Analysis of Woolworths: External and Competitive Environment

This report analyzes the internal and external environment of Woolworths, a popular retail company in Australia. The report includes a PESTLE analysis, Porter's five forces analysis, and a discussion of the company's resources and capabilities. The report concludes with recommendations for an information system that can be implemented by Woolworths.

Running head: COMPANY ANALYSIS
COMPANY ANALYSIS
Name of the student:
Name of the University:
Author's Note:

1: COMPANY ANALYSIS
Executive summary
The report has analyzed the internal and external environment of an organization. The industry
based environment of an organization has also been analyzed in the report which is focused on
Woolworths. The external environment of the company has been analyzed with the aid of
PESTLE framework. The industry where Woolworths operates has been analyzed with the help
of Porter’s five forces structure. The competitive environment of the company has been analyzed
in the report in detail. The report has been concluded with the help of a major recommendation
based on the information system which can be implemented in the organization.

2: COMPANY ANALYSIS
Table of Contents
Introduction:....................................................................................................................................3
Part 1................................................................................................................................................3
External analysis..............................................................................................................................3
Background of the company:.......................................................................................................3
General environment:......................................................................................................................4
Industry environment:......................................................................................................................5
Porter’s five forces analysis of Woolworths................................................................................5
Competitive environment:...............................................................................................................7
Opportunities and threat..................................................................................................................7
Part 2................................................................................................................................................8
Resources gained by Woolworths...............................................................................................8
Identifying the capabilities of the company.....................................................................................9
Core competency based analysis of Woolworths............................................................................9
Proposed information based system which can be implemented by Woolworths.........................10
Recommendations related to the proposed information system....................................................10
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12

3: COMPANY ANALYSIS
Introduction:
The aim of this report is to discuss the situation under which the retail industry of
Australia has been working. This report has aimed to analyses the strategicenvironmentof the
food retail sector in which Woolworths is a very popular and successful name.This company
unlike other companies of the same market tolerates tremendous competitive pressurewhich is
instigated by the internal and external factors of the company (Keller2017). This report however
will discuss the company’s background and analyses the general environment, industry
environment and competitive environment so that the opportunities and threats for Woolworths
can be identified. In the aspect of internal environment of the company, the resources and
capabilities of the corporation will be analyzed. The core competency of the company will also
be discussed so that information system required by Woolworths can be understood. This report
concludes with recommendationsbased on the proposedinformation present in the Australian
market.
Part 1
External analysis
Background of the company:
Woolworthsgroup limited is a chief Australian company which has an extensive retail
interest in all over the Australian and New Zealand market. It has been the second largest
company in the country after Wesfarmers by revenue. In addition to this the company is the
largest takeaway liquor retailer as well as largest hotel gaming machine operator is the country.
This company managers some of the most recognized and reputed brand of Australia. The main
business of this company is focused on maintaining the largest supermarket chain of Australia

4: COMPANY ANALYSIS
which has more than nine hundred stores across the country and more than 115,000
employeesworking in these stores (Woolworths.com.au 2018). Woolworths is one of the most
innovative retailers of the country as it understands the demand of the customers and provide all
types of comfort whole shopping.
General environment:
As the company is located in mainly Australia hence the general environment in which
the company is operating is necessary to understand. Political factors of the count include its
stable government and administrative systems. It has a stable federal government operating in the
legislative, executive and judiciary sections (Hitt and Duane 2017). The government has full
support for the growth of the retail business in the country which allows the company to operate
with higher degree of certainty. The administrationhas an open, progressive and stable nature
which makes it a safe destinationfor investment. The political system has been assessedto be a
highly effective to respond to the economic challenges as well as policy direction. Economic
stability in the region gives full support so thatthe company can easily operate. The cost of labor
in this market is effective to be judged as this manipulates the revenue of the country (Ethiraj,
Gambardella and Helfat 2018).The cost of living in this country is quite fordable and Currency
exchange rates against euros and dollars are very favorable in Australia. The GDP growth in
Australia is positive and supportive of the growth of the company.
Physical factor includes the physical presence of the company in the market of the
country. As mentioned before, the company has more than 900 stores which anyone can
access.moreover, this company also serves the customersthrough supplying their goods to their
doorstops if booked online. Sociocultural factors include the standard of living of the people. It
is high and the country has social stratification. The education level of this country is quite high

