Strategic Management: Analysis of Woolworths in Australian Retail Industry

This report provides an analysis of the strategic management of Woolworths in the Australian retail industry. It includes a general environmental analysis, industry environment analysis, competitive environment analysis, resources and core competency analysis, and opportunities and threats analysis. The report identifies the major capabilities and core competencies of Woolworths, and provides recommendations for the company to improve its position in the market.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has helped in study of the general environment which provided a huge focus on
the different environmental factors. Furthermore, the different competitor along with VRIO
analysis have been performed which assisted in managing the different kinds of issues in an
effective manner. the opportunities and threats have been identified which focused mainly on
the different opportunities that can be taken and used by Woolworths as their strengths. The
internal environment of Woolworths has been analyzed in the report with the help of the
resources and core competencies which have been gained in the retail industry of Australia.
The proper process of implementation of information system in Woolworths has also been
analyzed in the report.

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Table of Contents
Part 1..........................................................................................................................................3
Introduction............................................................................................................................3
Background of Business.........................................................................................................3
Background of the Industry....................................................................................................3
General Environmental Analysis...........................................................................................4
Industry Environment Analysis..............................................................................................6
Competitive Environment......................................................................................................7
Opportunities and Threats......................................................................................................9
Part 2........................................................................................................................................10
Resources of Woolworths....................................................................................................10
Identification of the capabilities of Woolworths..................................................................10
Core competency analysis of Woolworths...........................................................................10
Proposed information system required by Woolworths.......................................................12
Recommendations base on proposed information...............................................................12
Conclusion................................................................................................................................12
References................................................................................................................................14

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Part 1
Introduction
The report helps in the analysis of the different strategic environmental analysis of
Woolworths Company which is situated in Australia. Furthermore, the macro and micro
environmental analysis is required to be done which will help in understanding opportunities
along with threats along with the rivalry from the different competitors in the entire market as
well.
Background of Business
Woolworths is one of the largest Australian grocery stores which is situated in New
South Wales, Australia (Woolworths.com.au, 2018). The company was founded in the year
1924 and the company has more than 995 locations in Australia. The company also
specialises in various departments such as health and beauty care products along with selling
DVDs to the customers as well. The revenue which has been earned by the firm is A$42.132
billion and the number of employees working in the company is more than 111000 till the
year 2017.
Background of the Industry
The sector in which Woolworths belongs to is the retailing industry in which there are
different other competitors such as Target, Big W and Kmart companies in the competitive
market of Australia. There are different retail markets in the entire Australian industry in
which this has been seen that Woolworths, Target, Coles and Kmart are the different
competitors in the market in which all of them are performing effectively and Woolworths
was the first retail store in the market of Australia.

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General Environmental Analysis
Political environmental factor is the first aspect in which this has been seen that there
is enormous political pressure against the duopolistic nature of the retail market in Australia.
Furthermore, this has been seen that there are various trade regulations along with tariffs
related to the retail services are rigid and this can affect the business of the firm in an
ineffective manner (Albrecht, et al. 2015).
Economic environmental factor is the other aspect in which this has been analyzed
that there are easing kind of regulations in paving way of retailing for the new entrants in the
entire market. Furthermore, this has been noticed that there is lackluster spending of the
customers in Australia is impacting the different retailers in the organization as well. Cost of
the labor is the major aspect which is required to be analyzed as this has affected the revenues
of Woolworths. Moreover, the company has been criticized for paying less wages to the
employees or workers who are working in the organization.
Physical factor is considered to be analyzed in which this has been seen that there are
more than 995 locations of Woolworths across entire Australia. Woolworths store has their
branches in New Zealand and Australia and this helps them in becoming more effective in
nature in becoming more effective in their approaches and gain more competitive advantage
in the future (Andrevski et al. 2014).
Socio-Cultural factor is the aspect in which this has been analyzed that Woolworths
has poor relationship with their suppliers and this is affecting the overall growth of the firm in
a negative manner. Due to the poor relationships, this brings ineffective changes in the
culture of business and this leads to ineffectiveness in the tasks which are being performed by
the company (Mittal and Dhar 2015).

