Strategic Management in Woolworths Australia: A Stakeholder, Dynamic Capabilities and Sustainable Approach Analysis

This report evaluates the strategic management in Woolworths Australia on the basis of stakeholder approach, dynamic capabilities and sustainable approach and tries to find out the effectiveness and limitations that the company procure in order to establish a healthy business.

Running Head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student:
Name of University:
Author Note:

1
STRATEGIC MANAGEMENT
Executive summary
Strategic management is considered to be an important aspect for the future sustainability and
profitability of an organisation. In this regard, this report tries to evaluate the strategic
management in Woolworths Australia. The Woolworths is considered to be one of the leading
supermarket giants in Australia and possesses a huge market capitalisation in the country.
Therefore, the report analyses the strategic management of the company on the basis of
stakeholder approach, dynamic capabilities and the sustainable approach and tries to find out the
effectiveness and limitations that the company procure in order to establish a healthy business. In
a conclusion, the report argues that the despite of having some limitations in the strategic
management approaches the given recommendations will facilitate a strategic advantage to
Woolworths.

2
STRATEGIC MANAGEMENT
Table of Contents
1.0. Introduction...............................................................................................................................2
2.0. Discussion.................................................................................................................................3
2.1. Sustainable approach............................................................................................................3
2.1.1. Viability.........................................................................................................................3
2.1.2. Suggested benefits.........................................................................................................4
2.1.3. Implementation issues...................................................................................................4
2.1.4. Limitations.....................................................................................................................5
2.2 Stakeholders approach...........................................................................................................5
2.2.1. Viability.........................................................................................................................5
2.2.2. Suggested benefits.........................................................................................................6
2.2.3. Implementation issues...................................................................................................6
2.2.4. Limitations.....................................................................................................................7
2.3. Dynamic Capabilities............................................................................................................7
2.3.1. Viability.........................................................................................................................8
2.3.2. Suggested benefits.........................................................................................................8
2.3.3. Implementation issues...................................................................................................9
2.3.4. Limitations.....................................................................................................................9
3.0. Conclusion and recommendations..........................................................................................10
Reference.......................................................................................................................................12

3
STRATEGIC MANAGEMENT
1.0. Introduction
Strategic management of organizations aims at undertaking different activities like
planning, implementing, monitoring and controlling as per the different dynamic changes in the
business environment. The competitive nature of the organizational functioning is based on the
strategic planning and its implementation through an assessment of the different capabilities and
competencies of the firm. In this connection, the research will be focusing on the study of the
different strategic management approaches that are undertaken by the organization Woolworths
while operating in the competitive markets.
The different approaches that will be discussed in the research are the stakeholder
approach, dynamic capabilities and the sustainable approach of the business. The approaches
will be helping the organization in planning the necessary steps that will be helping the same in
maintaining the sustenance of the firm in the highly competitive markets. The identification of
the approaches will be helping the organization in framing the different set of policies and
implement different modifications as per the needs of the business to make progress in the
competitive markets. The identification of the different capabilities and competencies of the
organization in the planning phase assists the business’ management in undertaking different
steps to avoid different uncertainties that might hamper the sustainability of the same.
The major purpose of the research is to identify the viability, benefits, implementation
issues and limitations that are faced by the organization through the implementation of the
approach in the organizational context. It will be helping to understand the effectiveness of the
approaches in the organizational context.

4
STRATEGIC MANAGEMENT
2.0. Discussion
2.1. Sustainable approach
2.1.1. Viability
The Australian supermarket industry is highly volatile and based on the customer
requirements predominantly. Therefore, all the retail business companies like Woolworths,
Coles, Aldi and Metcash want to develop their business based on the customer preferences. In
fact, the rivalry between Coles and Woolworths in the Australian supermarket industry is not a
new phenomenon. In several times the Coles Supermarket outplayed Woolworths in the
competition and monopolised the Australian retail market. However, every time Woolworths
succeeded to overcome their failure and brought new strategies to the Company policy and
operation.
In case of the sustainable approach price of the products considered to be an important
aspect. In case of the Australian retail market low pricing strategy has been beneficial for Coles
to dominate the market since 1980s. To keep retain its business in the high competitiveness,
Woolworths keeps an eye on the product quality along with the log pricing strategy (Arup,
Beaton-Wells and Paul-Taylor 2017). The tagline of the Company was ‘fresh food people’. This
strategy was quite effective for Woolworths in the long run. Besides this, Woolworths also kept
focus on its unique marketing policies. For an instance, they appoint celebrity chef Jamie Oliver
as the brand ambassador for their promotional campaigns (Knox 2015). Those are highly
beneficial for the company to retain its market image and compete strongly.

