Strategic Plan for Big W: Internal and External Analysis

This report explores the internal and external environmental forces impacting the operations of Big W and suggests a strategic plan for the company to overcome the challenges. It includes Porter Five Force Framework, key success factors analysis, value chain analysis, and key strategic issues. The report recommends increasing online presence and preparing a strategic plan to support growth and development.

Strategic Management
8/1/2019
Big W
JPR

STRATEGIC MANAGEMENT 1
Executive Summary
The aim of this report is to explore the internal as well as external environmental forces
impact on the operations of Big W. Besides this, the report has explored the internet strength
and competencies of the company that could support in adopting change. The analysis of the
report has identified that the decrease in the market share and profit margin of the company is
due to the growth of online shoppers which are getting attracted towards online businesses
which are offering convenient service at low prices. In order to overcome this issue, the
report has suggested Big W increase its online presence. In addition to this, the company
must get involved in preparing the strategic plan which will support it in moving towards
growth and development.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Overview of Big W................................................................................................................3
Porter Five Force Framework................................................................................................4
The Threat of Substitute Products......................................................................................4
Threat of New Entrants......................................................................................................4
Competition among Existing Players.................................................................................4
Power of Suppliers.............................................................................................................5
Power of Buyers.................................................................................................................5
Key success factors Analysis.................................................................................................5
Marketing and Distribution Channel..................................................................................5
Market Position..................................................................................................................6
Diversification....................................................................................................................6
Value Chain Analysis.............................................................................................................6
Primary Activities..............................................................................................................6
Support Activities...............................................................................................................8
Key Strategic issues...............................................................................................................8
Strategic plan........................................................................................................................10
Clarify the vision..............................................................................................................10
Collect and Analyse Information.....................................................................................11
Formulate a Strategy........................................................................................................11
Implement the Strategy....................................................................................................11
Evaluate and Control........................................................................................................12
Conclusion................................................................................................................................12
References................................................................................................................................13

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Introduction
Strategic management is considered as the management of the resources of the business to
attain its objective and goal. It is said to be one of the most significant parts of the business
for resolving the strategic tasks; it is the procedure of creating, monitoring, and maintaining a
strategic balance between the resources and the goals of the business. A strategic plan is
considered as the set of activities that are focused towards the success and the growth of the
business (Rothaermel, 2013). The purpose of this report is to present a strategic plan for Big
W Company, which is a discount department store chain of Australia. In order to prepare the
strategic plan for the future events, the report is analyzing the current market condition of the
Australian market with the help of Porter Five force framework and key success factors of the
industry. In addition to this, the report is also elaborating the analysis of the internal
capabilities and resources of the Big W in order to explore whether the company could deal
with the future issues in the industry with the help of value chain analysis framework.
Overview of Big W
Big W is the discount department store chain of Australia established in the year 1964 in New
South Wales. Big W is one of the divisions of Woolworths Limited which is one of the
leading supermarket chains of the Australian market. As per the reports of 2019, Big W
operated around 182 stores, with over 22,000 employees all over Asia and Australia.
Woolworths Limited got involved in launching the Big W brand to offer shoppers of
Australia a wide variety of general merchandise products options in a devoted one-stop-shop
(Woolworths Group, 2019). The name of Big W represents the corresponding relationship
with the Woolworths Supermarkets while the W does not mean Woolworths. In place of this,
the initial W represents warehouse which is extracted from the original name of the
Woolworths Limited of Woolworths bargain-basement warehouse.

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Porter Five Force Framework
Porter five force framework was introduced by Micheal. E. Porter as the strategic
management tool that guides in defining the competitive landscape of every industry (Pringle
and Huisman, 2011). The porter five force analysis of the Big W is discussed below:
The Threat of Substitute Products
This force is threatening for the business when customers in the market get the substitute
product which could offer similar benefits to them in better quality. The daily consumable
retail products in the market are essential and their daily basis consumption is also very
essential. But their substitute product is not available in the market which limits the threat as
well as risk for the existing players like Big W, in the Australian market. Customers have
bound to the avail the retail products due to restricted choices (Bowie, 2019).
Threat of New Entrants
The force of new entrant defines how easy it is for a new business to take entry in the specific
industry. It is generally said that the industry is profit-making then there are limited entry
barriers which increase the competition for the existing players. In terms Australian discount
retail market, the new entrant threat is considered low because the existing big players have
made it tough for the new entrants to take entry in the industry (IBIS World, 2018).
Competition among Existing Players
This force is one of the key determinants of explaining the intensity of the competition as
well as the profitability of an industry. The threat of competition in the discount retail market
is very high because the industry is comprised of some major players like Kmart, Myer, and
Target that are raising the intensity of competition against each other in order to gain
increased share in the market (Brook, 2019).

