Woolworths Ltd Porter Five Forces Analysis

This assignment delves into the strategic analysis of Woolworths Ltd, focusing on Porter's Five Forces model to assess its competitive environment. The analysis examines bargaining power of buyers and suppliers, competitive rivalry, threat of substitutes, and threat of new entrants. Additionally, it positions Woolworths within the product life cycle, identifying strategies for success in the current maturity and declining phase. Recommendations are provided for strengthening private labeling, promoting innovative organic products, and enhancing technological convenience for customers.

Research Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Assessing Woolworths external environment for identifying potential opportunities and threats
.....................................................................................................................................................3
Analyzing internal environment of Woolworths Ltd \................................................................4
Reviewing macro-environmental factors that have an impact on Woolworths Australia...........4
Providing analysis of Woolworths competitive advantage.........................................................5
Porter five force analysis and presenting attractive aspects for the new entrants........................5
Stating life-cycle model which is applicable on Woolworths Ltd...............................................6
CONCLUSION................................................................................................................................6
RECOMMENDATIONS.................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In the current times, Australian supermarket industry reached at the stage of maturity.
Moreover, with the motive to gain competitive edge over others and enhance customer base
Australian retail units are placing high level of emphasis on offering retail products or services at
lower prices. Further, for the purpose of cost reduction now companies are laying focus on
employing strategy pertaining to own branding and labelling. From the period of 2007 to 2012,
average annual industry growth was 3.4%. However, growth of such industry was declined to
2.4% per annum. In the retail market, a competitive duopoly has maintained by Woolworths and
Coles. In this, report will provide deeper insight about the internal and external environmental
aspects of Woolworths. Besides this, report will shed light on the macro factors that have an
impact on Woolworths operating in Australia. It also depicts initiatives which are undertaken by
Woolworths ltd for gaining competitive edge over others.
MAIN BODY
Assessing Woolworths external environment for identifying potential opportunities and threats
By doing analysis of external environment following opportunities and threats have
assessed:
Opportunities: business unit has opportunity to engage and enhance customer base by
placing advertisements on social sites. This in turn helps in developing awareness among the
customers regarding offerings and thereby entices customer decision making (SWOT analysis of
Woolworths Ltd, 2018). Further, from the growth perspective such retail unit has opportunity to
explore business operations in the emerging economies. Apart from this, Woolworths Ltd can
win back the customers through promoting brand via advertisement, promotion and sponsorship.
Threats: Woolworth Ltd is facing major threat from leading retail firm namely ALDI.
Moreover, considering the mindset of customers in relation to saving money ALDI is providing
them with high discounts. This in turn imposes threat in front of the company pertaining to
loosing customer base and revenue. Along with this, discounting war with Coles may also be

presented as a threat for Woolworths Ltd. Further, company is facing threat from aggressive
expansion strategy employed by ALDI and slow growth takes place in online retailing.
Analyzing internal environment of Woolworths Ltd \
Strengths:
Woolworths Ltd is the oldest and highly well known brand in Australia under retail
sector. Further, company has gained high market share by opening several supermarkets. Strong
commitment of the business unit towards the aspect of environment sustainability is recognized
as another main strength. This in turn helps in building distinct image in the mind of stakeholders
(SWOT analysis of Woolworths Ltd, 2018). Effectual CSR program is also the main aspects
which in turn strengthens company’s image.
Weaknesses
Negligible global in comparison to the rival firm is one of the main weaknesses of
Woolworths Ltd. Due to the highly competitive situation and discounting war firm lose its
competitive edge. Further, late entry in online retailing is considered as main cause which in turn
has placed negative influence on revenue as well as margin.
Reviewing macro-environmental factors that have an impact on Woolworths Australia
Given case situation presents that there are several macro factors which in turn has
impact on the operations and performance of Woolworths Ltd. Moreover, after the period of
financial crisis consumer sentiments and their disposable income is decreased to a great extent.
In response to this, Woolworths had introduced private label brands and offered comparable
quality products to the customers. In addition to this, changes take place in the demographical
aspects also impose issues in front of the company. The reason behind this, it influences both
location decision pertaining to new establishments and range of offering between supermarkets.
Further, social factors present changes in the preference of customers in relation to the
retail product or services. Now, customers prefer to purchase organic products or services rather
than others. In the selling of organic retail products growth of 50% has recorded. Hence, for
attaining success company needs to provide customers with wide range of organic products.