5
STRATEGIC MANAGEMENT
2.1.2. Suggested benefits
As a result of the measures taken by Woolworths, the company became able to attract
more customers to buy their products. Moreover, the sustainable approach also incorporates the
attitude of the business organisation towards Corporate Social Responsibility (CSR) and Green
Business environment. As far as the CSR is concerned, Woolworths are known for their
benevolent approach towards the local communities. For an instance, the organisation organised
Drought Action Program for the affected farmers and raised a fund of $7 million in which the
company donated the initial $1.5million in 2018 (Woolworths.com.au 2018). This helped the
company to create a good image and at the same time build a strong supply relationship with the
farmers.
2.1.3. Implementation issues
According to Hockerts (2015) there are a number of issues regarding the implementation
of sustainable approach for an organisation. In that case, most of the issues related to the
environment sustainability and CSR. The major problem regarding this is the huge expenses. In
his research, Klettner, Clarke and Boersma (2014) proved that the sustainability measures are
massively expensive and it causes some trouble for the organisations to maintain its
sustainability practice. For an example, in case of the Woolworths, the company is compelled to
stepped down from the cheap pricing policy due to its high expenditure in maintain
environmental sustainability and donations to the local communities (Mortimer, G. and Grimmer
2018).
Moreover, Zhou (2018) argued that the sustainability measures also put a great impact on
the existing organisational framework and practices. There can be both positive and negative
impacts but the negative impacts are so intense that it can halt the natural growth of the

6
STRATEGIC MANAGEMENT
company. In case of Woolworths, the company has succeeded to build a retail empire in the
Australian retail market but the recent sustainability issue in terms of banning the plastic bags is
seemed to be posed a detrimental impact on the operations of Woolworths. In fact, the company
was supposed to use the 15c thick reusable plastic bags that are under the close observation of
the environmental agencies and alleged to damage the environment more rapidly.
2.1.4. Limitations
As per the study conducted by Pulker et al. (2018) it can be argued that most of the
corporate organisations seeks to opt for the short term benefits and profits. Therefore, it leads to
environmental degradation, employee exploitation and other cognate issues (Richards and Devin
2016). In fact, the low pricing policy of Woolworths also paved the way for sustainability
challenges for the company in long run. Rather than taking more responsibility in order to shape
an unique image Woolworths always tried to compete with its rivals directly. Therefore, the
creative strategy and its effectiveness are missing in case of the sustainable approach of
Woolworths.
2.2 Stakeholders approach
2.2.1. Viability
In the retail sector stakeholders are considered to be placed in an important place that will
help the companies to make a firm future establishment. In case of Woolworths, the organisation
identified its major stakeholders in the form of the customers, the suppliers and government
agencies. In case of the suppliers, the supermarket giant always tries to make a good relationship
and effective supply chain management so that the supply will be uninterrupted (Grimmer 2018).
Tight contract with the farmers is one of the major features that are followed by Woolworths.

7
STRATEGIC MANAGEMENT
The Company is very specific about the size and quality of its products. Therefore, the farmers
have to manufacture or cultivate products accordingly. Moreover, in case of the delivery of the
products Woolworths maintains a time-specific delivery contract with the trucking companies. It
is pertinent for the stores to get the delivery on time and maintain a professional attitude. On the
other hand, Woolworths also follows the government regulations on the question of quality of
the products and the workplace environment. By employing more workers in their new stores
Woolworths helped a lot to the Australian government in dealing with unemployment issues for
several years.
2.2.2. Suggested benefits
As a result of that the Stakeholders management will provide additional advantage to
Woolworths to retain its growth in the intensely competitive Australian retail sector. In fact,
putting emphasis on the stakeholders facilitates the company to conduct effective marketing
analysis that will lead to expanding the business profoundly. For an instance, Woolworths
always change its marketing strategies on the basis of current customer demands. Recently, the
company shifts its gaze from the price preferences to the shopping convenient set up. The result
was also emphatic and interesting. As per the report, it can be seen that 30% of Woolworths
customers are stopped buying products from Coles because now they can easily get it from the
convenient Woolworths stores nearby.
2.2.3. Implementation issues
However, there are some issues that Woolworths have faced while incorporating the
stakeholders in the process of their operation and marketing strategies. According to Willis
(2015) involving stakeholders in the process of business fosters strategic advantage to the
organisations but over representation of the stakeholders’ leads to affect the natural development

