Strategic Management of Woolworths in Australian Retail Market

This paper evaluates the business conduct of Woolworths in the Australian retail market and assesses the level of competition. It also analyzes the internal capabilities and threats faced by the company. The paper highlights the application of differentiation strategy and subsidiary strategy by the senior management. Recommendations for future success are provided.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author Note

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Executive Summary:
The paper evaluates the business conduct of one of the major retail organizations of Australia
named as Woolworths. The paper presents a short description of the company profile and at
the same time, it also assess the level of competition in the Australian retail market. With
precise application of the PESTEL analysis, the paper shows that Australia is a politically
stable and economically growing nation for conducting sustainable business. Along with this,
the paper identifies some of the competitor organizations such as Walmart, Coles Group,
Amazon and Costco and the impact of their business operations on the company. In addition
to this the paper highlights the internal capabilities such as the strong brand reputation and
skills of the employees along with the threats such as limited presence of the company in the
global retail market and the lack of emphasis on the online business conduct of the company.
Apart from this, the paper highlights the strong emphasis of the senior management of the
company on the application of the differentiation strategy as the business level strategy and
the subsidiary strategy as corporate level strategy. However, the company requires to improve
the efficiency of their CRM for the much required improvement in the marketing and
promotional activities, the supply chain mechanism for the introduction of products at
cheaper rates and their approach in the online biasness management.

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Table of Contents
Introduction:...............................................................................................................................4
Organizational Overview:..........................................................................................................4
Competitive analysis:.................................................................................................................6
External Analysis:..................................................................................................................7
Political:.................................................................................................................................7
Economic:..............................................................................................................................8
Social:.....................................................................................................................................8
Technological:........................................................................................................................9
Environmental:.......................................................................................................................9
Legal:......................................................................................................................................9
Porter’s Five Forces Analysis:.................................................................................................10
Competitive Rivalry:............................................................................................................10
Bargaining power of the Buyers:.........................................................................................11
Bargaining power of the Suppliers:......................................................................................11
Threat of Substitution:..........................................................................................................11
Threat of New Entrants:.......................................................................................................11
SWOT Analysis:......................................................................................................................12
Strengths:..............................................................................................................................12
Weakness:............................................................................................................................12
Opportunities:.......................................................................................................................12
Threats:.................................................................................................................................13

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Business Level Strategy:..........................................................................................................13
Corporate Level Strategy:........................................................................................................13
Future strategy and development:............................................................................................14
Conclusion:..............................................................................................................................14
References:...............................................................................................................................16

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Introduction:
The importance of strategic management in the contemporary world of trade is
increasing in a notable manner and that is pretty evident with the increasing intensity of the
business competition in various business industries. As an impact of the globalisation, the
intensity of the business rivalry amongst the organizations is seen to increase in a
considerable manner and that is becoming one of the key factor responsible for the abolition
of the concept of the market monopoly. With the increasing level of business competition, the
companies are observed to face the necessity of incorporating scientific management in their
business operations (Chang, 2016). The paper is focused in analysing the business operations
of an Australian global retail giant named as Woolworths. The paper includes a brief
overview of the business operations of the selected group. Along with that, the paper
evaluates Australian retail industry with a precise application of the PESTEL framework.
Along with that, the paper includes an in depth analysis regarding the competition faced by
the chosen group in conducting their business operations in the global and national market.
Other than this, the paper summarizes the business level strategy and the corporate level
strategy of the selected group. With a thoughtful understanding of the business operations of
the group, the paper delivers a set of important recommendations for the future success of the
selected group.
Organizational Overview:
Woolworths is one of the prime supermarket chain operating in the Australian retail
industry. The organization was recognized in the year 1924 as Wallworths Bazaar Ltd
(Woolworths.com.au, 2019). The group is currently headquartered at Bella Vista in New
South Wales (Woolworths.com.au, 2019). The group is able to achieve considerable amount
of reputation amongst the Australian clients for providing quality products. The main focus of