5: COMPANY ANALYSIS
which helps he company to have cheap yet skilled labor (Martins, Rindova and Greenbaum
2015). However, the relationship of the company with the customers and supplies is intense
whish can create a loyal and dependable customer base as well as supply chain. The global
factors of the market are associated with the sustainable growth. The companies focus on
various environmental factors now a days so that this do not create problem in the all-inclusive
growth ofthe company.
The government gives technologicalsupport to the companies operating in this particular
market so that they can work on the new processes and products. This helps the companies to
reduce costs and improve quality leading to innovation (Meyer, Neck and
Meeks2017).Woolworths grab this opportunity resented and has developed unique
merchandisingsystem to improve the efficient of the store as well as the firm.The Australian
market has potential buyers for Woolworths. The company applies to the average to prime
income level customers for any age group and gender if segmented the customers base
demographically. However, the stores attract the women of the age group of 20 to 50 who
usually take responsibilities of their households. The stores of Woolworths give all the facilities
to itscustomers and gain competitive advantage.
Industry environment:
Porter’s five forces analysis of Woolworths
Threats of New Entrants
For the retailing company like Woolworths, it is difficult to operate in the market of
Australiaas the threat of new entrants in the market is high. These new entrants bring innovation
and pressurizes Woolworths to lower their pricing strategiesand provide a new value

6: COMPANY ANALYSIS
propositionsto the customers. This is the reason why the company needs to build an effective
barrier for safeguarding the competitive edge.
Bargaining Power of Suppliers:
All the organizations in food retailing industry buy raw materials from different suppliers
the suppliers in the leading position diminish the profit margin of the company by using their
negotiation power for extracting the higher prices from this firm. This is the reason why
Woolworths needs to erect a well-organized supply chain with multitude of suppliers.
Bargaining Power of Buyers:
The buyers have demanding attitude and they want to buy best quality goods at the
lowest price. It often puts stress on the company’s profitability in the long run. The smaller
customer base of the company is more powerful which heightens the bargaining power of the
buyers and their capabilities for seeking the increasing discounts as well as offers.
Threats of Substitute Products or Services
The competition level in the food retail market of Australia is quite high. This is the
reason why the substituteproduct and services can be easily found in the market (Martinez-
Simarro, Devece and Llopis-Albert 2015). The customers prefer buying high quality products at
lower price hence they turn to the companies where they get more benefits. Moreover, the
switching cost of the substitutes are also low which threatens the profitability of the company.
The threat regarding the substitution of product or service is high for Woolworths as it
offersvalue proposition which is exclusively different from the present offerings of the industry.
Rivalry among the Existing Competitors

7: COMPANY ANALYSIS
As mentioned before, the market of food retail industry is highly concentrated but this
particular company possess the position of second largest retailer in terms of revenue in the
country (Molina-Azorín et al. 2015).However, the number of rival companies is constantly
increasing as there is limited barrier for the new entrants. As the competitive rivalry is increasing
in the market Woolworth is pressurized to drive down the prices which leads to decrease an
overall profitability of the company.
Competitiveenvironment:
To the critics, the competitors are now granted to be the stakeholders as they manipulate
the price systemand quality of products and service ofthe companies (Saeidi et al. 2015). The
competitive rivalry is highly effective in the retailingsector of Australian market. The
competitive environment in which the company now operates have some features. Some of the
rivals are famous for their unique services and some for availability. Woolworths mainly
focusses on providing all types of comforts to their customers starting from catering all their
demands by maintaining availability of the products in one hand and shipping these products to
their doorsteps (Scarborough 2016).In addition to this Woolworths strengthens the financial
assets in various ways and increase the strategic capabilities to maintain their good will in this
market. Ion order to avoid the conflicts and empowerment of the suppliers, Woolworths has
designed a strong network of suppliers to gain competitive advantage than that of the rivals. The
company has also built a sustainable differentiation so that it can collaborate with the
competitors to increase the size of the market (Martínez-Torres, Rodriguez-Piñeroand
Toral2015).

