Micro Environment Analysis of Woolworths

This report analyses the micro environmental factors affecting the business of Woolworths as well as the challenges presented by these factors. It also suggests strategies that could help in facing these challenges. The micro environmental factors include competitors, suppliers, customers, publics and employees. The challenges and risks present in the micro environment include cut-throat competition, supplier management, increasing demand of customers, pressure from publics and employee retention. The suggested strategies include product diversification, STP and CSR policies.

The Business Environment

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Contents
Introduction...........................................................................................................................................1
Background of the business...................................................................................................................1
Micro environment analysis..................................................................................................................2
Challenges and risk present in the micro environment..........................................................................3
CONCLUSION.....................................................................................................................................4
REFERENCES......................................................................................................................................5

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Introduction
Business environment has changed all across the globe hence it has become essential for the
organisations to ensure that they understand the challenges they are facing and take use of
effective strategies for confronting it (Bitzer & Hamann, 2015). Woolworths is one of the
biggest supermarket chains in Australia. This report analyses the micro environmental factors
affecting the business of Woolworths as well as the challenges presented by these factors. At
last it gives the suggestions about the use of strategies that could help in facing these
challenges.
Background of the business
Woolworths limited is a major retail company in Australia having major business of
supermarket. Apart from this it is also having business of hotels, gasoline stations and spirits
etc. Woolworths specialises in the business of selling groceries but also sells other products
which includes pet and baby products, household products, health and beauty products,
stationary items (Manewa, Siriwardena, Ross & Madanayake, 2016). It having 1000 stores in
which 980 are supermarkets while others are convenience stores. It also does its business
through the help of online portal “HomeShop”.
Micro environment analysis
Woolworths is facing significant amount of challenges from its competitors. There are
various micro environmental factors that are affecting their business. Some of them are as
follows:
 Competitors: Number of Big competitors in the Australian Supermarket is less but the
ones that are present gives a tough fight to the Woolworths. Companies such as Coles
are capable of taking market share from the cited firm. Some other big competitors
are Aldi Australia, Distributors, Metro, Giant Eagle. With the advancement in the
digital technology, there are many small retailers coming in the market.
 Suppliers: Woolworths has a very close relationship with their suppliers. Apart from
this they also have strong relationship with supply concatenation, resellers and
logistics concatenation which is driven by higher values of Woolworths (Moscardo,
Lamberton, Wells, Fallon, Lawn, Rowe, ... & Renouf, 2013). They believe that
suppliers and other market mediators are really of import as they have a direct impact
on the quality of services and products that is given to the customers.

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 Customers: Customers are their prime focus while doing their business. Approaches
that they have adopted for reacting to altering clients demands are genuinely singular.
They have worked hard for gaining such a large client base. They have adopted plans
named mundane wages plan which is really effective trueness plan with customers
(Flax, Bick & Abratt, 2016). The information that is gathered through this trueness
plan is analysed thoroughly for understanding the way in which customers shops, the
merchandises in highest demand and the place where they need to put.
 Publics: On the other hand public in Australia is also large and there are many people
who have interest in the operations of the firm. Consumer protection groups,
environmentalist, media personnel are some of the publics. Company often makes
policies in the pressure of these publics. Sometimes they act as a stakeholder for the
firm (Al Serhan & Boukrami, 2015).
 Employees: Woolworths has a pool of extremely skilled employees. They hire
employees that are dynamic, exciting and skilled. They provide challenging and
dynamic opportunities for growth of the employees at each and every level. Training
and development must be given as per the requirement of each and every staff so that
skills could be developed as per the requirements.
Challenges and risk present in the micro environment
Due to change in the micro environment, there are many challenges that are posing in the
micro environment. Some of the risk and challenges are as follows:
 Competitors: The numbers of competitors are increasing at much faster speed. Due to
the online facilities in retail, the competition has gone intensive. Because of this cut
throat competition the chances of the business growth of Woolworths has reduced.
Risk of business failure also increases due to intensified competition.
 Suppliers: The suppliers are in huge numbers but the quality matters the most.
Recently company has faced challenges related to suppliers (Arli, Dylke, Burgess,
Campus & Soldo, 2013). Since Woolworths has the business of selling fresh food
items hence they might face challenges related to supplier’s management.
 Customers: The increasing demand of the customers especially related to improving
the quality and numbers of products available in the market is a challenge for the
company. With so many new kinds of products line available with the competitors
there is risk that Woolworths might lose their market share.

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 Publics: With the increasing issues related to environment and sustainability. The
groups that are known as publics are putting pressure on the company to work for the
development of the society. The increasing farmer’s agitation against the bigger
supermarkets is a challenge for the micro environment of the Woolworths. There are
many people who have an interest in the company’s growth and hence ensuring their
profits is not easy for the company.
 Employees: The challenges such as employee retention can be a problem for the
company. In the increasing use of technology, training has been their major challenge
especially with the fact that people at workplace are from different cultural
backgrounds and maintaining diversity is a challenge for the organisation (Keith,
2012).
In order to resolve this problem there are various strategies that could be used by
Woolworths. Some of them are:
 Product diversification: By increasing the category of products, Woolworths could
easily increase their market base. It will help them in attracting customers towards
their stores (Woolworths, 2018).
 STP: It is crucial that company utilises this strategy of marketing in an effective
manner. This will help the company to focus on those who can be potential customers
of the company.
 CSR policies: In order to resolve the issues related to publics, company could take use
of the CSR activities to build the image of the company.
CONCLUSION
From the above based report, it can be concluded that Woolworths is one of the biggest retail
firms in Australia. There are many factors that are affecting the micro environment of the
Woolworths and it is essential for them to manage the effect of these factors on it. Factors
such as Competitors, Suppliers, Customers, Publics and Employees effect the micro
environment. All these factors pose huge amount of challenges and risks to business of
Woolworths and the micro environment present in front of the organisation. Use of strategies
such as Product diversification, STP and CSR policies can be helpful for the company in the
long run.

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REFERENCES
Al Serhan, O. A., & Boukrami, E. (2015). Mapping studies on consumer boycotting in
international marketing. Transnational Marketing Journal, 3(2), 130-151.

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Arli, V., Dylke, S., Burgess, R., Campus, R., & Soldo, E. (2013). Woolworths Australia and
Walmart US: Best practices in supply chain collaboration. Journal of Economics,
Business & Accountancy Ventura, 16(1).
Bitzer, V., & Hamann, R. (2015). The business of social and environmental innovation.
In The business of social and environmental innovation (pp. 3-24). Springer, Cham.
Flax, J., Bick, G., & Abratt, R. (2016). The perceptions of supplier-buyer relations and its
affect on the corporate brand. Journal of Brand Management, 23(1), 22-37.
Keith, S. (2012). Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal
of Regional Food Studies, 2, 47-81.
Manewa, A., Siriwardena, M., Ross, A., & Madanayake, U. (2016). Adaptable buildings for
sustainable built environment. Built Environment Project and Asset
Management, 6(2), 139-158.
Moscardo, G., Lamberton, G., Wells, G., Fallon, W., Lawn, P., Rowe, A., ... & Renouf, M.
(2013). Sustainability in Australian business: principles and practice. Wiley-
Blackwell.
Woolworths, (2018) Marketing Strategy. Retrieved from:
https://orreconomics.weebly.com/marketing-strategy.html