Strategic Information System for Woolworths: Market Analysis and Competitor Evaluation

This assignment conducts a market analysis of Woolworths, an Australian retail company, using PESTLE analysis and Porter's five forces. It evaluates the organization's tangible and intangible assets, core competencies, and recommends an information system for effectiveness.

Running head: STRATEGIC INFORMATION SYSTEM
STRATEGIC INFORMATION SYSTEM
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction:........................................................................................................................2
Discussion:...........................................................................................................................3
Business background:......................................................................................................3
What industry is it?..........................................................................................................3
General environment analysis..........................................................................................4
Industry analysis:.............................................................................................................7
Threats of the new entrants:.............................................................................................8
Bargaining power of the suppliers:..................................................................................8
Bargaining power of the buyers:......................................................................................8
Competitive rivalry:.........................................................................................................8
Threat of the substitute products:....................................................................................9
Competitive environment:...............................................................................................9
Opportunities for Woolworths:......................................................................................10
Threats for Woolworthss:..............................................................................................10
Firms resources:.............................................................................................................10
Tangible assets:..........................................................................................................10
Intangible assets:........................................................................................................11
Core competencies:........................................................................................................11
Information system that can be implemented................................................................11

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Recommendation:..........................................................................................................12
Conclusion:........................................................................................................................12
References:........................................................................................................................13

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Introduction:
The assignments discusses about the Australian retail chain organization, Woolworths.
Woolworths is an Australian retail company. The organization operates its business in Australia
and New Zealand. Woolworths is the second largest organization in Australia in terms of
revenue. In this assignment a market analysis of Woolworths will be conducted. PESTLE
analysis will be conducted to understand the Political, Economic, Social, Technological, legal
and the Environmental factors that affect the organization. By using the Porter’s five forces we
will come to know about the industry of Woolworths. This assignment will discuss about key
competencies, tangible and intangible assets of the organization. An information system will also
be conducted to understand how the organization can be more effective in the environment.

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Discussion:
Business background:
Woolworths is an Australian retail company. The organization operates its business in
Australia and New Zealand. Woolworths is ranked as second in Australia in terms of revenue.
The company was formed in 1924 by Stanley Chatterton, Percy Christmas, George Creed, Ernest
Williams and Cecil Scott Waine. In 2017, the organization earned revenue of 55.669 Australian
dollars and the net income of the organization was accounted 2.326 Australian dollars. The net
income of the organization was summed up 1.593 Australian dollars in the year 2017.
Woolworths employs a total of 205,000 employees in their organization. The organization
opened its first retail store, in the Pitt Street, Sydney (Woolworthsgroup.com.au 2018).
What industry is it?
Woolworths operates its business in the liquor, food and merchandise retailer. Apart from
this the organization also operates its business in the gaming and the hospitality sector (Dwivedi
et al. 2012). The organization is mostly famous for its retail stores in Australia and this helped
the industry in becoming the second largest revenue collector in Australia. The industry in which
Woolworths is operating is considered as highly competitive market due to the presence of the
competitors like Coles, Distributors, ALDI, Safeway are some of the top competitor of the
organization. Among all the competitors present in the Australian market Woolworths get the
highest amount of revenue in the market (Orhun 2013).

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General environment analysis
The environment analysis of Woolworths can be done by the PESTEL analysis. PESTEL
will help to find the political, economic, social, technological, environmental and the legal
factors that affect the market of Woolworths (Dcosta 2015).
Political factors:
Political factors play an important role in deciding profitability of the Woolworths limited
in the market or the country. Woolworths limited operates in different countries which expose
the organization into different political system and different political risks. The political factors
that affect Woolworths operation are:
 Political stability in Australia and the importance of the retail store in Australian
environment has helped the organization in its growth in the Australian environment
(Eccleston 2012).
 The risk of the military invasion in the Australian environment affects the Woolworths
operation (He 2012).
 The interference of the government and bureaucracy in the retail industries has a huge
impact on the production and working process of Woolworths limited.
 The anti-trust laws associated with the food and the staples retailing industries affects the
organization.
 The employee benefit programmes affect the environment of Woolworths
Economic factors:
The macro environment factors that affect the Woolworths limited are the savings rate,
foreign exchange rate, inflation rate, interest rate and the economic cycle. This helps to

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determine the aggregate investment and demand in the economy. The micro environment factors
like the competition norms affect the competitive advantage of the organization. The economic
factors that affect the market of the Woolworths are:
 The economic system of the Australia influences the operational process of the
organization. The economic market has a huge impact on deciding the organization
structure of Woolworths for example, the Australian market has a high level of
competition therefore Woolworths cannot influence the price of the product.
 The exchange rate and the stability in the economy of the ghost countries will also affect
the operational process of the organization (Rossi 2013).
 The availability and the condition of the infrastructure in the country for the food and the
staple industry highly influence the productivity of the organization.
 The skill and the expertise of the employee in the market of Australia has a direct impact
on the effectiveness of the organization (Hawthorne 2016).
Social factors:
The cultures of the society and the way the people do things have a direct impact on the
organizations culture in the environment. The attitude of the people and the shared beliefs among
them will affect how Woolworths limited segments their market and how they choose the
marketing strategies for the food and the staple retailing store. The social factors that
Woolworths need to analyse and which may affect the organization are:
 Skill level of the employees and the demographics of the country will affect how well the
organization functions in the market.

