Strategic Gap Analysis: Woolworth's Performance and Initiatives

This report presents a strategic gap analysis of Woolworth, evaluating the difference between targeted and actual performance using key indicators like Return on Investment (ROI), Return on Assets (ROA), sales growth, and sustainability targets. The analysis reveals positive gaps in Return on Equit...Read More

STRATEGIC ANALYSIS
TASK

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
1. Strategic Gap Analysis of Woolworth Organization...............................................................3
2. Strategic Alternative or initiative to bridge identified gap......................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic Gap analysis is basically one of the best business management techniques with the help
of which the gap or difference between the company targeted performance and actual
performance is evaluated and analysed (Ramirez‐Villegas and et.al., 2020). This report will
analyse the actual performance of Woolworth Plc using the strategic gap analysis and for
negative or shortage gap report will recommend strategic initiative.
1. Strategic Gap Analysis of Woolworth Organization
Strategic Gap analysis is basically one of the best business management techniques with
the help of which the gap or difference between the company targeted performance and actual
performance is evaluated and analysed (Ramirez‐Villegas and et.al., 2020).
There The three performance indicator has been used for evaluating the gap analysis of
Woolworth organization which are as follows:
1. Return on Investment/Equity/Asset
Particulars
(Woolworth Actuals)
Industry
Average
Woolwo
rth
(Targets)
Gap from
Industry
(Woolwor
th actual
2021 –
Industry
average)
Gap from
Woolworth
(Woolworth
actual 2021
–
Woolworth
targets)
2021 2020 2019
ROI 9.78% 6.18% 20.83% 16.60% 20.00% -6.82 -10.22%
ROE 40.98% 12.25% 25.94% 20.06% 30.00% 20.38 10.98
ROA 5.34% 3.76% 11.45% 7.20% 15.00% -1.86 -9.66%

On the basis of above calculation, it is analysed that there is positive gap in Woolworth
ROE and negative gap in ROI and ROA. This means the performance of company in term of
ROA and ROI is poor which they need to improve (San Jose, 2018).
2. Growth of Profits or earnings
Particulars
(Woolworth Actuals)
Industry
Average
Woolworth
(Targets)
Gap from
Industry
(Woolwort
h actual
2021 –
Industry
average)
Gap from
Woolworth
(Woolwort
h actual
2021 –
Woolworth
targets)
2021 2020 2019
Gross
profit
Margin
29.32% 29.16% 29.08% 25.00% 30.00% 4.32% -0.68%
NOPA
T
Margin
20.52% 20.41% 20.35% 20.00% 15.00% 0.52% 5.52%
Sales
growth
rate
5.66% -0.01% 3.16% 10.00% 8.00% -4.34% -2.34%
Market
share
43.00% 40.00% 35.00% 40.00% 40.00% 3.00% 3.00%
Earnin
g
growth
rate
77.80% -
56.70%
56.10% 50.00% 55.00% 27.80% 22.80%

3. Market Share and Productivity
On the basis of above chart, it is analysed that the productivity of company is poor as
there is negative sales growth gap (San Jose, 2018). While on the other hand, the market share
gap between company actual and performance is positive or surpluses which means good
performance of company.
4. Environmental Friendly and Social Responsibility -Sustainability report
Environmental Friendly: Sustainability targets of Woolworth 2021 towards the three pillar such
as People, Planet and Product are as follows:
People: The company has targeted of reaching 59.22% of female representative in sales team
and 42.57% in management (Schumacher, Nemeth and Sihn, 2019). The actual percentage of
female representative in Woolworth sales team and management in the year 2021 is 60% and
40% respectively.
Planet: For the year 2021, the company has targeted that they will divert total 350000 tonnes of
material waste from landfill. The actual tonnes of material diverted by Woolworth in the year
2021 is 362638. This indicates positive gap.
Product: Under this category, the company has targeted that their own brand will undergo
nutritional renovation which involve 99 tonnes of less salt, 155 tonnes of less saturated fat and
269 tonnes of less sugar (Schumacher, Nemeth and Sihn, 2019). The actual data regarding the

sustainability report is also same i.e., 99 tonnes of less salt, 155 tonnes of less saturated fat and
269 tonnes of less sugar. This means there is no gap and Woolworth has achieved its
sustainability target under product category very well.
Social Responsibility: Woolworth company basically do not do political charity but on the other
hand donate the food products of company to poor people. The company have targeted that they
will donate food value of $1 million in year 2021 which they have done. It means their actual
donation is also of $1 million in year 2021. This indicates no gap in social responsibility of
Woolworth organization (Schumacher, Nemeth and Sihn, 2019).
GAP = Desired or Target Performance – Actual Performance
Shortage gap or poor performance of Woolworth is because of following indicator:
ROI = 20.00% - 9.78% = 10.22%
ROA = 15% - 5.34% = 9.66%
GM = 30% - 29.32% = 0.68%
Sales Growth = 8% - 5.66% = 2.34%
Female representative as manager = 42.57% - 40% = 2.57%
2. Strategic Alternative or initiative to bridge identified gap
On the basis of above gap calculation and analysis, the following strategic initiatives is
recommended to Woolworth to bridge the identified gap is as follows:
 In order to bridge the negative gap of ROI of company, it is recommended that
Woolworth should adopt the investment appraisal technique and use net present value to
identify profitable investment project.
 Further to bridge gap of ROA, it is recommended to Woolworth that they should provide
training to its employee which will reduce its cost of production and ultimately net
income (Lin and et.al., 2018).
 To bridge the gap of sales growth rate and gross margin, it is recommended that they
should offer discount to its customer and engage in social media promotion.
 They need to provide flexible working conditions and recognition to female employee to
bridge gap of female representative percentage in management (Lin and et.al., 2018).

CONCLUSION
After summing the above information, it has been concluded that the ROI and ROA of
Woolworth Plc is showing shortage or negative gap as compared to target. The report has also
concluded that actual gross margin, sales growth rate and female representative percentage is
lower as compared to target performance. Lastly, on the basis of gap, the different strategic
initiative has been recommended to Woolworth Plc.

REFERENCES
Books and Journals
Ramirez‐Villegas, J. and et.al., 2020. A gap analysis modelling framework to prioritize
collecting for ex situ conservation of crop landraces. Diversity and Distributions.26(6).
pp.730-742.
San Jose, M. M., 2018. Sustainable Intervention for Learning Gaps in Middle School
Mathematics: A Gap Analysis (Doctoral dissertation, University of Southern
California).
Schumacher, A., Nemeth, T. and Sihn, W., 2019. Roadmapping towards industrial digitalization
based on an Industry 4.0 maturity model for manufacturing enterprises. Procedia
Cirp .79. pp.409-414.
Lin, D. and et.al., 2018. Strategic response to Industry 4.0: an empirical investigation on the
Chinese automotive industry. Industrial Management & Data Systems.