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Global factor is the other aspect in which the company needs to provide huge focus
on the different kinds of environmental factors as taken care by the different competitors in
the market. The Woolworths company is required to be provide attention of environmental
factors such as no carbon emissions as this will help in improving overall growth of the
company (Hill, Jones and Schilling 2014).
Technological factor is the aspect in which technological advancements will improve
the overall efficiency of the organization in a positive manner. Furthermore, this has been
seen that implementation of the SAP based merchandising system helps in improving the
overall efficiency of the firm in contrast to the other opponents in the market (Scarborough
2016).
Legal factor is the aspect wherein there are legal compliances which are being
affecting the Woolworths company. Furthermore, this has been seen that there is legal battle
with Australian Competition and Consumer Commission and this affects the overall growth
of the firm as well (Ethiraj, Gambardella and Helfat 2018).
Demographic factors are the aspect which includes the different kinds of households
between the age group of 22-45 years of the women customers in the market. The target
customers are inclusive of middle and higher income group individuals and this helps the
company in providing them with variety products at a reasonable rate as well (Hitt and Duane
Ireland 2017).
From the general environmental analysis, this has been identified that there are
different kinds of issues relating to legal and political factors which affects the overall image
of the Woolworths company. Furthermore, this has been noticed that there are different kinds
of demographic and global factors which are required to be improved which will help in
improving the overall efficiency of the firm in an appropriate manner.

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Industry Environment Analysis
Threat of Substitutes is high for Woolworths as the company faces indirect
competition from other companies which includes convenience stores along with other
grocery stores. There has been huge increasing trend on the healthy alternatives in which
different convenience stores are selling various organic products and this is potential future
threat for the company.
Rivalry amongst the existing competitors is the second aspect in which there is high
degree of rivalry which is existing and there is lack of differentiation as well. The
competition primarily based on price and there are other competitors such as Coles wherein
they offer value added costs to the customers in the market which is helpful in managing the
ineffectiveness (Meyer, Neck and Meeks 2017).
Bargaining Power of the Suppliers is the third aspect in which the power is low and
both Coles and Woolworths is controlling more than 85%of the market share in the entire
market. Moreover, this has been noticed that there are local Australian producers in the
market which makes limited selection of the intermediaries, in such case Coles and
Woolworths are the major purchaser and therefore, the other companies face huge issues in
terms of gaining suppliers in the entire market.
Bargaining Power of the Buyers is the other element in which the power is low and
the buying power of the different consumers will increase in future. There are different
customers in the market in which this has been seen that the customers prefer to buy the
similar kinds of products at lower prices and this can affect the bargaining power of
Woolworths as well.

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Threat of New Entrants is low for Woolworths in which this has been observed that
the different competitors in the Australian market do not have the power to compete with
Woolworths and this has influenced the overall development of the firm in a positive manner
as well. Woolworths and Coles are the two major competitors in the market and the other
firms do not have any importance in competing with Woolworths in the market as well
(Molina-Azorín et al. 2015).
From the Porter’s Five Forces Analysis, this can be analyzed and ascertained that
there are different forces which are needed to be taken into consideration as this will provide
the company with different ideas as to become more competitive in nature in contrast to the
other competitors in the market in an efficient manner (Saeidi et al. 2015). Lastly, this can be
ascertained that the major competitor of Woolworths is Coles and the other competitors lack
such supplier’s presence in the market and this does not affect the brand image of the
company.
Competitive Environment
The competitive environment that has been developed by Woolworths is high in
nature and this will require for Woolworths to take into consideration the different kinds of
factors which will help them in becoming effective in the different operations
(Ausfoodnews.com.au, 2018). The main competitive approach of Woolworths is customer
centric approach which helps in providing products and services as per needs of the
customers effectively (Hill 2017). The other strong and prominent competency of
Woolworths is strong kinds of financial assets along with goodwill of the firm in the market.

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Resources Valuable Rare Imitable Organisation Advantage
Integration of
Information
Technology
Yes No Yes Yes Permanent
Supply chain
management of
Woolworths
Yes No No Yes Temporary
Analysis of
Workforce of
Woolworths
Yes Yes No Yes Temporary
Unique kind of
format of the
store
Yes Yes Yes Yes Permanent
Efficiency
related to Cost
Yes Yes No Yes Permanent
Figure 1 – VRIO factor analysis
Source – Created by author
From the VRIO analysis, this can be analysed and identified that the website of the
company Woolworths is the strategic capability of the firm and this helps the company in
providing sheer convenience along with comfort to the different customers in the entire

