team that
takes continuous feedback from the customers and every day focuses on improving
the customer experience. It has six priorities under which the customers are placed
at number one. It focuses on providing a connected, convenient and personalized
experience to customers and differentiates food customer propositions. It fosters to
bring innovation in the drinking business and unlocks the value of the portfolio. It
emphasizes on E2E processes to simplify for the stores and better for the customers
(Nastasoiu and Vandenbosch, 2019).
To deliver the differentiated products it focuses on a deeper understanding of the
customers. It leverages a single view of the customers by efficiently using the
customer database and analyzing the customers need in the real-time to deliver
personalized services. It efficiently uses digital channels to increase the market
share and develop loyal customers for the brand (Phillipov, 2019)