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the group with their product chain is observed to be fast moving consumable goods. The
group has the excellence in reaching out to the clients with their products courtesy the strong
store presence of the group. The group is observed to operate in 995 different locations and
that is considered to be one of the key infrastructural advantages, responsible for the success
of the group at the global stages (Woolworths.com.au, 2019). Woolworths Limited is
observed to be owner group of the group and the impact of the group is pretty substantial on
the managerial team of Woolworths Supermarket. Brad Banducci, the Chief Executive
Officer of the group is one of the main representatives of the owner group in the managerial
team of the group (Woolworths.com.au, 2019). Along with Brad Banducci, Claire Peters, the
managing director of the group is seen to be an important individual in the management team
of the group (Woolworths.com.au, 2019).
The group is able to employ 115000 number of employees and the skills and
competences of the employees is recognized as a crucial factor responsible for the success of
the group (Woolworths.com.au, 2019). As a result of the service brilliance from the part of
the employees of the group along with the visionary leadership from the part of the
managerial team of the group, the group is able to increase their financial stability and that is
evident with the generation of a revenue of 56.726 billion Australian dollars in 2018
(Woolworths.com.au, 2019). With a detailed emphasis on the business operations of the
group, it is evident that the main purpose or the mission of the group is to add quality to the
lifestyle of their clients. As a result, the senior management of the group is witnessed to be
more motivated towards providing exceptional quality in their products and services that they
offer to their clients. The group believes the fact their ability in delivering quality products
have the potential to add the much required value to their business operations. With a precise
focus on the mission statement of the group, the vision is also pretty evident.

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Considering the vision of the group, it is evident that the group is determined in
becoming one of the most responsible retailers operating across the globe. The vision
statement of the group clearly reflects their passion and commitment towards conducting
good business and at the same time, it also reflect the responsibility of the group towards the
clients, people and the planet. Considering the value proposition of the group, it is evident
that the business operations of the group is largely customer based and at the same time, the
reflection of the inspirational leadership from the part of the management of the group is
petty prominent in the business operations of the group. In addition to this, the senior
management of the group is focused in ensuring the fact that they have the capability to take
the responsibility of the group’s products and services which increases the acceptance level
of the group amongst their clients. Having said that, the heart of the group’s value proposition
is seen to be their urge in continuously improving the quality of their products and services.
Competitive analysis:
With a detailed emphasis on the Australian retail industry, it is visible that the annual
retail turnover have only increased in the last few years. In the year 2010, the annual retail
turnover in the nation was 242.91 billion Australian dollars which increased to 293.16 billion
Australian dollars in 5 years’ time span (Statista.com, 2019). The growth of the mentioned
industry kept on increasing and that was evident with 303.29 billion Australian dollars in the
next year and in the year 2018, the growth reached to an annual turnover of 320.8 billion
Australian dollars (Statista.com, 2019). Hence, it is pretty obvious that the mentioned trade is
associated with remarkable growth and the financial growth of the industry will only continue
in the coming years. The sustainability associated with the business operations of the
companies operating in the mentioned industry is pretty visible and that is evident with an
annual increment of 2% in the retail sales volume of the mentioned industry in the year 2017
(Statista.com, 2019). Apart from this, the gross value added by the mentioned industry till the

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month of March 2018, is observed to be 19.4 billion Australian dollars which is pretty
substantial in stating the contribution of the Australian retail industry in Australian economy
(Statista.com, 2019).
Considering the top most selling segments of the mentioned industry, the scope of
conducing sustainable business is pretty prominent and that is obvious with the annual
turnover of 16.21 billion Australian dollars in the year 2017 (Statista.com, 2019).
Considering the e- commerce segment of the industry, it is visible that the share of the all
retail sales in the mentioned segment is expected to increase to 7.2% in the year 2018 from
that of 5.9% of 2015 (Statista.com, 2019). Other than this, the annual turnover of the
supermarkets and the grocery stores in the mentioned industry is seen to increase to 105.23
billion Australian dollars in the year 2017 (Statista.com, 2019). Hence, it is pretty visible that
the mentioned industry is associated with substantial growth and financial sustainability
which have the possibility of helping any organization such as Woolworths in improving
their generation of their profit and sales of their products.
External Analysis:
Political:
With a detailed emphasis on the political environment of the country, it is obvious
that the country is considered as one of the most preferable destinations for the companies in
establishing their business. The country is able to form a strong relationship with the reputed
trade organizations such as the OECD, Commonwealth of Nations, G20 along with the World
Trade Organizations and that precisely specifies the appropriate trade environment that the
country is able to develop (Wto.org, 2019). Along with this, the strong connection of the
country with these organizations is playing a substantial role in decreasing the difficulty
associated with the business management in the nation. In addition to this, the stable

