Strategic Management for Woolworths: PESTEL, Porter's Five Forces, VRIO and Competitor Analysis

This report analyzes the strategic management of Woolworths, including PESTEL analysis, Porter's Five Forces, VRIO analysis, and competitor analysis. It also discusses the company's resources and capabilities, and its corporate strategy.

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Strategic Management
Executive Summary
The below demonstrated study is executed after analyzing the various aspects of the concept of
strategic management. The report is focused on a varied range of approaches and mechanisms
that can be adopted by Woolworth’s for bringing advancements in the organizational structure
and performance of the business corporation. Various analysis has been executed for expanding
the business in new market regions such as macro environment analysis, industry analysis,
company analysis, competitors and strategy analysis. Execution of research and analyzing these
aspects will be aiding the business entity on various grounds.

Strategic Management
Table of Contents
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................3
PESTEL analysis..........................................................................................................................3
Competitor analysis.........................................................................................................................6
References........................................................................................................................................8

Strategic Management
Introduction
A continuous process of planning, scrutinizing, analyzing, and assessing all the required
operations and functions laities that are required by a business organization is defined as the
process of strategic management. It is one of the most empirical task that is required to be
executed by every business organization (Rothaermel, 2015)
Woolworths group limited is one of the biggest Australian supermarket chains. It was founded
back in1924 and fondly referred as “Woolies”. Woolworths is owned by Woolworths limited. In
past few years, it has made so many advancements in revolutionizing the storage and transport
services along with the technology of refrigeration. Woolworths headquarters is present at Bella
Vista, Australia. The primary services of the company are food and liquor. The following report
analyses the adoption of different strategies by Woolworths in order to achieve high-level growth
and face all the challenges. The analysis shows how the external environment affects the
Australian retail and supermarkets.
Macro Environment Analysis
PESTEL analysis
This is an analytical tool which helps to asses the market environment or external industry
environment that can affect the performance of the company. PESTEL stands for political,
economic, social, technological, environmental and legal. PESTEL analysis of Woolworths is as
follows:
Political- this factor highly affects the performance of Woolworths. Bigger companies like
Woolworths and Coles dominate over small-scale industries and to prevent this, the federal
government of Australia launched a policy. That policy does not allow these companies to
remove competition (Goetsch and Davis, 2014). This policy mainly concerns the duopoly nature
of supermarket retailers. which prevents the bigger companies like Woolworths limited, to
dominate over the small retailers for whom it is very difficult to perform against such huge
companies. This is a major drawback since it’s eliminating the competition.
Economical- According to an annual report in 2013, Australia's economy has faced a
declination in the conditions of the market, which has affected the Woolworth's performance
significantly. Another reason behind the low economy is fluctuations in the rate of currency
exchange, which has weakened the rate of Australian currency. Therefore, it tremendously
affected most of the retail projects of Woolworths going to different countries. The regulation
easement has made it so easy for the new entrants to pave their way in retail. Lackluster
customers have left a great impact on Australian retailers (Wheelen, Hunger, JHoffman and
Bamford, 2017).

Strategic Management
Social- Most of the Australian organizations due to poor relationships with the customers or
suppliers makes the business quite difficult. High level of community and social development is
required in order to make it work. According to a recent survey, most of the customers prefer
such kind of organization, which is socially responsible. A significant amount of societal
initiative is required in order to leave a greater impact on the customers and increase the social
level communication. Social factor also affects the Australian communities in different ways.
Technological- Technological factor is a very important factor in order to gain the higher level
of efficiency in the work. It also helps with the competitive advantage. For a retail industry,
technology is a determining factor, which decides the progress level of the company. The fact
that this factor has also affected Woolworths can be identified by several facts, for instance,
green refrigeration technology, SAP-based merchandise system etcetera. The green refrigeration
technology helps to store the product for a longer time and to increase the efficiency (Durand,
Grant and Madsen, 2017), it uses the merchandising system based on SAP.
Environmental- Environmental factor affect the working performance of the supermarket
industry in several factors. In particular, Woolworths is affected by the environmental factor
because of its wine production along with the petrol business. Lots of its productions cost goes to
carbon initiative and energy efficiency.
Legal- ACCC (Australian competition and consumer commission) makes it tough for the
Woolworths. On the other hand carbon tax is also a major challenge. NFF implemented some
strict codes which are mandatory and affect the retail industry in performing the business
operations particularly.
Industry analysis-
Industry analysis can be done with the analytic tool such as Poter five forces.
Porter five forces
this analytical tool helps to analyze the current situation of the industry and suggests different
ways in which they can affect the performance of the industry (Morden, 2016). Analysis of
Australian supermarket industry as follows:
Bargaining power of the buyers- supermarkets provide almost all the basic- necessity items,
therefore, the consumers go for the one they find more budget friendly. In Australia, the
bargaining power of consumers is very high with respect to the supermarket or retail industry.
Since there are so many different kinds of a supermarket or retail stores are available that gives
the consumer so many different options to choose from. Since there are so many options
therefor, the bargaining power of the consumers increases significantly higher (Adewuyi and
Oyejide, 2012).