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Power of Suppliers
The power of bargaining of the suppliers indicates the amount a business has to pay for
purchasing the raw material (Indiatsy, Mwangi and George, 2014). If the supplier has a high
power of bargaining which enables them to sell their products at a higher cost, but if the
suppliers have low power then they are bound to sell their products at low costs. From the
analysis of the discount retail industry of Australia, it has been identified that suppliers in the
market have moderate bargaining power.
Power of Buyers
The customers hold the power to ask or demand the lower price and higher quality of the
product from the retailers or producers in the industry the time they have a strong power of
bargaining (Hokroh, 2014). In respect to the discount market of Australia, the power of
bargaining of the customer is high as there are increased number of discount stores and
supermarkets that offer general merchandise products to the consumers. This results in
increasing the number of options available for customers.
Key success factors Analysis
Marketing and Distribution Channel
The Australian departmental and grocery stores industry is considered to be very competitive.
The industry is growing with time due to its strong and vigorous marketing as well as
distribution channel adopted by different players in the market through which they can serve
the entire target market (IBIS World, 2019). The marketing strategies and policies and
network of distribution attract different investors as well as customers to take the experience.
In general, the innovative merchandising and marketing along with the layout of the store
stimulates revenue of the industry. Besides this, the private labeled products offered by
different players helps in retaining loyalty if the customer and offer businesses increased
margins.

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Market Position
The Australian department store industry is dealing with the tough environment with weaker
than the expected sentiment of the customer and the growth of the digital players is
anticipated to endure for the coming five years. According to the analysis of the IBIS World,
reflects that the slow growth of around 0.7% yearly in coming five years to $20.2 billion,
because the key players in the market may plan to expand their online services to stay
competitive and relevant (EuroMonitor International, 2019). The departmental stores in the
Australian market have to contend with just 1% of the growth on yearly basis for the next
five years because customers are regularly trying investing less and saving more, in place of
open spending.
Diversification
Diversification is considered as the major contributor in the limited growth of the
departmental stores in the Australian market as they are majorly getting involved in
diversifying their policies, store formats, geographic coverage as well as target customers for
maintaining steady growth and mitigating the risk (Pefindo (2019).
Value Chain Analysis
Value chain analysis is the tool that is used by the businesses for identifying their internal
firm activities that are most valuable. Besides this, the businesses also identify the activities
that do not offer value and need to be improved (Helm and Jones, 2010). The value chain
analysis of Big W is presented below:
Primary Activities
Inbound Logistics
Inbound Logistics discuss regarding the relationship of business with its suppliers and
comprises the activities that are needed to receive and store products. Big W is a retailer,

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which is involved in the distribution and manages the distribution network of its products in
place of producing the products.
Operations
The business has successfully upheld standardized processes for detecting and eliminating the
products from the delivery lot that are provided by the supplier. The responsible staff of the
quality assurance department makes constant checks from the time the products are delivered
by the supplier to the retail outlet to the time they are placed for display, in order to detect
and eliminate defective products (Lanin, 2019).
Outbound Logistics
To meet the objective of serving the maximum customers and patrons in the market, the value
chain analysis of the Big W is comprised of outbound logistics by which products are
distributed among several stores, supportive services for the consumers to concede the added
value provided by the company.
Marketing and Sales
In the departmental store business, products in the store and warehouses need to be market
correctly for increasing the sales volume. For the effective in-store promotion, Big W has
made use of slick marketing in order to alter the opinions of people for the Woolworth to
offer unaffordable products. The promotions of the company highlight that it does not just
offer high price products, it also offers affordable price products with high quality.
Service
Big W offers different types of services to the customer to provide their convenience while
shopping the products of their daily needs. It offers the facility of trolley, scanner, etc. to
allow them a convenient shopping experience. Besides this, the company has a refund policy
which results in changing the perception of the customer towards the brand.

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Support Activities
Firm Infrastructure
The analysis of the Big W Company highlights that it has extremely well-organized
infrastructure along with sourcing capabilities, etc. These aspects contribute to the growth of
the company in a positive manner. In addition to this, the store infrastructure is well
organized which allow convenient shopping experience to the customers.
Human Resource Management
The company has a well planned human resource department which is equipped with an
experienced workforce that supports in hiring the best candidate for the operations of the
store (Mitchell, 2016). Further, the company also contributes to offering an increased number
of jobs to the residents.
Procurement
The procurement activity of the Big W is related to purchasing the input products that are
comprised of machinery, raw material, equipment, machinery, suppliers, and other required
items for offering the finished products to the customers.
Technology
The technology plays an important role in the operations of the Big W departmental store
chain as it supports in offering suitable services to the customers. The technology like
barcode scanning, electronic weighing machine, etc. is being used by the company for
offering fair services.
Key Strategic issues
Lack of Online Presence – Online shopping is majorly being considered as one of the
strategic issues for Big W. This is because the company has limited online presence resulting
in losing market share as well as profit in comparison to its competitors like Amazon, etc.

