Business and Organisational Strategy of Woolworths

This report defines the strategic analysis of Woolworths, including its strategic issues and recommendations to solve them. The report also includes a SWOT and PESTEL analysis of the company. The strategic issues faced by Woolworths are supply chain, conduct of employees, and changing regulations of government. The report recommends that Woolworths should aim at framing its strategies in a constant and better way with the political conditions prevailing in the country. It should also focus on the strategy of fair price policy for its customers. The report also discusses the impact of political, economic, social, technological, and environmental factors on the company.

RUNNING HEAD: Business and organisational strategy 0
Woolworths
Business and organizational strategy

Business and organisational strategy 1
Contents
Introduction................................................................................................................................2
Strategic issues...........................................................................................................................2
Recommendations to solve strategic issues...............................................................................5
Conclusion..................................................................................................................................9
References................................................................................................................................11

Business and organisational strategy 2
Introduction
The company was formed in 1924 and had it’s first store at Sydney’s Pitt Street. Woolworths
is one of the largest supermarkets of Australia. The company provides clothing, general
merchandise and wide range of food products. It has 995 stores worldwide. Woolworths
includes various sections like supermarkets, food and petrol and hotels. It is a recognised
company and listed on the JSE Limited Securities Exchange. The company is owned by the
Woolworths Limited. It sells household products, groceries, stationery items, DVDs, health
and beauty products etc. The company offers high quality merchandise at reasonable prices.
The company meets expectations of customers with increased consistency. Woolworths
ensures that it delivers quality, reliability, value for money and sustainability to win trust of
customers.
The food industry is complex. The company includes functions of production, processing,
packaging and marketing of food products. Woolworths uses refined technology to oblige
customers. It has tied up with a new merchandising system to remove manual product
information process and enables electronic data receipt. The company continuously improves
way of conducting operations. This report defines the strategic analysis of Woolworths. The
strategic analysis examines how successfully an organisation operates and uses resources to
achieve goals of company. It is also the process of developing strategy by researching and
environment in which an organisation operates. The analysis includes strategic issues faced
by the company. The company faces strategic issues in supply chain, conduct of employees
and changing regulations of government. Further the strategic recommendations are
discussed along with strategic tools.

Business and organisational strategy 3
Strategic issues
The strategic issues greatly influence operations and activities of the business. It affects the
sales and customers of the company. The strategic issues are certain trends that appear from
the internal and external situations of the company. The strategic issues are responsible for
the low performance and create a barrier to the development of Woolworths. Recently
strategic issues are faced by Woolworths in Australia (Azeem, et. al. 2018). The company is
also known as Woolies in Australia. The marketing strategies are used by the company to
attract customers and improve quality of services.
Because of the uncertainty in demand Woolworth carries smaller inventories. So at the same
time, uncertainty in supply is carried out by the company. There are some factors which make
supply chain of Woolworths more challenging than ever such as changing prices of
commodities, increase in weather-related interferences and increased competition for raw
materials (Brandenburg, Govindan, Sarkis & Seuring, 2014). Due to supply chain issues costs
is increased and risk is maximised. Woolworth has conducts operations worldwide. The
company have Small Business Units (SBU). Woolworths renovated supply chain operations.
The company faced threat from 2000 warehouses workers in Victoria as they voted to strike
and close warehouses (Supply Management, 2017). Globalisation is one of the reason
company faces supply chain issues. The company has moved it’s operations to other
countries which offers low taxes, labour costs and low cost of transport for the raw materials.
The outsourcing extends operations of company globally. But at the same time having
suppliers in different geographical location complicates the supply chain. Woolworths has to
deal with various stores across borders regarding storage, manufacturing and logistics. It also
requires a significant change in supply chain to adopt preference of customers globally
(Pagell & Shevchenko, 2014). There is risk of proper management over inventory. The
supply chain is also affected by the fast- changing markets. The market changes frequently
due to cultural, social and psychological factors. The main reason behind change is
technology and globalisation which results in changed consumer behaviour. The life cycle of
products changes rapidly due to the changing trends of market demands. The company is
pressurised to keep itself update with the latest trends. The company is supposed to introduce
innovative products to keep it’s manufacturing cost low (Methner, Hamann & Nilsson, 2015).
The challenges faced by company are not to introduce new products but to update product
features constantly. Due to the influenced consumer behaviour the company is required to
maintain quality of products. The online business of company is affected due to the negative

