Analyzing the Microenvironment of Woolworth in the Australian Retail Industry

This article analyzes the microenvironment of Woolworth in the Australian retail industry, including its relationship with suppliers, logistics chain, and customers. It also suggests strategies for Woolworth to maintain its competitive edge.

Running Head: BUSINESS ENVIRONMENT 0
Business environment

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Table of Contents
Introduction................................................................................................................................2
Conclusion..................................................................................................................................4
References..................................................................................................................................5

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Introduction
In Australia, the retail industry is one of the largest employers. Businesses in this
retail industry consist of a wide number of choices including groceries, dairy foods, canned
goods, fruits and vegetables, toiletries and cleaning merchandise.
The first store of Woolworths was opened in Sydney in 1924. The acquisition and
expansion make Woolworth to become one of the largest supermarket chains in Australia.
There are various major brands such as Apollo, Baxters and Smitten, also work under the
umbrella of Woolworth that makes the it one of the largest retailer in terms of revenue of
sales, geographic area covered, and the number of stores all over Australia (Campbell &
Chalmers, 2008).
For analysing the microenvironment of Woolworth, internal environment need to be
considered that is affescted by many forces including customers, suppliers, intermediaries
and competitors. This will help in developing a good strategic plan, the key factors need to be
assessed critically, in which the company operates (Miranda & Konya, 2008).
The relation of Woolworth and suppliers are based on the long-term commitments
that lead to mutual benefits. In addition, Woolworth and their suppliers also established a
speak up service where the partners in trade can report a breach of the law, product and
people safety, corruption, and fraud at several phases (Sanin, 2015). This will help
Woolworth to deliver value benefits to the customer in term of both products and services.
The effective relationship of the Woolworth between the resellers and logistics chain
in between customer and supplier also help Woolworth in deliver superior values to the
customers. The company has maintained a strong association with Australia leading farmers
so that they can provide fresh quality foods as per their core competency (Shin, 2007). As the
company directly sourced the material from the farm, they have an overall control at every
level of their activities, which leads in the rise of their market share.
The other relevant microenvironment factor of the company includes their customers.
The focus of the company is on the response to the changing customer needs. They serve
many customers across all its brands, and thus they also created an everyday reward program
which increases the customer loyalty towards the brand (Dwivedi, Merrilees, Miller &

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Herington, 2012). Major competitors of the Woolworth in Australia are Coles, IGA and Alde,
however, with the help of “Everyday Rewards” program, the company is successful in
making a long-term relationship with the consumers by leaving the competitors behind.
In addition, it cannot be said that new entrants and competitive companies can threat a
giant market leader like Woolworth, however, they can come up with a better offer on a
particular product with the value added attributes which can have a little impact over the
performance or profitability of Woolworths. Therefore, this cannot overtake the hold of
Woolworths in the Australian market.
Woolworth needs to considered effective solutions in advance for the various
potential risks relating to the market intermediaries, changing customer needs and
competitors. Moreover, the company also need to invest a lot in Research and Development
department so that to find out the best way to bring their customer back and increase
customer satisfaction (Smith, Lawrence & Richards, 2010). For taking a competitive
advantage in the market against competitors like Coles and IGA, the company can start new
initiatives such as customer talkback where there are customer focus groups held across the
country. This makes the store team take the feedback directly and help them in making the
stores best. To increase customer loyalty, they should also participate in the various CSR
activities so that to enhance the goodwill of the firm.
With the help of above strategies, the market decisions taken will be best fitted in its
business environment and this makes them to gain competitive advantage. The company can
also adopt the social media strategy, which will get them the advantage of low cost
advertising and promotional activities. With the diversification strategy, the company should
also offer organic and GM-free goods (Law, Ward & Coveney, 2011).

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Conclusion
The retail industry in Australia is mature and high competitive in nature which crates
many barriers to the new entrance. Woolworth has a superior business model from a long
period of time that makes them successfully understood their business boundaries and
strengths.
As company identifies the impact of the various micro and macro environmental
factors, it will help them broaden their product offerings so that company can also expand
into new markets and thus preserve the sustainable advantage of the competitive edge.

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References
Campbell, I., & Chalmers, J. (2008). Job quality and part-time work in the retail industry: an
Australian case study. The International Journal of Human Resource
Management, 19(3), 487-500.
Dwivedi, A., Merrilees, B., Miller, D., & Herington, C. (2012). Brand, value and relationship
equities and loyalty-intentions in the Australian supermarket industry. Journal of
Retailing and Consumer Services, 19(5), 526-536.
Law, I. R., Ward, P. R., & Coveney, J. (2011). Food insecurity in South Australian single
parents: an assessment of the livelihoods framework approach. Critical Public
Health, 21(4), 455-469.
Miranda, M. J., & Konya, L. (2008). Are supermarket shoppers attracted to specialty
merchandise rewards?. Marketing Intelligence & Planning, 26(1), 43-59.
Sanin, J. D. (2015). A BIG RESPONSIBILITY! The Moralization of markets and Rise of
supermarket patriotism. Sites: a journal of social anthropology and cultural
studies, 12(1), 83-106.
Shin, B. S. (2007). The Australian Farmers' Strategies to Manage the Supply
Chain. International Area Review, 10(2), 95-107.
Smith, K., Lawrence, G., & Richards, C. (2010). Supermarkets’ governance of the agri-food
supply chain: is the ‘corporate-environmental’food regime evident in
Australia?. International Journal of Sociology of Agriculture and Food, 17(2), 140-
161.