Strategic Management for the International Hospitality Industry

This report analyzes the external and internal environmental analysis of Woolworths to analyze the fruitfulness and the effectiveness of the company. It covers recommendations for improving the strategic actions of the company and reflects upon the vision and goals of Woolworth.

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Strategic management for the
International Hospitality Industry
Student’s Name
8/11/2019

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Executive Summary
Strategic management is a management approach that guides the organization and helps it in
becoming proactive towards the changes in the internal and the external environment. It
assists the company to be responsive towards the dynamic environment and ensures the long
term survival of the business. It includes the development of the strategies that allow facing
the competition and sustaining the competitive advantage through the involvement of timely
actions. This report will reflect upon the external and internal environmental analysis of
Woolworths to analyze the fruitfulness and the effectiveness of the company. It is analyzed
that the company faces huge competition from Coles and the new Entrants like Aldi and
Costco. To overcome the competition and sustaining of the competitive advantage it will
cover recommendations for improving the strategic actions of the company. It will also
reflect upon the vision and goals of Woolworth.

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Contents
Introduction................................................................................................................................3
External environmental analysis................................................................................................3
Porter’s five forces.................................................................................................................3
Pestle analysis of Woolworths................................................................................................4
Value Chain analysis..............................................................................................................5
Strategy formulation and choice................................................................................................6
Recommendations and Conclusion............................................................................................8

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Introduction
Strategic management is considered as a management approach that focuses on
planning and monitoring of the organization activities. It involves the development of
strategies and introduces corrective measures to sustain the competitive advantage of the
company. It also helps in guiding the organization to survive in the dynamic business
environment (Desai, 2019).
The additional paragraphs of the report will reflect upon external environmental
analysis of Woolworth which is recognized as a large integrated provider of leisure and retail.
It will also reflect upon the core competencies of the company through the use of value chain
analysis. It will cover the vision and goals of the company and will further provide
recommendations for the strategic growth of the company.
External environmental analysis
Porter’s five forces
This analysis helps the company in knowing the structure of the industry as well as
knowing the position that proves to be profitable but also helps in minimizing the threat.
 Bargaining power of buyers: In Australia, retailing stores are seen to be
homogenous. Besides this, several retailing supermarkets are present due to which
customers have low switching cost. In this way, the bargaining power of the buyers is
high (Pickles, Barrientos & Knorringa, 2016).
 Bargaining power of suppliers: the bargaining power related to suppliers is different
that depends on the brand name as well as the size of the supplier. Due to this, it can
be high as well as moderate (Rajabian, Tabesh, Batt & Butler, 2016).

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 The threat of substitutes: due to the availability of several substitutes, the bargaining
power is seen as the moderate to high. It is because customers have the several
substitutes such as the market for fresh food, convenience stores, grocery shops,
pharmacies, online stores as well as petrol stations (Pickles, Barrientos & Knorringa,
2016).
 The rivalry of the industry competitors: Woolworths has faced several threats from
the new entrant such as Aldi due to its different variety of products as well as a low-
cost competitive pricing strategy. Due to this, rivalry among the competitors can be
seen as the high and intension (Rajabian, Tabesh, Batt & Butler, 2016).
 Threat of new entrant: It is analyzed that the threat of new entrants is ranged from
moderate to high because the company has secured a strong brand positioning and the
regulations of government and high market prices creates difficulty for the new
entrant to operate its business successfully (Rajabian, Tabesh, Batt & Butler, 2016).
Pestle analysis of Woolworths
Political factors
The political environment of Australia has proved to be favourable for the business.
Due to the positive political condition, it is able to get the best future opportunities. It also
tends to ensure the growing interest of the trading partners as well as foreign investors.
Government has also taken the various initiatives in order to prevent major competition
among the Woolworths and Coles; it has started the competition policy (Morelli, 2018).
Economic factors
Due to the decline in the economic condition, it is seen that the performance of
Woolworths has affected. Besides the decline, fluctuations in the currency exchange rate have

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also negatively affected the retailing supermarket in Australia. The worldwide economic
meltdown has led to the negative impact on the sales of the company and has led to decrease
in the income of the households which in turns affects the sales at Woolworth (Research,
2019).
Value Chain analysis
It is a framework that describes the core competencies of the company which provides
value to the customers. It includes the primary and supporting activities that help the
company in differentiating its brand from its competitors.
(Source: Fernie, Fernie & Moore, 2015)
Primary Activities
Inbound Logistics: Under this, the company collects and maintains the raw material
and its resource to develop the products and ensures the timely availability of all the products.
The company delivers efficient services and also contributes to sustainable business practices.
It uses the local food sourcing strategy to ensure the growth and the development of the local
firms (Fernie, Fernie & Moore, 2015).