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 The education level and the education standard of the society helps in deciding the
perfect marketing strategies, which can be helpful for the organization in reaching to its
customer and will also helps them to decide the product preference of the customers
(Bexley et al. 2013).
 The power, hierarchy and the class structure of the society also affects the organizational
process.
Technological factors:
Technology has been growing in the industry. Technology has helped most of the
industries in their growth and making the organization effective. Transportation industry is one
of the best examples of how the technological development helped in making the organizational
processes easier and effective. The taxi industry nowadays is highly dominated by Ola and Uber,
which have been successful due to the advancement of the technology.
Australia is a country with high technology advancement. This helps Woolworths in
bringing online shopping features for the customer. The technological advancements also helped
them to implement softwares that help them to manage their inventory more effectively
(Niemeier, Zocchi and Catena 2013).
Environment factors:
Different countries have different environmental standards and norms that influence the
profitability of the organization. This environmental factor affects the organization in setting
different policies in the environment. The environment factors that need to be analysed before
making the marketing plan are:
 Climate change

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 Laws that controls the environment pollution.
 Water and air pollution laws and policies in the food and the staple retail industry
 The attitude and the behaviour towards the usage of the renewable energy.
 Focus on the recycling methods
Legal factors:
The legal factors of the country help in implementing the policies and the laws in the
organization. The legal factors that Woolworths needs to consider before entering any new
market are listed below:
 Discrimination law
 Health and safety law
 Data protection act
 Copyright
 Employment law
Industry analysis:
The Porter’s five forces theory analyses the industry in which he organization is
functioning. The Porter’s 5forces theory explains the threats of the new entrants, bargaining
power of the suppliers, bargaining power of the buyers, threat of the substitute services or
product, rivalry between the existing firms (Dobbs 2014).
Threats of the new entrants:
The entry of the new entrants in the market brings new ways of doing things, bring
innovation and this puts pressure on the existing firms like the Woolworths limited (Baldwin
2016). They can bring many new strategies such as reducing the cost of the product, lower

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pricing strategy or by providing new and unique value proposition to the customers in the
market. The threat of the new entrants is medium for Woolworths.
Bargaining power of the suppliers:
The organizations in the food and staple industry purchase their product from a number
of different suppliers in the market. The supplier usually has low bargaining power when it
comes to supplying a reputed organization like the Woolworths limited. However, the dominant
supplier in the market has the power to obtain a higher price from the firms. After analysing all
the factors it can be said that the bargaining power of the supplier is low for Woolworths limited
(Suuton-Brady, Kamvounias and Taylor 2015).
Bargaining power of the buyers:
The bargaining power of the buyer is usually high for Woolworths limited. The
availability of the competitor and the strong competitive market gives the buyer a lot of
bargaining power. The rival firms are usually focused on cutting the prices and other different
strategies, which affects the market of the Woolworths.
Competitive rivalry:
The competition in the food and the staple retail industry is fierce as the rival companies
or are offering the same products at the same price. Coles, Wal-mart are some of the main
competitors for Woolworths. Therefore, it can be said that the competitive rivalry for the
Woolworths limited is high.
Threat of the substitute products:
The retail products that Woolworths is selling are not unique in nature. Other local
supermarket and other giant retailers are selling the same product. These local brands are sold in

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almost everywhere and this local brand also focuses on marketing, price reduction and
advertising, which makes the substitution of the products very simple and easy. Therefore, it can
be said that the threat of the substitute product is high for Woolworths limited.
Competitive environment:
The organization faces a high level of competition in the market from different brands.
Some of the main competitors for the organization and the revenue they collect form the market
are listed below:
 Coles - $25 Billion
 Distributors - $1.1 Billion
 Aldi - $99.8 Billion
 Safeway - $40.6 Billion
 Giant eagle - $9.3 Billion
 Carrefour – $85.7 Billion
Among the above mentioned organization, Coles and Aldi possess a huge competition for
Woolworths. Coles and Aldi follows a huge price cut down to capture the market. They also
provide a huge discount in their products to hold the customer, which is a threat for Woolworths
(Freebaim 2018).
Opportunities for Woolworths:
The organization has the following opportunities in the market:
 The organization can seek market expansion or growth by strategic acquisitions and using
the franchise model in the emerging economy.