8
STRATEGIC MANAGEMENT
of the company. In fact, Gross (2015) argued that it is the role of the business organisations to
make the customers get used to with their products and convince them to buy the products rather
than dominated by the consumers and do whatever they ask for. In case of the Woolworths, the
company also follows the same line by procuring more thrust on the requirements and demands
of the customers rather than freely take some bold decision and let the customers follow it. As a
result of that the Australian retail market always felt the same volatile for Woolworths though it
implements a number of new approaches on the basis of the customers’ demands.
2.2.4. Limitations
Lack of understanding of the needs and demands of the stakeholders is considered to be a
major flaw for Woolworths in order to establish a better relationship with them. It is true that
high competitiveness in the Australian market restricts the company to go for some bold moves
or firm decisions (Grimmer 2018). Nevertheless, Woolworths always treats the demand of the
customers as the most valid point. Therefore, the interests of the farmers and other stakeholders
remain silent and create grievance against Woolworths. In addition to this, the company should
take into considerations the problem for the farmer to stick with the enlisted size of the products.
2.3. Dynamic Capabilities
Dynamic capabilities refer to the organizational strategies, which assists in the different
functions that are undertaken by the management teams of the business. It covers all the different
aspects relating to resource allocation and assessment of the competencies and capabilities of the
ventures (Wilden and Gudergan 2015). This section refers to the different viability, benefits,
implementation issues and limitations that might be faced by the organization- Woolworths,
while undertaking the dynamic capabilities approach.

9
STRATEGIC MANAGEMENT
2.3.1. Viability
The viability of the approach is based on the identification of the radical discontinuous
change in the business markets helps the management in implementing different favorable
strategies for supporting the goal of organizational sustenance. The inter- trust factors and
coordination among the employees and the management of the business helps in enumerating
different strategies to support the dynamic capabilities of the organization to stand unique in the
market. As per the case of the concerned organization, Woolworths, coordination of the
employees with the management and the other departments of the business has helped in
enhancing the productivity of the venture. On the other hand, the different strategies that are
formulated by the managing boards of Woolworths also accounts for the active participation of
the employees in the decision making process which results to the change readiness among the
employees (Teece, Peteraf and Leih 2016). The viability of the approach is based on the long
term objectives of the organization to achieve competitive advantage in the globalized markets.
The key objects of the organizational functioning are based on the strategic planning based on
the analysis of the competencies that are faced by Woolworths while operating in the globalized
markets.
2.3.2. Suggested benefits
The benefit that might be gained by Woolworths through the application of the approach
in the globalized market scenario is due to the growth in the competitive edge of the business
through suitable resource allocation and different dynamic strategies. The strategies will be
helping Woolworths in balancing the functions as per the needs of the same to change in the
international markets. Wilden and Gudergan (2015) stated that the competitive advantage of the
organization is dependent on strategic planning and resource allocation attributes, which affects

10
STRATEGIC MANAGEMENT
the suitable operations of the business. Woldesenbet, Ram and Jones (2012) also added that
the concept of dynamic capability in the organization context is based on the identification of the
competencies and thereby utilized in order to create short term competitive edge of the business.
The dynamic capabilities of Woolworths will be helping the organization in identifying the
competencies more clearly and thereby assist the same in working on them to build on their long
term objectives.
2.3.3. Implementation issues
The different implementation issues that might be faced by Woolworths are due to the
assumptions that are made by the organization while operating as per the objectives of the
business to sustain in the international markets. Denford (2013) stated that the assumptions play
an important role in identifying the different competencies that might be faced by the business
while operating in the different markets. Teece, Peteraf and Leih (2016) added that the
identification of different competencies helps the organizations in identifying the probable ways
through which the issues might be resolved in order to support the organizational goal of
sustenance. Therefore, identification of different issues that might be faced by the organization
while implementing the dynamic capabilities are through lack of proper assumptions on the
competencies on which the organization will be framing its strategic systems.
2.3.4. Limitations
The limitations that might be faced by the organization, Woolworths, while implementing
the dynamic capabilities approach is due to the lack of suitable models and frameworks that
might define the links between resources and capabilities of the business. It will be affecting the

11
STRATEGIC MANAGEMENT
organizational decision making on the design of the strategies that might help the management in
adding competitive advantage to the trail of the business. Teece (2016) stated that the lack of
theoretical model affects the design and processes that might be considered by the business.
Wilden et al. (2013) stated that the concept of dynamic capability in the organization context is
based on the identification of the competencies and thereby utilized in order to create short term
competitive edge of the business. However, Alegre (2017) argued that building on the short
term objectives might often affect the organizational objectives of sustainability through short
term financial gains. It affects the growth of the business. Nevertheless, Priem, Li and Carr
(2012) noted that the application of dynamic capabilities approach in the business functioning
will be helping the organization in overcoming the different issues through strategic
implementation of resources which supports the long term objectives of organizational
sustainability.
3.0. Conclusion and recommendations
Therefore, from the above discussion it can be concluded that the report rightly pointed
out different approaches for a corporate organisation in order to establish its business profoundly
and effectively. Moreover, the stakeholders approach, sustainable approach and the dynamic
capabilities are detailed topics on which the organisation should have clear idea. It is also
pertinent for Woolworths to have in-depth conceptualisation on those factors. However, it can be
asserted that there are always be problem in several aspects that can perturb the healthy growth
of the company but it is the responsibility of the organisation to take adequate measures and
effective strategies to mitigate the challenges.

