Strategic Information System for Woolworths: Analysis and Proposal

This report analyses the environment around Woolworths and provides recommendations regarding strategic information system that can be used within the company. It also describes the strengths and core competencies of the cited firm.

Strategic Information System

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Contents
INTRODUCTION......................................................................................................................1
Part1...........................................................................................................................................1
Business Background.............................................................................................................1
Industry...................................................................................................................................2
External environment analysis...............................................................................................2
Industry Environment.............................................................................................................2
Competitive environment...........................................................................................................3
Opportunities and threats........................................................................................................3
PART2: Internal analysis and proposal......................................................................................4
Resources of Woolworths.......................................................................................................4
Identification of capabilities...................................................................................................5
Core competencies..................................................................................................................5
Suitable information system.......................................................................................................6
Recommendation........................................................................................................................6
Conclusion..................................................................................................................................6
Bibliography...............................................................................................................................7

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INTRODUCTION
Australia in last few decades has changed in many terms. These changes have affected the
business process of many companies. Business environment all across the globe has created
many types of challenges for the business houses whether big or small. It is essential that
firms take use of the strategic tools for analysing the factors that are making such kind of
changes. Taking use of strategic management systems can help in effective utilisation of
resources. Woolworth is a big grocery and super market chain based in Australia
(Woolworths, 2018). With the resources and capabilities they have they can easily grab the
opportunities present in the market as well as face threats that the company needs to consider.
This report describes the strengths and core competencies of the cited firm. It also analyses
the environment that is present around their business as well as it gives the recommendations
regarding strategic information system that can be used within the company.
Part1
Business Background
“Woolies” or Woolworths is an Australian grocery/supermarket chain operating with various
stores in various parts of the country. It was established in the year 1924. It excels in selling
of groceries. Apart from this it is also dealing in the business of magazines, stationary items,
household products, beauty and health products, baby and pet products as well as electronics
item such as DVDs. Right now in Australia, it is operational with approx. 1000 stores in
Australia. In this 980 are super markets while 20 are convenience stores (Woolworths Group,
2018). Company also performs online operations with the name such as “Homeshop”.
Woolworths also provides home shopping and delivery services to its customers.
Industry
Woolworths comes under Retail Industry. Supermarkets have opened in large numbers but
their growth has not been such fast. The industry stats show that grocery retailers have
performed better when compared with non-grocery retailers (Akbar and Ahsan, 2014).
External environment analysis
In Australia business environment has made a drastic change. Both internal and external
environment of Australia has made changes in the business process. The factors that affect
the external environment are as follows:

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 Physical: The physical environment has degraded and Australian government has
taken many steps to control this pollution. The use of plastics has been prohibited and
hence Woolworths will have to work hard for finding the alternatives for plastic use.
 Legal and political environment: The legalities related to business in Australia have
strengthened the powers of consumers. The rules and regulation regarding the
procurement and transportation within Australia have also to be followed strictly so as
to avoid any legal consequences. Apart from this Woolworths will have to comply
with the governmental policies that have changed over the years (Arli, et. al. 2013).
 Global: Due to globalisation any change in the political and socio-economic condition
in any part of the world gets reflected back in the same within Australia. There are
many lower cost markets from where company can avail their products. Reducing
trade barriers and lowering of import duties is helping Woolworth in reducing their
overall cost of operations.
 Technology: In retail sector advancements in technology has been very fast.
Implementation of technology like Strategic Information management systems,
supply chain management system, e-retailing and many other have emerged. Use of
Artificial Intelligence and predictive analytics has become necessary as the firm has to
get ready for the fast changing business environment (Dos Santos, 2012).
 Sociocultural: The Australian society has transformed and hence their needs have also
changed. Due to time complexity people purchases all the things from supermarket
chains rather than going to the individual or specialised stores. People are also moving
towards the online mediums for purchasing for which companies will have to be
ready with.
Industry Environment
Environment in the industry is subjected to huge changes due to various factors. The industry
analysis for Woolworths is done below.
 Power of buyers: There are large numbers of players present in the industry which
gives various kinds of options to the consumers. It strengthens the bargaining power
of buyers. With small firms emerging in the local markets their buying power is
further enhanced.
 Supplier’s power: Woolworths have huge amount of suppliers from all around the
globe and from Australia itself. With so many suppliers in the bank company is easily