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 The organization can increase their brand awareness with the help of promotion,
advertising, sponsorship, collaboration etc.
Threats for Woolworths:
The organization has the following threats in the market:
 The rising cost of the raw materials from the non-food and food items will have a direct
impact on the profit margin of the organization (Kalecki 2013).
 The recession in the economy of the country could affect the growth of the organization
and can also affect the strategy of opening more retail store in the country.
 The increased level of competition in the market can also affect the organization.
Firms resources:
Tangible assets:
The tangible assets are the ones which has some physical forms (Greco, Cricelli and
Grimaldi 2013). The organization presently has over 990 stores in Australia. The organization
currently employs 205,000 employees in their organization. The liquor brand of Woolworths was
rebranded as BWS. BWS presently has 1500 stores worldwide. Woolworths also own 75% of the
ALH group’s hotel and Poker machine.
Intangible assets:
The intangible assets are the one which have no physical forms but are useful in the
organizations growth and organizations sustainability. Woolworths have been a huge brand in
the market for nearly 94 years. The organization has impressed the customers with their products
and services. The organization has earned huge brand goodwill in the market. The organization

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also gained global recognition, which helped the organization to expand its business in New
Zealand market.
Core competencies:
The main competencies for the organization are:
 The most important competency that the organization has that helped the organization in
gaining the goodwill is the quality of the services that the organization provides.
 Good customer services and after sales services helped the organization in increasing the
repetitive purchase.
 Availability of the online shopping facility attracted the customer to opt for their
services.
 Availability of a high range of products all the time helped the organization to stay ahead
in the market.
Information system that can be implemented
The retail companies have to mange and keep a high level of inventories all the time so
that the consumers can get the products easily. To manage the inventory, the organization can
use inventory management system to effectively manage their inventory (Bauer et al. 2012).
Recommendation:
The organization can use the inventory managements system, which will help to
effectively manage and store their inventory in time. Implementing the inventory management
system will help the organization in storing the stock in time and will also reduce the space for
extra storage. The inventory management system will help the organization in getting the
products easily (Laudon and Laudon 2016).

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Conclusion:
The assignment is based on an Australian local organization. In this assignment
Woolworths was selected. Woolworths is an Australian retail company. The organization
operates its business in Australia and New Zealand. Woolworths is the second largest
organization in Australia in terms of revenue. In this assignment a general market analysis has
been done with the help of PESTLE analysis to understand what factors can affect the
organization in their operation. An industry analysis has also been conducted to understand the
five different forces that affect the organization. Competitive environment has also been
discussed in this assignment. The organization faces fierce competition in the market from
competitors like Coles, Distributors, Aldi and Safeway. This assignment also discussed some of
the competencies that the organization has, the tangible and the intangible assets have also been
discussed in this assignment. Later part of the assignment discussed an information system that
will help the organization in managing the inventory of the organization. The inventory
management system will help the organisation to manage the inventory more effectively.

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References:
Baldwin, M., 2016. Social work, critical reflection and the learning organization. Routledge.
Bauer, D.G., Campero, R.J., Rasband, P.B. and Weel, M.D., Sensormatic Electronics Corp,
2012. Inventory management system. U.S. Patent 8,321,302.
Bexley, E., Daroesman, S., Arkoudis, S. and James, R., 2013. University Student Finances in
2012: A Study of the Financial Circumstances of Domestic and International Students in
Australia's Universities. Centre for the Study of Higher Education.
Dcosta, A. and McDonough, M., 2015. Components of a PESTLE Analysis.
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship
equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and
Consumer Services, 19(5), pp.526-536.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Eccleston, R., 2012. The politics of Australian tax reform beyond the national tax forum: context
and challenges. Austl. Tax F., 27, p.227.
Freebairn, J., 2018. Effects of supermarket monopsony pricing on agriculture. Australian Journal
of Agricultural and Resource Economics.
Greco, M., Cricelli, L. and Grimaldi, M., 2013. A strategic management framework of tangible
and intangible assets. European Management Journal, 31(1), pp.55-66.

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Hawthorne, L., 2016. Labour market outcomes for migrant professionals: Canada and Australia
compared.
Kalecki, M., 2013. Theory of economic dynamics. Routledge.
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Niemeier, S., Zocchi, A. and Catena, M., 2013. Reshaping retail: Why technology is
transforming the industry and how to win in the new consumer driven world. John Wiley &
Sons.
Orhun, A.Y., 2013. Spatial differentiation in the supermarket industry: The role of common
information. Quantitative Marketing and Economics, 11(1), pp.3-37.
Rossi, B., 2013. Exchange rate predictability. Journal of economic literature, 51(4), pp.1063-
1119.
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015. A model of supplier–retailer power
asymmetry in the Australian retail industry. Industrial marketing management, 51, pp.122-130.
Woolworthsgroup.com.au (2018). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Woolworthsgroup.com.au. Available at: https://www.woolworthsgroup.com.au/
[Accessed 27 Aug. 2018].