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Woolworth is dedicated to satisfying the customers by achieving excellence in
services and providing after-sale services to the customers. The company effectively handles
customer queries. The Company uses social media platforms and develops effective
marketing campaigns by collaborating with the renowned advertising agencies to promote the
products and provide real-life experience to the customers. The Outbound Logistics activities
of providing the final goods and services to the customers. The company makes the sales at
retail stores and the adoption of online mode for providing ease to the customers. The
company ensures the safety of the products and delivers quality products to the consumers
(Ariyawardana, Collins & Lim-Camacho, 2017).
Supporting Activities
The supporting activities include the firm structure which is appropriate and attracts
the customers. The company uses innovative technology to attract customers and enhance
their services. It ensures to provide the best training to its human resource to advance its
service delivery (Jie & Gengatharen, 2019).
The competitive advantage of the Woolworths
In the Australian retailing and supermarket chain, it is seen that the competitive
rivalry is too common. Due to the presence of several strong competitors such as Coles and
Aldi in the grocery market, it is seen that they are limiting the market share of Woolworths.
The presence of several supermarket chains is also offering similar products for the lower
prices. These competitors are similarly impacting the company on a negative basis despite the
domination of the market share (Arli et al, 2013).

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Strategy formulation and choice
Vision
Woolworths Group has a specific vision to deliver the best as well as qualitative
services in order to satisfy its customers. Operation team of the Woolworths has also worked
very hard in order to help the Australian customers. It has also adopted an effective means in
order to get the best. The company focuses on being the most responsible retailer and is
committed to doing good business for the customers, people, and planet. The company strives
to help of all the Australians by “Live Big for Less “and turning the business effectively
(Woolworths Holding Limited, 2019)
Goals
The strategic objective of Woolworths is to put the customer always first as compare
to every brand. For achieving the goal, Woolworths gives emphasis on building effective
measures for customers. In addition to this, the company has also given the high priority in
order to generate the balance in sales in order to provide the value to its customers. The
strategic approach in order to deliver the effective shareholder value provides the system
excellence to it. It is true that Woolworths is facing high pressure on its strategic direction as
well as profit margin. Due to this, it becomes essential for the company to think forward in
order to gain huge profitability by giving emphasis on the creative ways according to the
demand of customers. Due to its trust across the several local manufacturer and farmers, it is
able to serve the customers in a more effective way (Phillipov, 2016).
The company also focuses on sustainable business practices to fulfilling the goals of
being the responsible retailer and ensures efficiency in its production and delivery of services.

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It focuses on sourcing strategy to develop the local firms and improve the well-being of the
local people in Australia. The company is highly committed to delivering quality products at
less so that it can expand the market share and maintain the profitability of the business
(Beswick, Geraghty & Bishop, 2015).
Initiative: Cost leadership vs. Differentiation
Several studies have revealed that Woolworths is able to manage the vertical
integration of the suppliers by using their own input. For increasing the market power as well
as respond, it is significant to use the cost leadership strategy. It is true that cost leadership
helps the company to show its commitment toward the best quality service to the customers.
Due to this, it is clear that the company must use the cost leadership in order to maintain its
competitive advantage (Australian food news, 2015).
The cost leadership strategy allows the company to expand the target market and
become the market leader. The company manages the cost of the company by developing the
inputs and managing the cost of the products. This allows the company to attain higher
profitability and sustain its competitive advantage over its competitors. It allows in increasing
the efficiency and satisfying the needs of the cost-conscious customers. The company uses
this strategy to differentiate its firm through competitive pricing and become the market
leader (Australian food news, 2015).
Recommendations and Conclusion
As per the above-discussed things, several recommendations are provided to the
company in support of the strategy as well as in critique of the strategy. In the support of its
strategy, it is clear that the Australian supermarket is best known for ensuring the lower
pricing services for the customers. Due to this, it can bring forward due to which Woolworths