12
STRATEGIC MANAGEMENT
Based on this understanding, there are some recommendations that Woolworths must
follow for its business growth. The recommendations are as follows,
i. Woolworths must focus more on environmental sustainability by putting emphasis on the
energy saving techniques.
ii. It will be better for Woolworths to shape the online delivery practice more efficient and
effective.
iii. Engaging the stakeholders more extensively will lead to strategic advantage for
Woolworths in the high competitive retail market in Australia.
iv. The supply chain management needs to be more extensive and widened.
v. The high competitiveness is a major threat to Woolworths but the company should turn it
into an advantage to introduce effective strategy with requirements. It will facilitate more
flexibility to the organisational activities.

13
STRATEGIC MANAGEMENT
Reference
Alegre, J., 2017. Dynamic capabilities within organizations. Revista de Administração de
Empresas, 57(3), p.291.
Arup, C., Beaton-Wells, C. and Paul-Taylor, J., 2017. Regulating supermarkets: The competition
for space. UNSWLJ, 40, p.1035.
Denford, J.S., 2013. Building knowledge: developing a knowledge-based dynamic capabilities
typology. Journal of Knowledge Management, 17(2), pp.175-194.
Grimmer, L., 2018. The diminished stakeholder: Examining the relationship between suppliers
and supermarkets in the Australian grocery industry. Journal of Consumer Behaviour, 17(1),
pp.e13-e20.
Gross, R., 2015. Measuring organizational performance: A new approach to triple bottom line
reporting and stakeholder engagement. British Journal of Business and Management
Research, 2(1), pp.69-80.
Hockerts, K., 2015. A cognitive perspective on the business case for corporate
sustainability. Business Strategy and the Environment, 24(2), pp.102-122.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), pp.145-165.
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths' dominance (Vol.
6). Black Inc..

14
STRATEGIC MANAGEMENT
Mortimer, G. and Grimmer, L. (2018). Why Coles, Woolworths are moving away from the
'supermarket price wars'. [online] ABC News. Available at: http://www.abc.net.au/news/2018-
03-07/why-supermarkets-are-moving-away-from-price/9524110 [Accessed 21 Sep. 2018].
Priem, R.L., Li, S. and Carr, J.C., 2012. Insights and new directions from demand-side
approaches to technology innovation, entrepreneurship, and strategic management
research. Journal of management, 38(1), pp.346-374.
Pulker, C.E., Trapp, G.S.A., Scott, J.A. and Pollard, C.M., 2018. What are the position and
power of supermarkets in the Australian food system, and the implications for public health? A
systematic scoping review. Obesity Reviews, 19(2), pp.198-218.
Richards, C. and Devin, B., 2016. Powerful supermarkets push the cost of food waste onto
suppliers, charities. The Conversation, (29).
Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management Review, 58(4),
pp.13-35.
Teece, D.J., 2016. Dynamic capabilities and entrepreneurial management in large organizations:
Toward a theory of the (entrepreneurial) firm. European Economic Review, 86, pp.202-216.
Wilden, R. and Gudergan, S.P., 2015. The impact of dynamic capabilities on operational
marketing and technological capabilities: investigating the role of environmental
turbulence. Journal of the Academy of Marketing Science, 43(2), pp.181-199.
Wilden, R., Gudergan, S.P., Nielsen, B.B. and Lings, I., 2013. Dynamic capabilities and
performance: strategy, structure and environment. Long Range Planning, 46(1-2), pp.72-96.

15
STRATEGIC MANAGEMENT
Willis, P., 2015. Public relations, passive aggression and critical social auditing: reflections on
organisational inaction in stakeholder engagement. Journal of Public Affairs, 15(2), pp.220-226.
Woldesenbet, K., Ram, M. and Jones, T., 2012. Supplying large firms: The role of
entrepreneurial and dynamic capabilities in small businesses. International Small Business
Journal, 30(5), pp.493-512.
Woolworths.com.au (2018). Drought Action Update. [online] Woolworths.com.au. Available at:
https://www.woolworths.com.au/shop/discover/community [Accessed 21 Sep. 2018].
Zhou, N. (2018). Coles and Woolworths’ plastic bag ban and the choices that remain. [online]
the Guardian. Available at: https://www.theguardian.com/environment/2018/jun/06/coles-and-
woolworths-plastic-bag-ban-and-the-choices-that-remain [Accessed 21 Sep. 2018].