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market (Robson 2015). The supply chain management system of Woolworths has been
designed effectively which connects the company with the different suppliers as to gain more
competitive advantage in the market in an efficient manner. Furthermore, the information
technology aspect has been taken into consideration which helps in managing and improving
the overall quality of the firm.
Opportunities and Threats
There are various opportunities and threats of Woolworths which are required to be
taken into consideration which are being as follows:
Opportunities – This helps in promoting the brand with the help of promotions,
advertisements along with sponsorships which will improve the efficiency of the firm.
Furthermore, Woolworths can seek growth through different strategic kind of acquisitions
along with adoption of franchise models in the emerging economies (Rothaermel 2015).
Threats- There is huge competition from the international players along with costs of
the raw materials has been increased which can impact the profit margin of the company in a
negative manner as well. lastly, the economic kind of recession can hinder the overall growth
of the firm and this can lead to less opening of store sin the market as well.
From the different opportunities and threat analysis, this can be identified that there
are various kinds of issues which are required to be analysed by Woolworths efficiently in
order to improve their threats and turn them into their strengths and gain competitive
advantage in the entire market which is competitive in nature as well. Lastly, the
opportunities are required to be considered as this will help the company in becoming
successful and gain more knowledge as to become more competitive in the entire business
environment as well.

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Part 2
Resources of Woolworths
Human resources – The huge employee base of Woolworths has been able to
provide support to the proper operations of company and the services which are provided
effectively to the customers.
Financial resources – The financial resources are mainly built on the huge revenues
that have been gained by the firm in the Australian retail sector is based on its products and
services (Tantalo and Priem 2016).
Physical resources – The physical resources of the company are mainly based on the
stores of Woolworths which have been effectively developed all over Australia and New
Zealand. The stores are thereby able to provide effective products and services to the
customers who are a part of the Australian retail industry.
Identification of the capabilities of Woolworths
The major capabilities which have been gained by Woolworths in the Australian retail
industry are built on the methods by which fresh products are offered to the customers. The
firm is thereby able to provide products to the customers with the help of proper coordination
with the local farmers or the growers. The products which are developed by the company are
fresh in nature and the levels of customer satisfaction can also be achieved in an effective
way. The major capabilities of the company are thereby based on the ways by which
customer first based strategy of Woolworths is implemented in an effective way (Berry
2014).
Core competency analysis of Woolworths
Core competencies of Woolworths –

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 The major competency of Woolworths which is able to improve its position in
the retail industry is based on the methods by which the firm is able to provide
fresh products to the consumers.
Valuable – High
Rarity – Moderate
Imitability – Moderate
Organization – Yes
 The process by which the firm is able to improve itself into a lean retailer with
the help of end-to-end based systems and processes (Shujahat et al. 2017).
Valuable – Moderate
Rarity – Moderate
Imitability – Moderate
Organization – Yes
 The generation of sustainable income the with the help of Food based products
that are offered by Woolworths.
Valuable – Moderate
Rarity – Low
Imitability – High
Organization – Yes
 The development of the Drinks based business in such a manner which are
help value which is provided to the consumers (Rugman and Verbeke 2017).
Valuable – Moderate
Rarity – Moderate
Imitability – High
Organization – Yes

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Proposed information system required by Woolworths
The information system which can be proposed to Woolworths is based on the
implementation of proper MIS or management information based system. The decision
making based process which is used in the analysis is based on the proper analysis of
information based on profits, sales and the choice of the customers. The management
information system will thereby be developed in a such a manner which will help in the
proper analysis and gathering of data. The levels of confidentiality of data will be maintained
with the help of proper security based systems. The software which will be implemented in
the company for management information system is Oracle.
Recommendations base on proposed information
The implementation of proper management information system will be helpful for the
company to manage the data of customers in an effective manner. The systems need to be
managed in such a manner which will help Woolworths in order to use the data of the
customers which are available to the company. The management of the performance of the
employees will also be made possible with the help of the implementation of MIS. The
structure of the company is an important part of the proper implementation of the information
system which can be managed in an effective manner. The store managers play a key part in
the proper processes of information systems that can be implemented by Woolworths.
Conclusion
The report can thereby be concluded by stating that the external and internal
environment based analysis of Woolworths plays a main role in the methods by which the
company is able to develop its resources. The implementation of proper information system is
an important part of the proper analysis of the environment of the organization. The resources

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of the company are able to play a key part in proper operations of the information system
which can be implemented in the Australian retail organization. The implementation of
information system will play a crucial part in the management of human resources of the firm

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