Business and organisational strategy 4
reviews, comments and feedback on the social media. The social media has raised
expectation of customers regarding the quality of products and services. The pressure is
increasing on the company to create high quality products consistently. The company is
needed to be ensuring that it meets local and international regulatory standards in developing,
packaging and shipping of products. The compliance documents are also required to be
maintained such as license and certification which can devastate the supply chain system of
company (Stadtler, 2015).
Woolworth faces issues related to employees which are becoming a serious issue nowadays.
The company faced trouble as 200 workers went to strike over pay and job security. The
giant warehouses in Victoria and NSW create a serious problem for the company in
supplying to supermarkets and liquor stores. The workers are pushed for job security, full-
time work and greater termination payouts. The strikes caused disruption in Victoria to it’s
local supply chain. The company also faced an allegation that the trolley collectors are
underpaid. The company reverted to this matter that it pays fairly to workers and undertakes a
regular audit of trolley collection contractors to comply with the employment law and
regulation.
The changing policy and regulations of government are always concern for the Woolworths.
The environmental and financial policies complicate the decision making of company
(Chopra & Chopra, 2012). As the company is expanded globally so it is required to follow
rules and regulations of the particular country. The new policy of becoming green is
becoming threat for the company as it has increased costs due to corporate taxes (Fahimnia,
Sarkis & Davarzani, 2015). The other strategic issues faced by Woolworths are:
Cheap - cheap
Woolworths pursuit shoppers through it’s famous strategy ‘cheap-cheap’. Despite the offer
economic pressure have made shoppers progressively price conscious. The company has
lost sight of power which resides in it’s brand. It has lost confidence due to uncertain and
ambiguous strategy. Due to such policies customers are even not clear that what they should
shop at Woolworths (Schuetz & Schrefl, 2017). The grocery companies need to be interesting
or cheap. The company trying to compete on price and it feels like no-win strategy.
Sales struggle

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From the sales figures of Woolworths, it has been concluded that cheap-cheap strategy has
been nothing other than a miserable failure. The decision of removing Tony Phillips deeply
distressed former Coles market (Keith, 2012). The company also admitted that it’s
promotional programs were not successful as it was expected. The cheap-cheap campaign
was received well by customers but no improvement was seen in price perception. The
company anticipated during the quarter. If the comparison of Woolworths is done with other
competing companies than it is still the most expensive and savings can be made by shopping
at ALDI.
Down – Down
The success of Down-Down had been highly successful. But the admiration did not last long.
This promotional activity seemed complicated and confusing as well. The marketing can only
hit the mark but there is no clarity and matter to support it (Smith, Heley & Stafford, 2011).
The company have become uncompetitive in the terms of branding and caught without even a
sense of purpose.
Recommendations to solve strategic issues
The strategic analysis indicates that Woolworths has achieved a significant level of dominant
position in the retail industry. The strategic recommendations are used by Woolworths. The
company includes leadership in all segments to track record of business and maximize
shareholder value. The following recommendations are considered essential:
 It is recommended to the company to aim at framing it’s strategies in a constant and
better way with the political conditions prevailing in the country. Woolworths should
also focus on the strategy of fair price policy for it’s customers.
 It is also recommended to aim at executing continuous innovations and it can be
considered a key part of the strategy of the company. It is mainly due to the social
trends and preferences are considering dynamism which can be efficiently addressed
through allowing the strategy of higher growth levels.
 The recommendation also implies that Woolworths should look to further enhance
support from it’s employees by additional training and development mechanism to
customers. The focus of company’s strategies are defined in the diagram below:

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(Source: Woolworth’s Group, 2018)
The strategic tools such as SWOT analysis and PESTEL analysis are used to improve
strategic issues faced by the company. The SWOT analysis of the company is:
Strengths
Market share: The company has the advantage of largest market share in retail and fresh food
grocery stores. Woolworths is a powerful brand and policy of maintaining low prices and
quality of service. The company provides a wide range of products and fresh foods.
(Source: Roy Morgan, 2016)

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Location: Woolworths has more than 700 supermarkets and serves over 13 million customers
in Australia. The company is in every major shopping center in Australia. The supermarkets
provide convenience and accessibility to customers. The core competencies of company help
company to operate effectively (Blockeel, et. al. 2016). The company always ensure
availability of fresh food.
Weaknesses
No differentiation of products: The company makes available various types of products under
one which makes it harder for the company to differentiate between fresh and selected brands
(Rauch, et. al. 2015).
Huge size: The size of business can be potential weaknesses due to a huge area of operations.
Opportunities
Global expansion: The company is growing rapidly in the retail sector. Woolworths is even
moving to the new market segments like New Zealand and South East Asia. The company
finds out the merging and forming alliances with organizations globally.
Multi-option retailing: The company makes use of Multi-option retailing to cope up with the
changing need of customers. It also increases operations of the company in the market
(Kouzani, et. al. 2017).
Threats
A higher level of competition: Woolworths have a higher level of competition in the
industry. It mainly competes with Coles and Aldi.
Government intervention: The intervention of government is another factor which affects the
growth of company within the retail industry (Bull, et. al. 2016).
The Pestel analysis is appropriate in providing an understanding of the internal aspects of the
company. The factors of macro environment are external to the company. The organization
cannot control them. The company needs to modify it’s strategies in order to deal with the
external factors and changes which occurs time to time in these factors (Luiz, Bowen &
Beswick, 2011). These factors can be defined as:
Political

