Strategic Information System for Woolworths: External and Internal Analysis

This report analyses the external and internal environment of Woolworths, a supermarket in Australia, using Porter's five forces framework and SWOT analysis. It also evaluates the tangible and intangible resources, core competency, and proposes a suitable information system for the company.

Strategic information system

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Contents
Part A (External analysis)......................................................................................................................4
Overview...........................................................................................................................................4
Industry.............................................................................................................................................4
General environment analysis............................................................................................................4
Environment of Woolworths.............................................................................................................6
Competitive environment..................................................................................................................8
Opportunity and Threats....................................................................................................................8
Part B (Internal analysis and proposal)..................................................................................................9
Tangible and Intangible resources.....................................................................................................9
Tangible resources.........................................................................................................................9
Intangible Resources....................................................................................................................10
Core competency.............................................................................................................................10
Woolworths Capabilities.................................................................................................................11
Suitable information system............................................................................................................11
Evaluation........................................................................................................................................12
Conclusion...........................................................................................................................................13
Bibliography........................................................................................................................................13

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Part A (External analysis)
Overview
Strategic analysis is a process of conducting research on operating environment of the
company. Strategic analysis helps the company to achieve the goal and objective. It identifies
the opportunity and weakness with the help of porters five forces framework and SWOT
analysis. In this report, Woolworths is taken into consideration to analyse the internal and
external environment of the company. Woolworths is a supermarket in Australia, it was
founded in 1924. It sells the groceries like fruits, vegetables, packaged food, meat and others.
The company operates in 1000 stores with the help of 111,000 employees. It has 976
supermarkets and 19 convenience stores. With the developing economy, the company starts
operating in an online market with its own webpage that is ‘Home Shop’1. It delivers the
home shopping delivery services to the customers through its own webpage.
Industry
Woolworths is operating under the retailing industry of Australia. It has been seen that the
grocery retailers have stronger growth than the non-grocery retailers in Australia.
In this report, the discussion will be made on the “strategic analysis of Woolworths”. In the
first phase of the report, the external environment of the company analysed with the help of
Porter’s five forces framework. In the next phase of the report, tangible and intangible
resources are analysed with the core competency of the company. At the end of the report, the
suitable information is proposed and evaluates to meet the requirements of the company.
1 Woolworths Group, About us (2018) < https://www.woolworthsgroup.com.au/page/about-
us>.

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General environment analysis
Political factor
It has been seen that Woolworths operates in various countries and deliver the grocery
product. It means the company expose itself in many political environments and it faces the
political system risk. The company follows the rules and regulation of each operating
country. The company has to closely analyse the factors of political parties to achieve success
such as political stability in food and staple retailing in the economy2.
Economic factor
Woolworths can easily expand the business in another country or it can export the good
because there are fewer rules and regulation related to the retail paying. Woolworths has to
analyse the economic factors to expand the business such as growth rate, an inflation rate of
the country and it also has to analyse the Food and Staples retailing industry growth rate, and
consumer spending rate. It has been seen that the economic factor has a positive impact in
earning the revenue3.
Social factor
It has been evaluated that Woolworths has a poor relationship with the suppliers which affect
the business culture of the company but it observed that Woolworths understand the customer
of the market and design the product according to the requirement of the consumers.
Wesfarmers has a good relation with the consumers which increase the sale of the company4.
Technological
2 Perera Rashain, ‘The PESTLE Analysis’ (Nerdynaut, 2017)
3 Swot & Pestle, Woolworths Limited SWOT & PESTLE Analysis (2018) <
https://www.swotandpestle.com/woolworths-limited/>.
4 Gaurav Gupta, ‘Strategy Process’. The internal and external business environment of News
Corporation’ (GRIN Verlag, 2015)

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Wesfarmers adopt and implement the technology in the workplace such as an analytical tool.
It helps the company to restore sales momentum. It is observed that the company adopt the
SAP system to improve the efficiency of the work and increase the productivity. The
company continuously adopt the technology with the developing economy5.
Demographic/ physical evidence
It has been seen that the population of Australia is rising and it is expected that it also rise in
near future. With the increasing population in Australia; the necessity of the consumer is
increasing for the food. It has a positive impact on the company sales because increasing
demand means increasing the revenue of the company. In order to save the lives of the
people, the government provides the free food to the poor people which are also a beneficial
step for the company.
Environment of Woolworths
New entrants
The company has the low threat of new retailer because the retail market requires the high
capital investment to establish the business. Woolworths has a benefit of the low threat of
new entrants, the further reason of low threat is a competitive industry. Australian retail
industry is the high competitive industry; the new retailers have the high risk of losing
investment because the existing companies have high goodwill so it is difficult for the
company to compete with the existing companies6.
Bargaining power of buyers
5 Rashain Perera, ‘The PESTLE Analysis’ (Nerdynaut, 2017)
6 Anna Lena Bischoff, ‘Porters Five Forces. Innovation through Business, Engineering and
Design: How does rivalry in a market as well as customer expectations influence the process
of a design concept from a business perspective?’ (GRIN Verlag, 2016)

