Strategic Analysis of Woolworths: Internal and External Evaluation

This report presents the strategic evaluation of the Woolworths, an Australian supermarket and grocery store chain. The report is divided into two parts: internal analysis and external analysis. The external analysis defines the business background, industry, general environment, industry environment, competitive environment, and opportunities and threats. The internal analysis defines the resources held by the organization, capabilities, core competencies, and the right information system. The report also includes recommendations related to the structure of the organization.

Strategic Analysis
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Strategic Analysis

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Executive summary
This report present the strategic evaluation of the Woolworths, and for doing the effective
strategic evaluation, report is divided into two parts that are internal analysis and external
analysis. Internal analysis of the company defines the resources held by the organization,
capabilities, core competencies, right information system. On the other side, external analysis of
the report defines the business background, industry in which organization operates, general
environment in which company operates, Industry environment, Competitive environment, and
Opportunities and threats. This report also states the recommendations related to the structure of
the organization.

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Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
External analysis..........................................................................................................................................4
Background of business...........................................................................................................................4
Industry of organization..........................................................................................................................4
General Environment Analysis.................................................................................................................5
Industry environment..............................................................................................................................5
Competitive environment........................................................................................................................6
Opportunities and threats.......................................................................................................................6
Internal analysis & proposal........................................................................................................................7
Resources of Woolworths........................................................................................................................7
Capabilities identification........................................................................................................................7
Core competency analysis.......................................................................................................................8
Information system solution....................................................................................................................8
Recommendation....................................................................................................................................9
Conclusion...................................................................................................................................................9
References...................................................................................................................................................9

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Introduction
Strategy is defined as the plan of actions conducted by the management of the organization for
achieving the overall aim and alternative aims of the organization. Strategies mainly evaluate the
company’s success. In other words, organizations are evaluating it in terms of future
perspectives. In this context, strategic analysis is defined as the process through which
management conduct research in terms of the organization and its operating environment. It must
be noted that the definition of the strategic analysis can be different from the business
perspective but the process of strategic analysis include number of common factors such as
management needs to identify and evaluate the data related to the strategy of the company,
management needs to define the internal and external environment of the organization, and
management can use the analytic methods such as Porter’s five forces analysis, SWOT analysis,
and value chain analysis for conducting strategic analysis (Maunder & Vissar, 2013].
Structure of this assignment includes two arts that are Part 1 and Part 2. Part 1 conduct the
external analysis of the chosen organization and Part 2 conducts the internal analysis. Lastly,
brief conclusion is stated for concluding this Paper. For the purpose of this report we choose
Woolworths Limited as the local company of the Australia.
External analysis
Background of business
Woolworth supermarket is the supermarket and grocery store of the Woolworths, as it is the store
chain which is owned by the Woolworths Limited. This company was founded in 1924,
Woolworths holds of the 80% shares of the Australian market. Following are the 5 achievements
of the Woolworths-
 Woolworths build the customer and store-led culture.
 Generate maintainable sales momentum in terms of food.
 Woolworths evolve their drink business for providing more value and also convince the
customers.
 Empower the portfolio of their business for pursue strategies in context of delivering the
shareholder value.
 Focus on become the lean retailer with the help of end-to-end process and systems
excellence (Woolworths, n.d.].
Industry of organization
Woolworth operates its business in the retailing industry. Retail industry of Australia contributes
maximum success in the economy of the nation (Woolworths, n.d.].

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General Environment Analysis
This section of the report defines the general environment of the Australia in which Woolworths
operates its business. In other words this section conducts the ESTEL analysis-
Political factors- Political factors lay important role in terms of determining those factors which
determines the profitability of the Woolworth’s in Australia. Woolworths stands in the
beneficial position because of the Australia-New Zealand Closer Economic Relations Trade
Agreement (ANZCERTA). This agreement adjoins the two countries and Woolworth’s worked
as the single community for the purpose of fulfilling the needs of their customers.
Economic factors- Economic factors of Australia also provide benefit to the Woolworths, as both
the countries Australia and NZ ensures economic stability. In comparison of the other countries
both New Zealanders and Australians maintain a high living standard (Global data, 2012).
Socio-cultural factors- Woolworths are the organization which ensures best for the society, as it
becomes the trend settler in terms of greener and healthier lifestyle. There are number of
techniques which support green environment, and Woolworth’s is the company which adopts
these techniques.
Technological factors- Woolworths is committed in context of innovation and develop better
technologies in continuous manner, as these technologies enhance the service efficiencies of the
organization and also meet the quality expectations of their customers.
Legal factors- It must be noted that, government trading and other policies of the organization
affect the policies and strategies of the organization in direct manner. There are number of
authorities and policies which positively influence the supermarket business of Australia such as
Australian Competition and Consumer Commission and the Trade Practicing Act.
Environmental factors- Environmental factors greatly contributes in the business strategy as
these are considered as important business factors because they greatly affect the sustainability
of the supermarket retail business. Woolworths develop environmental friendly policies (Fern
Fort University, n.d.].
Industry environment
Supplier power- the efficient and timely production of the goods in terms of Supplier is deemed
as the most important factor of the supermarket retail industry. Woolworths focus on building the
strong and healthy relationship with their suppliers, and they always in the priority list of the
organization. Organizations conduct the annual trade performance measurement meeting and
awards for encouraging their suppliers, and they also recognize the innovations conducted by
their suppliers.
Buyer power- It must be noted that customers are considered as the most behind the retail
industry of supermarket. This company implement the innovative and new technologies on
continuous basis for retaining and impressing their customers, as customer refer the convenience