8: COMPANY ANALYSIS
Opportunities and threat
Despite an intense competition present in the market. Woolworths can grab some
opportunities presented in the market of Australia so also the threat to take care of. The company
has a huge financial asset as well as a loyal customer basewhich they use while operating in the
Australia and NewZealand market. Moreover, the company grab the benefit of marketing online.
Through proper promotional strategies and advertisements,the market penetration can be
achieved. In addition to this, Woolworths can spread market within the territory through
collaborating with the competitors to increase the market size.
The first and foremost threat of the retail industryin the Australian market is its
concentration. The number of similar companies working in the market is quite high. This keeps
the pressure of reducing cost of the materials therefore remain constant upon Woolworths. In
addition to this, the company has been under threat of supplier domination whichcreates issues in
the company’s focus of serving their customerswith all types of comforts.Finally, the economic
recession lurking over the world economy can affect the economy of Australia also.
From this analysis, the exact position of the Australian retail industry can be understood. From
this opportunities and threat analysis, it has been understood that Woolworths need to gain
competitive advantage by properly managing the threats and utilizing the opportunities
efficiently.
Part 2
Resources gained by Woolworths
Human resources – The major human resources which have been developed by the
company in the retail industry of Australia are based on the huge number of employees who are

9: COMPANY ANALYSIS
considered to be an important part of the organizational operations. The company has been able
to expand the human resources in effective manner in order to provide best level of services to
their customers (Albrecht et al. 2015).
Financial resources – The huge amount of revenues which have been gained by
Woolworths in the retail industry of Australia are thereby based on the services and products that
are accessible to the customers.
Physical resources –The physical resources of the company are thereby based on the
huge number of stores of the company which have been developed by Woolworths in Australia.
The products and the services of the organization are provided to the customers with the help of
the stores of Woolworths (Andrevski et al. 2014).
Identifying the capabilities of the company
The different capabilities that are developed by Woolworths in the industry are mainly
related to the methods that are used by Woolworths in order to offer fresh products to the
customers. The organization can thereby provide the services and products to consumers by
proper levels of coordination between growers and local farmers. The company is able to
develop effective products that are fresh in nature. The levels of customer satisfaction can
thereby be achieved by providing fresh products with the help of proper capabilities of
Woolworths. The customer first related strategy which has been developed by Woolworths is an
important approach based on its operations (Shujahat et al. 2017).
Core competency based analysis of Woolworths
The core competencies of Woolworths –

10: COMPANY ANALYSIS
The most important competency which has been gained by Woolworths is based
on leadership position which is developed by Woolworths in the retail industry.
Valuable – High, Rarity – High, Imitability – Moderate, Organization- High.
The different processes that have been used by the organization is based on the
ways by which Woolworths has transformed itself into a lean type of retailer.
Valuable – High, Rarity – Moderate, Imitability – Moderate, Organization – High
(Tantalo and Priem2016).
The ways by which Woolworths is able to generate sustainable income in the
industry is an important competency which has been developed in retail industry.
Valuable – Moderate, Rarity – Moderate, Imitability – High, Organization – High.
The steps which have been taken by the company in order to develop the Drinks
related business is a major core competency of Woolworths. Valuable –
Moderate, Rarity – Moderate, Imitability – High, Organization – Moderate (Hill
Jones and Schilling 2014).
Proposed information based system which can be implemented by Woolworths
The information system that is thereby proposed for implementation in Woolworths can
be termed as management information system or MIS. The decision making of the company will
be related to effective analysis of the information that is related to the sales, profits, and choices
which are made by the consumers. The collection of effective data will be an important part of
the implementation of MIS. The confidentiality of the data will play a major role in the
implementation of information system. The software which can be used by Woolworths in
management information system is Oracle.