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relationship of the country with the neighbouring nations is crucial in refining the reputation
of the country being a hostile place for the business houses. Apart from this, the transparent
stand of the national government in the effective management of the changes in the economic
policy of the nation, reflects the stability of their economy and at the same time, it reflects the
accountability of the government towards the citizens and the business houses operating in
the nation.
Economic:
With a detailed emphasis of the economic condition of the nation, it is visible that the
country is at the 19th position in the list of GDP (PPP) with a total GDP (PPP) of 1.313
trillion US dollars in the year 2018 (Tradingeconomics.com, 2019). Along with this, the per
capita value of the GDP (PPP) of the nation is 52,191 US dollars (Tradingeconomics.com,
2019). Considering the GDP (Nominal), the group is able to achieve 1.500 trillion US dollars
in the same year along with a per capita value of 59,655 US dollars which places the country
at 10th position in the corresponding list (Ceicdata.com, 2019). With a score of 33.0 in the
Gini Co- efficient aspect, the reflection of the intermediate wealth distribution amongst the
citizens of it is pretty prominent (Data.worldbank.org, 2019). Under such situation, the group
has the possibility of conducting a sustainable business in the mentioned nation and the fast
moving consumable goods will be more inclined towards repetitive purchases from the part
of the clients.
Social:
With a score of 0.939 in the Human Development Index, the country reflects a pretty
high urge towards the human development (Hdr.undp.org, 2019). The score signifies the high
life expectancy of the citizens along with improved literacy rate and at the same time, it also
portrays a strong per capita income of the citizens of the nation. Other than this, the high

9STRATEGIC MANAGEMENT
income level of the citizens of the nation is vital for the success of the group in conducting an
improved sales in the nation.
Technological:
With a detailed emphasis on the increasing literacy rate of the country, it is evident
that the acceptance level of the citizens towards the technological advancement, is increasing
in notable manner. The youth of the nation has considerable amount of preferences towards
the various social media platforms and the presence of the citizens in social media and
various online platforms, is a crucial motivator for the group in conducting their marketing
and the promotional activities with the help in the social media advertisements. Other than
this, the knowledge of the citizens regarding the technological applications will be crucial for
the success of the group in improving the quality of their business management.
Environmental:
The people of the nation are observed be substantially focused in maintaining the
ecological balance of the nation and at the same time, the improved literacy in the nation is
able to enhance the knowledge of the citizens regarding the effective management of the
environment and the necessity associated with it. Hence, the group has the necessity to make
sure that they source their products in an eco- friendly manner. Along with this, the group
requires to make sure that they are operating with a precise focus environmental guidelines
imposed by the national governmental agencies.
Legal:
Considering the legal aspects, the government is able to incorporate some crucial
changes in the taxation policy which is considered to be substantially helpful for even the
small scale industries. For sustainable business operations in the nation, the group is expected
to maintain their wage and work time characteristics in accordance to the industry guidelines

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and at the same time, the group needs to manage the requirements associated with the
efficient management of the Workplace health and safety legislations, Fair Work Act along
with the Equal Opportunity Act (Legislation.gov.au, 2019). Apart from these, the group
needs to have a professional approach in managing the Labour and Employment related
legislations.
Porter’s Five Forces Analysis:
Competitive Rivalry:
With an exact emphasis on the Australian and global retail industry, it is petty
prominent that the business competition amongst majority of the companies is increasing in a
substantial manner. Woolworths is facing an extreme level of rivalry from the part of the
competitor organizations such as the Walmart, Coles Group, Amazon and Costco.
Considering the business operations of Walmart, the retail giant is observed to upturn their
revenue to 514.405 billion US dollars in the year 2019 and the group is also able to increase
their market share in Australia (Walmart.com, 2019). Having said that, Coles Group is also a
tough contender in the global retail industry and that is pretty prominent with the capability
of the group in generating 39.388 billion Australian dollars in the year 2018
(Colesgroup.com.au, 2019). Apart from this, the market share of Amazon is observed to
increase in notable manner in Australia and that is visible with an increased revenue of
232.887 billion US dollars in the year (Amazon.com, 2019). In the same year, the group also
improved their operating income to 12.421 billion US dollars (Amazon.com, 2019). Apart
from these companies, the success of Costco in the Australian market is also substantial.
Along with increasing their market share in Australia, the group is able to increase their
revenue and the sum went up to 141.6 billion US dollars in the year 2018 (Costco.com,
2019). At the same, the group has also increased their operating income which is currently
4.48 billion US dollars (Costco.com, 2019). Hence, it is pretty evident that the selected group

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is exposed to an strong level of competition from the part of the mentioned competitor
organizations.
Bargaining power of the Buyers:
With an exact emphasis on the dynamics of the Australian retail market, it is obvious
that the main basis of the competition are the capability of applying low prices, continuous
improvement of the excellence of the products along with the capability of the businesses in
designing or manufacturing the products and their services in agreement to the preferences of
the clients. The strong availability of the capable companies in delivering these qualities is
observed to increase the bargaining power faced by the group from the part of their clients.
Bargaining power of the Suppliers:
Considering the bargaining power of the suppliers, the Australian retail market is seen
to have substantial number of suppliers, capable of delivering on time supply of their
products, supply of quality products and at the same time, the suppliers are observed to
supply their products at reasonable prices. In addition to this, majority of the suppliers
operating in the retail industry of the nation are observed to have the capability of following
scientific procedure for the preservation of their products.
Threat of Substitution:
With a precise focus on the ability of retail companies operating in the Australian
market in providing the much required quality in their products, low priced products along
with the ability of scheming the products in agreement to the preferences of the clients, the
clients are observed to have considerable number of options to choose from. Hence, the group
is seen to be placed in a position where it is facing high threat of substitution.

