Porter’s Five Forces Model Analysis for Woolworths Company

This article provides an analysis of Porter’s Five Forces Model for Woolworths Company. It examines the different factors that could impact the business environment and the overall effectiveness of the firm.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Table of Contents
Introduction......................................................................................................................................2
Overview of Porter’s Five Forces Model Analysis.....................................................................2
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

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Introduction
Overview of Porter’s Five Forces Model Analysis
The Porter’s Five Forces Model framework is the tool which helps in analyzing the
competition of the business in an effective manner. This helps in drawing the industrial
economic organizations which helps in deriving the five forces which helps in determining the
competitive kind of intensity as this helps in generating the overall attractiveness of the industry
in an efficient manner (E. Dobbs, 2014). The purpose of the Porter’s Five Forces Analysis is that
the different organizations will be able to keep a close watch on the different competitors and
examine the different factors which could impact the business environment.
Figure 1: Porter’s Five Forces Model Analysis
(Source: Zhao et al., 2016)

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In case of the Woolworths Company, this can be analyzed and seen that there are
different kinds of threats and other competition of Woolworths which can affect the overall
effectiveness of the firm in a negative manner.
Intensity of Competitive Rivalry- This is the first aspect in which this can be seen that
there is high degree of rivalry and this creates small number of major players in market. There is
lack of differentiation aspects as the nature of the different goods and services are generic in
nature. In future, the rivalry can increase for Woolworths as there are other companies such as
American Retail Company named Costco can turn around the entire aspect and this can be
dangerous (Zhao et al., 2016).
Threat of Substitutes- This is the other aspect which is medium in nature as there is
indirect competition such as the different specialist stores and convenience stores which can
affect the overall effectiveness of Woolworths. However, threat posed by the different specialty
stores is minimal in nature (Zhao et al., 2016).
Bargaining Power of Suppliers- The aspect has low impact as more than 80% of the
suppliers in the market are being controlled by Woolworths or Coles. Woolworths is the major
purchaser and they are the only purchaser which is effective for gaining huge profitability in the
market (Mathooko & Ogutu, 2015).
Bargaining Power of Buyers- The aspect has low impact on the Woolworths Company
as there are no such alternatives available for the customers in Australian economy which will be
beneficial for the success of the organization in a positive manner. However, in the future this
can be seen that there can be introduction of other new retailers in future which can affect the
overall profitability of the firm (Takata, 2016).

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Threat of New Entrants- The threat of new entrants is low in nature and this will remain
unchanged. The combination of different laws and legislations which has created scarcity of the
different grocery stores and this can affect the overall efficiency of the firm in a positive manner
for Woolworths (Zhao et al., 2016).
Conclusion
From the Porter’s Five Forces Analysis, this can be analyzed and identified that
Woolworths is in safe position in the entire competitive market. The performances of the
suppliers of Woolworths have helped them in gaining competitive advantage in the market.
Furthermore, the overall ability to outperform the different rivals along with maintaining the
competitive advantage will be resting on resources along with capabilities which will be helpful
in gaining competitiveness in the market.

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References
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Mathooko, F. M., & Ogutu, M. (2015). Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3), 334-354.
Takata, H. (2016). Effects of industry forces, market orientation, and marketing capabilities on
business performance: An empirical analysis of Japanese manufacturers from 2009 to
2011. Journal of Business Research, 69(12), 5611-5619.
Zhao, Z. Y., Zuo, J., Wu, P. H., Yan, H., & Zillante, G. (2016). Competitiveness assessment of
the biomass power generation industry in China: A five forces model study. Renewable
Energy, 89, 144-153.