11: COMPANY ANALYSIS
Recommendations related to the proposed information system
The application of the management information system is related to the ways by which
the company can manage data related to the customers. The entire system can thereby be
managed and can help Woolworths to use the data in an effective manner to develop strategies.
The performance of the employees can also be managed with the help of data which can be
collected with the help of proper information based system. The company structure will play an
important role in the application of information system. The managers of the stores will be able
to play a vital role in the ways by which the company can use the data to improve the operations
of Woolworths. The proposed information system will thereby be able to play a major role in the
ways by which the company is able to use relevant data in order to operate in the competitive
retail industry. The proper analysis of needs and demands of consumers is also possible with the
help of management information based systems. The company will be able to analyze the data
based on previous purchase of the customers in order to offer them appropriate products and
services. The proper analysis of data will be helpful in the management of employees and their
levels of productivity based on different organizational processes.
Conclusion:
Therefore, it can be concluded that Woolworths despite has the huge market share in the
retail market of Auisralia, can have potential threat by different factors. The external analysis of
the firm reveals the issue that the high level of competition present in the market is one of the
major reasons that affect the profitability of the company. In addition to this, the threat of new
entrants, customer demands and constantly changing regulations of the country have been
leading this company towards problems. Through proper understanding of the opportunities that
company will be able to develop innovative changes in the corporation. This will also lead to the

12: COMPANY ANALYSIS
development of resources which can help to company to identify proper information system and
implement them for the growth of the corporation. This will alsohelp the company to make
changes in the HR policies and mitigate issues regarding employees as well as different
stakeholders.

13: COMPANY ANALYSIS
References:
Albrecht, S.L., Bakker, A.B., Gruman, J.A., Macey, W.H. and Saks, A.M., 2015. Employee
engagement, human resource management practices and competitive advantage: An integrated
approach. Journal of Organizational Effectiveness: People and Performance, 2(1), pp.7-35.
Andrevski, G., Richard, O.C., Shaw, J.D. and Ferrier, W.J., 2014. Racial diversity and firm
performance: The mediating role of competitive intensity. Journal of Management, 40(3),
pp.820-844.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management. Strategic
Management Journal, 39(6), pp.1529-1529.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Keller, K.L., 2017. Managing the growth tradeoff: Challenges and opportunities in luxury
branding. In Advances in Luxury Brand Management (pp. 179-198). Palgrave Macmillan, Cham.
Martinez-Simarro, D., Devece, C. and Llopis-Albert, C., 2015. How information systems
strategy moderates the relationship between business strategy and performance. Journal of
Business Research, 68(7), pp.1592-1594.
Martínez-Torres, M.D.R., Rodriguez-Piñero, F. and Toral, S.L., 2015. Customer preferences
versus managerial decision-making in open innovation communities: the case of
Starbucks. Technology Analysis & Strategic Management, 27(10), pp.1226-1238.

14: COMPANY ANALYSIS
Martins, L.L., Rindova, V.P. and Greenbaum, B.E., 2015. Unlocking the hidden value of
concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship
Journal, 9(1), pp.99-117.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Molina-Azorín, J.F., Tarí, J.J., Pereira-Moliner, J., López-Gamero, M.D. and Pertusa-Ortega,
E.M., 2015. The effects of quality and environmental management on competitive advantage: A
mixed methods study in the hotel industry. Tourism Management, 50, pp.41-54.
Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate
social responsibility contribute to firm financial performance? The mediating role of competitive
advantage, reputation, and customer satisfaction. Journal of business research, 68(2), pp.341-
350.
Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Shujahat, M., Hussain, S., Javed, S., Malik, M.I., Thurasamy, R. and Ali, J., 2017. Strategic
management model with lens of knowledge management and competitive intelligence: A review
approach. VINE Journal of Information and Knowledge Management Systems, 47(1), pp.55-93.
Tantalo, C. and Priem, R.L., 2016. Value creation through stakeholder synergy. Strategic
Management Journal, 37(2), pp.314-329.
Woolworths.com.au. 2018. Woolworths.com.au. [online] Available at:
https://www.woolworths.com.au/ [Accessed 1 Sep. 2018].

15: COMPANY ANALYSIS