Apart from this, significant technological changes or advancements have assessed in Australian
retail sector. Coles have introduced contactless card payment system which in turn streamlines
customer purchase system. Thus, for building and sustaining competitive position Woolworths
require to make focus on technological innovation and adoption.
Providing analysis of Woolworths competitive advantage
For attaining competitive position or advantage Woolworths ltd has taken several
initiatives which in turn aid in the organizational growth and success. Hence, with the motive to
ensure high technological advancements (Strategic analysis of Woolworths Limited, 2018).
Woolworths Ltd has done trial to two virtual supermarkets in Melbourne and Sydney. In addition
to this, for exploring operations in relation to organic products Macro Wholefoods was acquired
by Woolworths ltd. Further, to compete with the rival firm such as Aldi, private labelling
strategy was undertaken.
Porter five force analysis and presenting attractive aspects for the new entrants
Porter five force analysis
Bargaining power of buyers
In the context of Woolworths Ltd, bargaining
power of buyers is high. This in turn creates
pressure on business unit pertaining to provide
customers with heavy discounts (Woolworths
Limited Porter Five Forces Analysis, 2018).
Bargaining power of suppliers
Dependency of Woolworths ltd is less on
customers which in turn presents low bargaining
power of suppliers. As company has high retailing
market share in Australia and New Zealand.
Competitive rivalry
Woolworth is facing stiff competition from
competitors such as Aldi, Coles and other leading
retail units. Hence, such aspects force company to
come up with the effective strategies and
innovation that beat the rivals.
Threat of substitutes
Company is facing high threat from substitute
products or services. Moreover, leading retailers
such Aldi, Coles are offering similar products in
the category of both organic and non-organic.
Threat of new entrants
Now, Australian supermarket is filled up with highly competitive situation and reached at saturation level.
Average annual growth of the retail sector is decreasing to the significant level. Hence, all such aspects

act a barrier in front of new entrants.
Stating life-cycle model which is applicable on Woolworths Ltd
From assessment, it has identified that now Woolworth Ltd lies within the range of
maturity and declining phase. Moreover, leading companies are offering similar products and
competing with each other on the basis of price. Hence, in this, company can achieve success
only when it comes up innovation.
CONCLUSION
By summing up this report, it has been concluded that micro and macro environmental
analysis assists Woolworths ltd in developing competent or strategic framework. It can be seen
in the report that by focusing on promotional aspects and private labelling retail unit can attain
success. It can be seen in the report that brand loyalty and environment sustainability practices
are recognized as the major strength of firm. It can be summarized from the report that
bargaining power of suppliers and threat from new entrants is lower in the context of
Woolworths ltd. Further, it can be stated that private labelling, quality and organic retail products
help in attaining competitive position.
RECOMMENDATIONS
 It is recommendation to Woolworths ltd to lay high level of emphasis on offering wide
range of innovative organic products. This in turn helps in enticing decision making
aspects of customers and thereby revenue as well as profit margin.
 Further, it is advised to the retail unit to lay focus on strengthening the aspects of private
labelling. Along with this, by focusing on promotional aspects company can aware
customers regarding their offerings.
 Along with this, it is suggested to Woolworths ltd to conduct R&D and find out technical
ways that offer high level of convenience to the customers. In other words, for getting
desired level of outcome or success company is required to make focus on improvement
in the technological aspects.

REFERENCES
Online
Strategic analysis of Woolworths Limited. 2018. [Online]. Available through:
<https://lastfreelance.wordpress.com/2013/11/23/strategic-management-analysis-of-
woolworth-supermarketupd/ >.
SWOT analysis of Woolworths Ltd. 2018. [Online]. Available through: <
https://www.swotandpestle.com/woolworths-limited/>.
Woolworths Limited Porter Five Forces Analysis. 2018. [Online]. Available through:
<http://fernfortuniversity.com/term-papers/porter5/asx/627-woolworths-limited.php >.