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they get and the better savings. It is easy for customers to switch the supermarket stores in terms
of their references such as lower rice of any commodity and better offers (Foo, 2008].
Potential entrants- However, new entrants and competitive organization general impose less or
no threat for the market leader like Woolworths, but new entrants can impose threat in terms of
any specific product. In other words, new entrants can provide better offers related to any
specific product, but it is not possible for them to overtake the complete market of the
Woolworths in Australia.
Substitute products - There are number of new products in the market which are introduced in
the market as the substitute of groceries, but because of their strong strategic Plan, Woolworths
is able to deal with the threat imposed by the substitute products.
Rivalry among competitors – There are number of competitors of the Woolworths in the
Australia, and these competitors includes the Alde, Coles and IGA. There are number of
programs which are introduced by the Woolworths for ensuring strong customer base and long
term relations with the customers such as their “Everyday Rewards” program help the
organization in gaining the loyalty of the customers. However, competitors impose serious threat
for the Woolworth, as they are also offering good offers and programs to the customers of the
organization and also for attracting the new customers (Dufficy, 2011].
Competitive environment
Supermarket retail industry of Australia witnessed tough competition for all its layers, as there
are number of organizations which are conducting business operations in this sector. The biggest
competitor of Woolworths in this context is Wal-Mart, as it imposes big threat for the
Woolworths. Following are the capabilities of the Wal-Mart which need to be considered by the
Woolworths while making the strategies for the organization-
 This company holds immense number of experience in this sector and also implemented
modern retail trade model.
 It is the well-known brand which is referred by number of Australian customers.
 Operations of this business are efficient and effective in nature.
 This company holds the strong base of customers and always introduce new programs for
attracting new customers.
Wall-mart use the cost advantage and differentiation strategy in terms of strengthen its
capabilities and also for providing the best services to the customers (Wal-mart, 2017]
Opportunities and threats
Following are the opportunity and threats of the Woolworths in terms of the Australian retail
sector of supermarkets-

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Opportunities- Supermarket retail industry of Australia is flourished sector as it holds large
number of customer base of the Australia. This sector introduce number of opportunities for its
layers such as-
 Opportunity of promoting the brand of the organization, as Woolworths gets the
opportunity to promote its brand on the social media platform. As this is the platform
which can ensure number of customers for the organization.
 Organization can seek the opportunity of growth by adopting the acquisitions and
franchise models in this emerging economy of the Australia.
Threat- This industry also impose number of threats for the organization, and some of these are
stated below-
 High competition from national and international players of this industry is the biggest
threat for the Woolworths.
 Threat of increase in the raw material cost in both food and non-food sector, as it directly
impact the profitability of the organization (Kraft & Mantrala, 2010].
Internal analysis & proposal
Resources of Woolworths
Woolworths hold number of resources and these resources are divided into two categories that
are tangible and intangible resources. At the present stage, Woolworths operated almost 3000
stores in Australia for giving best and convenient services to their customers. Machines and
warehouses owned by the organization is considered as the tangible resources of the
organization.
For conducting operations in these stores, organization employed almost 205000 employees in
their organization for serving almost 29 million customers. All these things mean that tangible
and intangible resources of the organization are very strong. As this organization holds the
efficient management and human resources, designed logistics management, etc. All these
employees are deemed as intangible resources of the organization which provides great
advantage to the organization (Woolworths, 2017].
Capabilities identification
Capabilities of the organization are defined as the skills of the organization in terms of
coordinating its resources by putting these resources in the productive use. From number of
years, this organization conducting the operations of its business in successful manner, as it holds
number of capabilities to ensure this. Some of these capabilities are stated below-