Business and organisational strategy 8
The political factors are strong in the business environment of Woolworths. The political
factors create opportunities by various rules which obligate to a certain level. The political
factors affect the retail industry and as a result, the performance of the company is affected to
a certain level (Yüksel, 2012). For instance, the federal government in Australia have
introduced a competition policy which is helpful in preventing major players like Coles and
Woolworths in eradicating competition. The increased dominance of the major retailers in the
market results in adverse conditions for small retailers to perform in the industry.
Economic
The decline in the economic market conditions has affected the performance of the company.
it is due to the decline in the economic activity of the markets in various countries. The
capital budgeting decisions are taken on the basis of interest rates, exchange rates and other
important factors (Dos Santos, Svensson & Padin, 2013). The fluctuations in the currency
exchange rates and weakening of dollar have affected international operations of
Woolworths. The economic factors also have a role in determining purchasing power of
customers. The market share of Woolworths have important role in the economy of Australia
which is revealed from the diagram below:
(Source: Roy Morgan, 2014)

Business and organisational strategy 9
Social
The social factors affect Woolworths to achieve higher societal and community development.
It is because of the recent social trends. The customer also prefers to the organizations which
are highly socially responsible and undertakes social responsibility. Woolworths creates an
impact on customers by undertaking societal initiatives (Spillan & Ling, 2015). The company
also encourages it’s employees to socialise and work in a happy and relaxed environment.
Woolworths have implemented a broad range of environmental strategies to give back to it’s
customers and local communities.
Technological
The 24-hour delivery strategy of Woolworths needs to be backed up with a fully automated
ordering system. A hand hlding ordering device is used by the company to make orders
instantly. It reduces the cost of stockholding and improves the decision-making process of
management (Dockalikova & Klozikova, 2014). The company has considered the application
of green refrigerator technology to store perishable products for the longer time period.
Environmental
The environmental factors are responsible to affect the the performance of the the company.
It can be evident from the petrol and winemaking a a business of Woolworths are posing an
adverse impact on the environmental conditions. Therefore the profitability performance of
the company in the particular segment is affected. The company provides various initiatives
which help to achieve a better and sustainable environment. The company aims to use
environmentally friendly practices which aim to reduce harm to the environment. The
company has also taken initiative by using environmentally safe bags in the stores. The
company is also using recycling activities to reduce the amount of wastage. Woolworths also
makes use of recyclable materials in production (Dos Santos, 2011).
Legal
The legal framework for the industry includes taxation policies and regulations of recruitment
and employee management. The legal aspects such as food licensing requirements have an
important role in the retail sector. Being a part of the retail sector the company need to
comply with these regulations. The rules and regulations of consumer commission affect the
operations of the company. The fair policies in performing business operations have also

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affected the performance of the company. The staff of the company is required to have
knowledge of food handling (Jaber, Elkarmi, Alasis & Kostas, 2015). So the staff should be
trained properly.
Conclusion
A critical strategic analysis of Woolworths has been carried out. The important strategies
have been undertaken to assess strategies which have been used by Woolworths. These
strategies are used to focus on growth and operation. This growth is supported by strong
commitment towards workers and employees. The analysis of external environment
conditions faced by the retail industry shows that the factors such as political condition in the
form of government influences, changes social patterns and trends within customers and
contrary economic conditions. Such conditions include highly competitive business
environment conditions which have effect on strategy and growth of company in a negative
manner. The analysis also indicates that the internal environment conditions have impacted
the potential of Woolworths in terms of growth. The active participation of company in the
community services and social responsibility reflects the devotion of the company towards
society. The company is able to update strategy over the years and it makes company even
more successful. So the employee should be properly implemented and analysed. It has been
noticed that the company is able to change strategy over the years which has made it more
successful. Further the company need to implement new and improved strategies to expand
operations successfully overseas. There are some strategies which can be implemented such
as increased brand awareness. The appropriate strategies should be adopted in order to
differentiate it’s identity. It is difficult for the company to survive and dominate the market
without an effective strategy.

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