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It is observed that the bargaining power of buyer is high; the buyers forced the companies to
decrease the prices for increasing the sale of the company. Wesfarmers decreases the prices
to attract the customer towards the goods and services of the company. Low price is one of
the major strategies of the company.
Bargaining power of suppliers
The company has the low bargaining power of suppliers because there are many suppliers of
the company. It is observed that the retailing companies offer the low prices which increase
the sale of the companies and increase the demand. Due to increasing demand of product; the
companies increase their supply which attracts the more suppliers towards the market. It is
observed that the more the suppliers mean low barraging power.
Threat of Competitors
The company has the high threat of competition; there are many retailing industries which
affect the companies. It is observed that the competitors such as Myer and Coles force the
company to build the effective strategies which make it different from the competitors.
Substitute threat
Woolworths face the high competition; the competitors of the company also adopt the
creative and effective strategies to attract the customers towards their goods and services and
build the reputation. The competitors of the company such as Orica, AECI and others also
implement the low price strategy7.
Competitive environment
There are many competitors of Woolworths such as Truworths, Yuppiechef, Mr Price group
limited and others. Yuppiechef is the stronger competitor of the company. The company also
7 Gary Armstrong, Stewart Adam, Sara Denize, Philip Kotler, ‘Principles of Marketing’
(Pearson Australia, 2014)

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follow the strategy of low price strategy and earned $1.2 Billion revenue but it is less than the
Woolworths revenue. Truworths is top competitors of Woolworths; it beats the Woolworths
in the field of Apparel retail. It generates the 126% of Woolworth’s revenue. The competitors
follow the more strategies to beat the Woolworths in the competition. Mr Price group limited
has the 16349 employees more than Woolworths which helps the company to generate the
more revenue. Old Khaki, EDCON is another competitor of the company. From the above
analysis, it can be said that the company has high competition in the market8.
Opportunity and Threats
Opportunity
From the above analysis, it is observed that Woolworths has an opportunity to generate the
more revenue. Due to rising the population their necessity is also rise which open the
opportunity for the company to earns more revenue. Nowadays, consumers are attracted
towards the online shopping which is beneficial for the company. It is an opportunity for the
company to expand its business in the online market. It is observed that the company will
make the strong relationship with the customer by promoting the goods and services9.
Threat
The company has a threat of slow growing online market. It is observed that the company did
not focus on the online market. The company also has a threat of losing customer due to
increasing the competition in the market.
8 Owler, Woolworths (2018) <https://www.owler.com/company/woolworths-limited>.
9 Anja Böhm, ‘The SWOT Analysis’ (GRIN Verlag, 2009)

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Part B (Internal analysis and proposal)
Tangible and Intangible resources
Tangible resources
Human resources-
It is observed that the man resources are the asset of the company. Employees of the
company deliver the 29 million customers which is beneficial for the company and it helps
the company to generate the high revenue and brand royalty. Woolworths spend the higher
amount on employees to achieve the objective of the company. The company provides the
facilities to the employees to attain the objective of the company10. It provides the safe
environment to work and promoting the gender quality. Gender equality increase the
productivity of the company, it appoint the women staff which improves the work efficiency
of the company11.
Financial resources
It has been seen that the financial position of the company due to which the company enjoy
the success in the market. The company earned $1.2 billion annual revenue in a year. Due to
strong financial position of the company, it builds the great reputation in the market12.
10 Woolworths Group, Strategy and objectives (2018) <
https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives>.
11 Woolworths Group, Our People (2018) <
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-
responsibility/our-people/ >.
12 Woolworths Group, 2018 SUSTAINABILITY REPORT (2018) <
https://www.woolworthsgroup.com.au/icms_docs/195398_2018-sustainability-report.pdf>.

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Technology
It is observed that Woolworths adopt the new technology in the workplace to improve its
efficiency and the productivity of the company. The company use the SAP system to
maintain the accounts of the company which helps the company to improve its productivity.
The company also use the tools to handle the sale records. The new technology helps the
company to build the strong relationship with the customer13.
Intangible Resources
Reputation and goodwill
Woolworths attain the title as Australia’s most valuable brand. It has been seen that
Woolworths is a fastest growing brand in twitter, which increases its brand value thrice as
compare to the previous years.
Brand Image
The company has a big name in the market which increases the revenue and profitability. It is
observed that the Woolworths has strong brand image which is calculated by the Brand
finance tool. Due to strong staff satisfaction, promotion, familiarity, and loyalty show the
brand value of the company.
Core competency
The core competency of the company is measured by for test. With the developing economy,
consumers demand for the products is also increasing which has a positive impact on the
company sale and revenue14. The company fulfil the requirements of first test that is low
13 Financial Review, Woolworths dives into technology (2013) <
https://www.afr.com/opinion/columns/woolworths-dives-into-technology-20130828-j0gdx>.
14 Woolworths Group, Our Customers and Community (2018) <
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-