Strategic Analysis 8
 Organization put the right person on the right place at the right time, which means
organization known very well which person is able to handle which situation at an
appropriate time period.
 Organization conducts its operations in effective manner, and adopts various strategies
for gaining the cost advantage for itself.
 Organization also ensures effective strategies for meeting its objectives, and in case any
changes required in the strategies (Woolworths, 2016].
Core competency analysis
There are number of core-competencies of the Woolworths, and all these competencies provide
competitive advantage to the organization over its competitors. As some of these competencies
are stated below-
 Supply Chain of the Woolworths is world class, which means, competitive advantage for
the organization is developed through the Supply Chain of the organization. As stated,
this company mainly ensures effective strategies for getting the cost advantages in its
operational process. Usually organization get these advantages are cutting down the
unnecessary expenses from the Supply Chain.
 Another important competency of this organization is the effective branding and
marketing. Slogan adopted by the Woolworths store is the fresh food people. This slogan
helps the organization in creating the differentiated reputation. In other words, thorough
this slogan organization ensures health and quality products for its customers at the
reasonable amount.
 Innovation is deemed as most important competency of the Woolworths, as this
organization implement number of projects for its customers such as re- fresh and new
idea program, etc. This company implement the innovative and new technologies on
continuous basis for retaining and impressing their customers, as customer refer the
convenience they get and the better savings.
 Another capability of the organization is the integration, which means, this organization
vertically integrated number of its supplies by ensuring the production of its own inputs
in terms of enhancing the power in the market and also by give reasons to the private
level trend (Woolworths, 2017].
Information system solution
Information system is defined as the tool which is created by combining the technical and human
resources of the organization for giving the storage, computing, distribution, and communication
in the organization. As this tool mainly ensures the distribution of the information in effective
manner in all those departments of the organization which required those information’s.
The best types of IS in context of the Woolworths is the management information system (MIS),
which gives the information in terms of managing the enterprise. It is the information system
which is generally used by the organizations for ensuring the effective distribution of the

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information in all the areas of the organization. This information system is deemed as
computerized database system in terms of the financial information which is organized and
programmed in such manner as it create regular reports related to the operations for each and
every level of the management (Harsh, n.d.]..
Recommendation
Management information system is the most suitable solution for the Woolworths as it provides
best solutions to the issues faced by the organization in terms of implementing the information
system in the organization. It is the only system which fulfils all the related requirements of the
organization by distributing the information in each and every department of the organization in
effective manner. Following are the important recommendations in this context-
 Organization needs to implement this system in effective manner, and before
implementing this systems organization needs to analyse all the necessary aspects and
requirements of this department.
 Management information systems must be soured by the relevant software, which means,
organization needs to outsource this functions.
 MIS must be implemented by exerts and exert advice need to be taken on continuous
basis.
 Management must ensure on continuous basis whether any changes are required (Harsh,
n.d.].
Conclusion
After considering the above facts, one thing is clear that strategic evaluation of the organization
includes both internal and external analysis of the organization. Strategic analysis is defined as
the process through which management conduct research in terms of the organization and its
operating environment. In terms of the resent structure of the organization, price strategy is
deemed as most important strategy in context of the retail industry. As amount of the product or
service is the most important and first factor which is consider by the consumer while taking the
decision of buying the product. Decision process of the supermarket industry includes number of
stages and the most important stage in terms of the consumer is the rice of the product. It is
necessary for the Woolworths to focus on this stage while offering products and services to the
consumers.
Supply Chain of the Woolworths is world class, which means, competitive advantage for the
organization is developed through the Supply Chain of the organization. As stated, this company
mainly ensures effective strategies for getting the cost advantages in its operational process.
Usually organization get these advantages are cutting down the unnecessary expenses from the
Supply Chain. It must be noted that the definition of the strategic analysis can be different from
the business perspective but the process of strategic analysis include number of common factors.

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It must be noted that, Supermarket retail industry of Australia witnessed tough competition for
all its layers, as there are number of organizations which are conducting business operations in
this sector. The biggest competitor of Woolworths in this context is Wal-Mart.
References
Dufficy, T. (2011). An Overview of Woolworths. Available at
http://www.slideshare.net/tomdufficy/an-overview-of-woolworths. Accessed on 31st August
2018.
Fern Fort University. Woolworths Limited PESTEL & Environment Analysis. Available at
http://fernfortuniversity.com/term-papers/pestel/nyse4/4816-woolworths-limited.php. Accessed
on 31st August 2018.
Foo. (2008). Woolies Boost Supply Chain Technology. Available at
http://www.theaustralian.com.au/australian-it/woolies-boosts-supply-chain-technology/story-
e6frganf-1111115892003. Accessed on 31st August 2018.
Harsh, S. MANAGEMENT INFORMATION SYSTEMS. Available at
http://departments.agri.huji.ac.il/economics/gelb-manag-4.pdf. Accessed on 31st August 2018.
Kraft & Mantrala, (2010]. Retailing in the 21st Century, Springer publications, London.
Maunder, N. & Vissar, M. (2014]. STRATEGIC EVALUATION. Available at
https://www.unocha.org/cerf/sites/default/files/CERF/WFP%20Eval%20of%20PFs%20-%20full
%20report.pdf. Accessed on 31st August 2018.
Walmart, (2017]. Annual report. Available at
https://s2.q4cdn.com/056532643/files/doc_financials/2017/Annual/WMT_2017_AR-(1).pdf.
Accessed on 31st August 2018.
Woolworths, (2017]. Annual report. Available at
https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf. Accessed on
31st August 2018.
Woolworths, 2016]. Annual report. Available at
https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf. Accessed on
31st August 2018.
Woolworths. How we do business. Available at
https://www.woolworthsgroup.com.au/page/about-us/our-approach/how-we-do-business.
Accessed on 31st August 2018.

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Woolworths. Strategy and objectives. Available at
https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives.
Accessed on 31st August 2018.