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negotiating with suppliers. This has reduced the overall powers of suppliers which has
diminished their bargaining power.
 Potential entrants: There is a huge investment required in opening a super market
chain and in the Australian market there are big giants that are already present. Apart
from this there are many small scale retailers that have come up in the industry. Since
the investment in these types of retail shops is less hence the chances of their entry
becomes highly probable (Keith, 2012). Generating higher profits in this competition
can be difficult hence this threat is on the lower side.
 Rivalry: There are many big firms present in the industry and most of them have the
capability to capture the larger part of the market. Players such as Coles are giving
tough fight to Woolworths. This is reducing the chances of the company to achieve
long term success in their business. The online players that have emerged over the
years have made the competition much tougher for Woolworths.
 Substitute products: There is large amount of substitute products available in the
market and hence the product of Woolworths can get easily replaced by some other
products. With the enhancement in the online market there is an immediate need of
focusing on the online competitors (Mitchell, 2014).
Competitive environment
In the retail industry of Australia, there are many small and big companies operational in
Australia. Retail Industry has attracted many new investors to open different types of shops.
With each of the bigger company having the potential to take the market of others, companies
will have to be ready with their plans so as to gain competitive advantage over their rivals.
This has made the competition more complex and has forced the firms to understand the
values that their products have (Sutton-Brady, Kamvounias and Taylor, 2015). In the years to
come the online competition is going to increase at much faster rate.
Opportunities and threats
Australia is changing especially in terms of the ways in which people are buying things as
well as the ways in which companies are doing their business. With only few companies
having control over the retail market in Australia, there are huge opportunities available for
Woolworths. This company has huge opportunities in the new developing cities of Australia.
Along with this they can also take use of online services which help the firms in reaching

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deeper into the market (Price, Bailey and Pyman, 2014). It will not only help the organisation
to fasten the pace of service delivery but also helps the organisation to limit their expenses.
The biggest threat that Woolworths have to face is related to sustainability. This is because
resource scarcity is increasing and the companies will have to make sure that they are ready
for fulfilling demand of the Australian society. The society in Australia is ageing and hence
company needs to be prepared for their specific demands (Dwivedi, et. al. 2012). Any small
change in the environment can affect the suppliers group which can further affect their
business.
PART2: Internal analysis and proposal
It is essential that every company analyses their internal environment. This is necessary for
fulfilling understanding the requirements of the firm in the coming years and hence better
decisions can be made with more precision. It is done for understanding the capabilities that
could be used for grabbing the opportunities that are present in the market.
Resources of Woolworths
Tangible and Intangible resources are both equally important. It is essential that company
does an analysis on both the types of resources Woolworths have. It is essential for long term
sustainability of the company.
Tangible resources
These are the resources that are physical in nature. Some of the tangible resources are:
 Cash: Woolworths has a huge cash base which has been generated from its previous
business. This cash can be utilised for the future investments especially for making
change in the inventory. In the changing global economic situation, this might help
the company in the transformation phase.
 Inventory: “Woolies” have a high quality inventory. They have an inventory
management team for its management. IT tools like inventory management system
can help in managing their inventory. The results could be seen with inventory
turnouts as it is lower.
 Equipment: Woolworth uses best of equipment in the industry to bring precision in
the work process. Their management is focused towards using technologically
advanced equipment. Such kind of equipment helps in doing innovative business. The