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The online shopping in the category of variety and department products is growing at a fast
pace by around 29.6% in the year 2018 as per the Index of NAB Online Retail Sales
(Mortimer, 2019).
Source [(Mortimer, 2019)]
To meet the losses, Woolworths Limited the parent company has planned to close several
numbers of stores of Big W division as it is not able to meet the changing demand of the
market that is digitalized infrastructure. This represents that the major strategic issue within
the company is avoiding the power and strength of the online businesses and not adopting
change as per the environment (Chung, 2016).
Departed Department – Lack of online presence is not just the major strategic issue for Big W
another issue is working as the departed department and being disrupted by the category
killers (Mortimer, 2019). Those days are gone when people used to prefer department store

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for purchasing different types of variety of products to the customers like electronics,
consumable products, etc. The profitability of this market segment has been eroded by the
category killers. Category killers are those who specialize in the same category of product.
Some of the examples, who are giving strong competition to Big W, are Rebel for sports
equipment, Super Cheap Auto, JB Hi-Fi, etc.
It raises the requirement for the Big W to redesign its strategic planning in order to cover
these issues and gain cover the market share against its competitors. As it is known that with
time the market will be covered by the online businesses due to increasing online shoppers,
Big W must improve its online presence and also plan to compete with the category killers.
Strategic plan
In the coming three years most of the target audience of Big W will prefer shopping online,
which will majorly impact the profit margin of the company (Duvall, 2018). Considering the
changing trend the competitors of the company will expand their online presence or will wind
up their business for not meeting the changing demand of the market (Knight, 2017). From
the analysis of the financial status and strategic status of Woolworths Limited, it is
anticipated that it will plan to expand Big W’s online presence. Some of the steps that will be
followed by the company to execute the identified strategy are:
Clarify the vision
The business needs to have a clear vision to plan the strategies and move ahead to improve
the position of the business. At this stage, the Big W need to make a vision of increasing its
market share and cover the loss it has experienced in the last two years. This is important
because the business will not have a clear vision it will not be able to get a clear direction to
move towards.

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Collect and Analyse Information
At this step, the company will gather market information and analyze its weakness due to
which it is not able to survive in the market in front of its competitors. The research and
development department of the company will perform the market analysis with the help of
different frameworks such as PESTLE Analysis and after that will analyze its strength that
could support in meeting the vision with the help of SWOT Analysis tool. After gathering the
information from the market, the company will be able to make a decision regarding strategic
issues that are impacting its business such as lack of online presence and impact of category
business.
Formulate a Strategy
At this stage, the business will form the strategies as per the identified information related to
strategic issues and the changing trend of the market. This step of strategic planning will
support the company in identifying its weakness and planning the solutions for the identified
issues. The strategy that can be adopted by Big W for overcoming the issue of lack of online
presence and competing with the category retailers is introducing or expanding online
presence. The company needs to introduce its website as well as need to contact different
know websites for offering its services to the customers.
Implement the Strategy
This is the stage where business finally plans to execute or implement its planned strategy for
overcoming the identified issues or expanding the business. Considering the above case of
Big W, it is regularly dealing with the increased competition from the online giants such as
Amazon and category retailers who are covering its market share. The company can
implement the strategy by contacting with its information technology team for the
development and designing of attractive as well as a convenient application that can allow

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customers to easily make a purchase. Further, the company can contact with different online
giants of offering its services over their website or application.
Evaluate and Control
Evaluation and control are the last but not the least step of the strategic planning. This step is
related to evaluating the results of the executed strategy to identify whether or not the
planned strategy is reflecting results. Controlling will be done by comparing the standard
performance with the actual performance in order to identify the loopholes. If the loopholes
will be identified then the company will take corrective actions to resolve the issues.
Conclusion
The above report has performed the internal as well as an external audit of Big W, to identify
its position in the market as well as strategic issues its experience. The analysis has identified
that Big W is dealing with intense competition from the online giants and category stores.
The increasing trend of online shopping among customer is majorly impacting the business of
the company. Hence, to deal with the identified issues the company is recommended to adopt
the digital change and give competition to different players in the market.

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References
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