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Threat of New Entrants:
The bulk investment required for the development of the required infrastructure for
operating in the retail industry of the nation, is observed to be a major concern for the new
companies in opening their business. However, the growth related with the retail industry of
the nation plays the role of a crucial motivator for the new companies in conducting a
sustainable business in the region.
SWOT Analysis:
Strengths:
The strong brand reputation is one of the major strengths of the company going
forward and being one of the oldest companies working in the Australian retail market, the
success of the company in increasing their market share with strong influence of their brand,
is pretty visible.
The excellent skills and competencies of the company’s 115000 number of employees
is a significant boost to the company’s ability in conducting sustainable business
(Woolworths.com.au, 2019).
Weakness:
One of the significant weakness of the company is seen to be the limited presence of
the company in the global markets.
At the same time, the company is seen to be bit restricted in expanding their online
business operations.

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Opportunities:
The company has the opportunity to increase their sales and improve their financial
sustainability with the achievement of the increased efficiency in the marketing and
promotional activities of the company.
The company is expected to utilize the scope of achieving significant growth in the
emerging economies.
Threats:
The threats for the company is seen to be the detrimental impact of the economic
recession.
At the same time, the intense competition of the Australian retail market and the
increasing market share of the competitor organizations are recognized as major concerns for
the company in maintaining the sustainability of their business processes.
Business Level Strategy:
With a precise understanding of the various aspects of the business operations of
Woolworths, it is visible that the group largely applies the cost leadership strategy for the
operational management of their business activities (Tanwar, 2013). The group is observed to
have the knowledge of applying low pricing for their goods and services and that is
prominent with the pricing of their fast moving consumable goods. However, the group also
have certain products which they are observed to price with the application of the premium
pricing policy. Hence, with a precise look back at the Porter’s generic strategies, it is evident
that the group is mainly focused in applying the cost leadership business strategy.

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Corporate Level Strategy:
With a detailed emphasis on the business divisions of the group, it is noticeable that
the group follows the domestic expansion strategy and that certainly increased the ease of the
group in conducting their business activities across the nation. Other than this, the
international expansion strategy of the group is largely based on the subsidiaries and that is
pretty prominent with the formation of the Countdown supermarket of the group
(Countdown.co.nz, 2019). The corporate level strategy of the group substantially reflects the
urge of the senior management of the group in spreading their business across the nation and
at the global stage as well. Considering the corporate level strategy, the senior management
of the group is observed to be substantially focused in improving their brand portfolio for the
much required increment in their product offerings and for targeting a superior number of
clients in an efficient manner.
Future strategy and development:
It is evident that the success of any groups working in the modern world of trade, are
largely dependent on their ability in delivering the products and services in accordance to the
preferences of the clients and under such situation, the business operations of the mentioned
group is observed to be limited. From the application of the business level strategy of the
group, it is evident that the group largely focused on the establishment of the cost leadership.
However, with the improvement of efficacy in the CRM of the group, it has the possibility of
designing products that are aligned with preferences and demands of the clients and that will
certainly improve the ability of the group in manufacturing these seller products. Hence the
addition of the diversification aspect in the design of the products, is expected to be managed
with the application of the hybrid focus strategy.

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Other than this, the group is recommended to increase their product chain as that will
be crucial in improving their ability in targeting or serving a larger customer base in an
efficient manner.
Apart from this, the company is required to improve their efficiency in managing their
online business expansions as that will be significant for the success of the company in
increasing their sales.
Conclusion:
On a closing note, it is noticeable that the group has the capability to establish their
excellence in the global retail industry. The substantial growth of the stated industry is
considered to be crucial for the success of the group in achieving the desired growth in their
business operations. Having said that, the group faces the urge of scheming the products in
agreement to the clients for effective customer retention and for increasing their sales. Along
with that, the ability of the group in expanding their product chain will be substantial for the
success of the group in refining the sustainability of their commercial operations for a longer
period of time.

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