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is required to bring the strategic initiative by considering the political condition of Australia
(Casestudy, 2019).
It is also recommended to the Woolworths for continuing as well as developing the
several strategic alliances between its main businesses across the several ranges of its
operation. Besides this, it is also recommended to Woolworths for using the several reward
programs that will further help the company in getting more revenue. At the same time, it
also helps the company in gaining a large number of customers (Casestudy, 2019).
As per my perception, it should also give continuous emphasis on innovation and take
several strategic measures. It can also take into account the other cost leadership initiatives
for cutting down the cost of operation.
The company must focus on motivating the employees by developing efficient
training programs that allow the professional growth of the employees and further helping
them in delivering the best services to the customers. This strategy will allow interacting and
retaining customers by delivering maximum satisfaction (Kasanagottu & Bhattacharya,
2017).
In the critique of this strategy, it is being stated that Woolworths is facing some of the
changes by getting several failures in some of the home improvement stores. Due to this, the
company should also give emphasis on the strengths as well as weaknesses. It is also required
to alter the lower pricing policy in order to stay competitive. It is true that customers even pay
higher prices for some of the quality products. it will prove an effective cost leadership
approach (Kasanagottu & Bhattacharya, 2017).
In the limelight of the above discussion, it can be concluded that the retail world is
quite competitive. Due to this, the demand of consumers is also changing day by day. Due to

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this, Woolworths is ready to serve customers with some of its innovative strategies. The
company focuses on advancing its services through the adoption of the latest technology and
providing various discounts and freebies to attract the customers.
The company must be flexible to shift its production in accordance with the changing
trends and expectations of the customers. It must be highly responsive to the changes in the
external environment.

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References
Ariyawardana, A., Collins, R., & Lim-Camacho, L. (2017). Value Chains: Making the
Connections between Producers and Consumers of Native Plant Foods. Australian
Native Plants: Cultivation and Uses in the Health and Food Industries, 321.
Arli, V., Dylke, S., Burgess, R., Campus, R., & Soldo, E. (2013). Woolworths Australia and
Walmart US: Best practices in supply chain collaboration. Journal of Economics,
Business & Accountancy Ventura (JEBAV), 16(1).
Australian food news.(2015). Woolworth announces the new strategies to win over the
grocery shoppers. [Online]Available from:
http://www.ausfoodnews.com.au/2015/05/06/woolworths-announces-new-strategies-
to-win-over-grocery-shoppers-afn-reveals-full-detail.html [Accessed 11/08/2019]
Beswick, C., Geraghty, J., & Bishop, D. (2015). Building a culture of innovation: a practical
framework for placing innovation at the core of your business. Kogan Page
Publishers.
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https://acasestudy.com/woolworths-strategy-analysis/
Desai, C. (2019). Strategy and Strategic Management. In Management for Scientists (pp. 65-
84). Emerald Publishing Limited.
Fernie, J., Fernie, S., & Moore, C. (2015). Principles of retailing. Routledge.
Jie, F., & Gengatharen, D. (2019). Australian food retail supply chain analysis. Business
Process Management Journal, 25(2), 271-287.

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Kasanagottu, S., & Bhattacharya, S. (2017) A Review of Metro, Target, & Woolworths
Global Business Strategy.
Morelli, C. J. (2018). Business Strategy, Economic Crisis and the Theory of the Firm.
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Phillipov, M. (2016). ‘Helping Australia Grow’: supermarkets, television cooking shows, and
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Pickles, J., Barrientos, S., & Knorringa, P. (2016). New end markets, supermarket expansion
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Rajabian Tabesh, A., Batt, P. J., & Butler, B. (2016). Modelling the impact of environmental
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Research. (2019). Pest analysis of Woolworth limited. Retrieved from: http://research-
topics.blogspot.com/2011/07/pest-analysis-of-woolworths-limited.html
Woolworths Holding Limited. (2019) Our Purpose,
Vision And Values. Retrieved from:
https://www.woolworthsholdings.co.za/overview/our-purpose-vision-and-values/

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