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equipment such as Point of sale and communication equipment are of higher
standards (Chapman, et. al. 2013).
 Vehicles: They are using the best of vehicles in the process of supply chain and
various other purposes. Use of advanced technologies helps the company and the
customers in knowing the position of the vehicles especially in the case of fast
delivery.
 Stores: The stores of the Woolworths are of high standards and have all the facilities
that are required for providing the best of services to the customers. At the same time
size of the stores are also big that can accommodate large numbers of the consumers
at once. The convenience stores help the organisation reaching deeper into the
markets.
Intangible resources
The resources that are not of the physical nature but are very essential in the process of
business are known as Intangible resources. Some of the resources in this regards are:
 Goodwill: Firms works for maintaining the goodwill in the society. There are several
CSR activities run by Woolworths which also helps in adding to this goodwill. This is
necessary in the competitive business environment as people gets attracted towards
the company showing positive goodwill (Mortimer and Ingersoll, 2015).
 Accounts receivable: Woolworths has to collect huge amount of money from various
stakeholders especially the customers. The amount receivable value for Woolworths
for the quarter which ends in June 2018 is around $97 Million.
 Expenses: They have a strategic planning for using the resources. This helps them in
limiting the resources they have. Many a time, several cost cuts have been made so as
to limit the unnecessary expenses made by the company. Effective utilisation of
resources has helped the company in controlling the expenses.
Identification of capabilities
Woolworths has huge amount of capabilities that can help the organisation in various ways.
With the quality resources could help the company in achieving their goals and objectives.
Woolworth’s capability can be understood by the fact:

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 Employee’s salary: The salaries of the employees are higher as compared to most of
the firms in the industry. This has helped Woolworths in reducing employee turnover
and hence has highly skilled employees.
 Buying power: With huge capital that Woolworths has, the cited firm is capable of
making all the purchases as per their requirement. The Return on Investments has also
been high which has made company capable of gaining competitive advantage (Wu
and Wu, 2013).
 Low price and high quality products: They have offering the best quality products at
lowest of prices. This has been their strength over the years.
Core competencies
This company has excellent core competencies so as to take out the competitors out from the
contest. Elaboration of it is as follows:
 Power to buy: This stands on all four tests. It is having significant value, increases the
market share of the firm as well as it is not easy for the competitors to imitate and
gives competitive advantage over the rivals.
 Price Uniformity: They are bringing their products at lowest possible cost and it is
available in all the stores at the same price. It is hard to imitate for the competitors
hence giving them competitive advantage over the rivals.
 Salary of employees: Since their employees add value to the products and services of
the firm hence they pay salaries that are not easy to imitate. It gives them competitive
advantage over the rivals (Mbhele, 2012).
 High quality products at lowest of prices: This also passes on all four tests as the high
quality products are provided by the company at lowest of cost. This gives company
with competitive advantage and helps company in attracting the customers. This is
hard to imitate and dominates in the market.
Suitable information system
Information system has become the need of the modern day business especially the
companies of the scale of Woolworths. The data is generated from various sources and
managing these data is crucial for making effective decisions. Information systems that can
help Woolworths are as follows:

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 Transaction processing system: It is a system that is used in managing the records
which is generated in process of various types of transactions. This system assembles
the records of both employees and customers and produces the data to the decision
makers as per their requirement.
 Supply chain management system: Managing the demand and supply gap is very
essential in the modern day context. In this regards supply chain management system
can be very helpful in maintaining the balance between supply and demand (Mbhele,
2012).
Recommendation
Information systems like supply chain management will help in aligning the demand and the
goals that company has set for themselves. Use of predictive analytics and artificial
intelligence in supply chain management system can make the system more effective. Apart
from this the technology such as POS systems and data management software can make the
transactional processing system more effective (Pantano, 2014). The information system
adoption technique which should be used by Woolworths should be Enterprise Resource
Planning. This will further help in effective utilisation of resources.
Conclusion
A conclusion can be drawn from this report that Woolworths is one of the biggest retail firms
in Australia. Woolworth’s external and internal analysis explains that this company has huge
opportunities in the retail market. At the same time they need to take care of the threats that
are posing to their business. Competition in the Australian retail market can be tackled by the
company with the help of resources they have. Woolworth’s core competencies have passed
all the four tests and utilisation of resources must be done after the strategic planning. The
information systems such as supply chain management system and transactional processing
system needs to be used by Woolworths in an effective manner.

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References
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