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prices. From the above analysis, it has been seen that the company follow the low cost
strategy which attracts the customer towards the product and services. The demand of grocery
product is increasing which helps the company to attain the high market share due to low
price strategy15. The second test of the company is high market share16. The third test is
competitive advantage; the company enjoy the success by taking the competitive advantage
of low price. Fourth test is high quality product; the company beat the competitors which
highly beat the company in the revenue such as ACEI, Truworths and others. It shows that
the company beat the competitors by producing the variety of product but focuses on variety
of product instead of quality of product; it shows the company fails in fourth test.
Woolworths Capabilities
Woolworths has the capability of effective distribution network. The company is growing due
to its effective distribution channel. It is observed that the company distribute the product at
the higher level. The company has a capability to satisfy the customer demand by supplying
the product at higher level.
Suitable information system
Retail management information system-
responsibility/environment>.
15 Mact team, ‘The Core Competence of the Corporation’ (CRC Press,2017)
16 Charles Hill, Gareth Jones ‘Strategic Management Theory: An Integrated Approach’
(Cengage Learning, 2009)

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The company has to use the retail management information system; it helps the company to
control the basic retail function such as storage, dispatch and material procurement. It allows
the manager to monitor sales of product mix and daily sale volume17.
Executive system-
The company can use this system to store the data; it helps the company in decision making
activities18.
Management Information system-
The company can use the system to control the activities related to inventory, it offers the
many benefits to the company related to internal communication19.
Evaluation
From the above analysis, it is observed that Woolworths sells variety of products for which
the company has to enhance the distribution channel of the company. Retail management
information system helps the company in reducing the wastage of materials. Management
information system helps the company managers to always know about the quantity of
inventory in the company. Executive system helps the managers in decision making.
It is observed that the company can easily use these systems but it reduces the efficiency of
the employees and increases the conflict between the employees. Thus, the company has to
17 Ho Eng Wah, ‘Your Smart Retail Market Strategy Book’ (Partridge Publishing Singapore,
2017)
18 MSG study guide, Information System in Retail Sector (2018) <
https://www.managementstudyguide.com/information-system-in-retail-sector.htm>.
19 Kokemuller Neil, What Are the Uses of MIS in Retail Business? (2018) <
https://smallbusiness.chron.com/uses-mis-retail-business-50114.html >.

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train the existing employees who manage and control the inventory and record the
transactions. Training develops the personality of the company and appreciates the
employees.
Conclusion
From the above analysis, it has been concluded that Woolworths is a supermarket. The
company has high threat of competitors due to high brand image. The competitors offer the
low prices to attract the customer which increase the bargaining power of the buyer. With the
rising the population rate, demand of the consumers is increases which attracts the suppliers,
increasing supplier decrease the negotiation power of suppliers. Nowadays, the demand of the
consumers for online shopping is increasing; the company has an opportunity to expand the
business in the online market. Employee of the company helps the company to enjoy the
success; it is a tangible asset of the company. Woolworths fulfil the core competency test
requirement except the fourth test. The company can use the system to control the inventory
transaction. This system helps the company to improve the efficiency but it is better to train
the existing employees instead of using system.
Bibliography
Articles/Books/ Reports

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Mact team, ‘The Core Competence of the Corporation’ (CRC Press, 2017)
Perera Rashain, ‘The PESTLE Analysis’ (Nerdynaut, 2017)
Armstrong Gary, Adam Stewart, Denize Sara, Kotler Philip, ‘Principles of Marketing’
(Pearson Australia, 2014)
Wah Eng Ho, ‘Your Smart Retail Market Strategy Book’ (Partridge Publishing Singapore,
2017)
Anna Lena Bischoff, ‘Porters Five Forces. Innovation through Business, Engineering and
Design: How does rivalry in a market as well as customer expectations influence the process
of a design concept from a business perspective?’ (GRIN Verlag, 2016)
Gaurav Gupta, ‘Strategy Process’. The internal and external business environment of News
Corporation’ (GRIN Verlag, 2015)
Hill Charles, Jones Gareth ‘Strategic Management Theory: An Integrated Approach’
(Cengage Learning, 2009)
Böhm Anja, ‘The SWOT Analysis’ (GRIN Verlag, 2009)
Others
Owler, Woolworths (2018) <https://www.owler.com/company/woolworths-limited>.
Swot & Pestle, Woolworths Limited SWOT & PESTLE Analysis (2018) <
https://www.swotandpestle.com/woolworths-limited/>.
MSG study guide, Information System in Retail Sector (2018) <
https://www.managementstudyguide.com/information-system-in-retail-sector.htm>.

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Kokemuller Neil, What Are the Uses of MIS in Retail Business? (2018) <
https://smallbusiness.chron.com/uses-mis-retail-business-50114.html >.
Woolworths Group, About us (2018) < https://www.woolworthsgroup.com.au/page/about-
us>.
Woolworths Group, Our People (2018) <
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-
responsibility/our-people/ >.
Woolworths Group, Our Customers and Community (2018) <
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-
responsibility/environment>.
Woolworths Group, Strategy and objectives (2018) <
https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives>.
Woolworths Group, 2018 SUSTAINABILITY REPORT (2018) <
https://www.woolworthsgroup.com.au/icms_docs/195398_2018-sustainability-report.pdf>.
Financial Review, Woolworths dives into technology (2013) <
https://www.afr.com/opinion/columns/woolworths-dives-into-technology-20130828-j0gdx>.