Strategic Management
Bargaining power of suppliers- according to the basic research there are so many bigger
industries that own the fair share of the market that is why the Australian retail industry or
supermarket industry is very concentrated (Stead and Stead, 2014). This level of distribution
increases the bargaining power of suppliers to quite a good extent but not as much high as others.
Retailers have to go through the high number of competitions and increased costs because of the
above-mentioned reason. Some suppliers are very good at bargaining that can also affect the
retailer business and the production profit.
Threats of new entry- although there is a good chance that the new entrants can easily pave
their ways due to easements in the regulations but there is a very minimal chance that the new
entrants can affect these bigger retail companies. The threat of new entry is very less because
companies like Woolworths are large firms that can easily handle such competition. Because of a
very high level of popularity and a bigger brand name of these pre-existing companies, it
becomes quite difficult for the new players to set- up their business (Jenkins and Williamson,
2015).
Rivalry among existing firms- there are other bigger firms like Coles, Wesfarmers, aside and
Aldi which gives a very tough competition to Woolworths. Since these, all are very large firms
and have very popular brand names; therefore, the level of competition is slightly high. All these
large firms are competing with each other to get the maximum share of the market
(Anomohanran, 2012). There are several ways in which they try to gain the competitive
advantage like, cost shrinkage, better promotion campaign, better offers, discounts, better
locations for the stores'.
A threat of substitute- this type of threat is not very likely to occur on a daily basis. All the
retail products that are found in the supermarkets are highly essential for the daily consumption
by the customers. Since these products are important and there is no alternative available in any
kind or form, therefore, it becomes very important for the customer to purchase the product.
Since the customers do not have any other choice that is why they have to purchase the product
without any doubt.
Company analysis: Resources and capabilities
In order to analyze the company’s resources and therefore the capabilities and the competitive
advantage, VRIO is the best analytical method. VRIO stands for, value, rareness, imitability, and
organization. It possesses the inside situation (Wood, Nwaoha and Towler, 2012).
VRIO for Woolworths is as follows:
Value- It analyses the number of resources. It also measures the number of efforts required to
obtain the resources on the market. This feature includes lease, rent, sales, purchase etcetera.
Woolworths is a retail industry, it’s headquartered is in New South Wales. Woolworths has

Strategic Management
branches in 995 locations. There are 111,000 employees that work for Woolworths in all the
branches. This company has a revenue of around 42.132$ billion. Even in Australia there are
more than 1000 Woolworths stores.
Rareness- This feature shows the amount of rareness of the brand. Woolworths is the second
largest supermarket in Australia. One of the features that make it rare or limited is the online
platform where it provides its product. “Click & Collect” home delivery or pickup services are
also available. This feature has made shopping easier for the customers in the times of rough
transport (Peng and Vlas, 2017). Along with selling basic products of necessity, Woolworths also
sell other products like baby supplies, pet supplies, health care products, beauty products, DVD,
magazines etcetera. They even include loyalty schemes too for the customers.
Imitability- This features shows the level of imitability which means up to what amount, the
product can be imitated (Min, Min, Jang, Han and Kang, 2016). It gives other company a very
high competitive advantage. Woolworths is an amazing organization in terms of infrastructure
and has a strong presence all over Australia. Woolworths possesses strong techniques and
technology to make sure that it’s product and services are of better quality. The company has
launched several revolutionizing techniques like green refrigeration techniques to store the
products for a long time interval and efficiently. Zero food waste and cost efficiency make it
different from others (Ovadia, 2012).
Organization- It defines how we manage our company and organize it effectively to prevent the
company from incurring costs that have not been used. Woolworths has adopted a sourcing
strategy that helps them to accomplish the sustainable conditions in the performance of the
organization. Woolworths has a very strong information technology infrastructure along with a
powerful skilled set of HR department (Pinkse and Buuse, 2012). People at Woolworths are at
the heart of their work and they have adopted a few strategies to support the customers socially
and culturally.
Competitor analysis
Due to an increased population of Australia, it has started mounting up pressure for the retailers
due to the availability of real estate. Due to an increase in population density, there is a decrease
in the growth of retailers. Bigger firms like Amazon, Aldi, and Coles there has been great
competition among these brands to gain more amount of market share. Due to an increase in
competition many supermarkets are forced to lower down their prices and increase discounts in
order to gain more customers. reducing the price of groceries, price cut, increasing pressure on
suppliers are few side effects of competition faced by Woolworths. Main rivals of Woolworth
are Coles and Aldi. Despite having very few stores, Aldi’s sales are much higher than

Strategic Management
Woolworths. Aldi with it’s better to price and discounts scheme has started to attract even the
wealthier customers. although the check-in time is faster in Woolworths along with the fresh and
quality products which makes it better than Aldi. Even a small amount of declination can be seen
in the number of sales of the Woolworth in past few years. Aldi has small stores and logistics
that are more organized. Woolworth is trying to add more retail capacity to a saturated sector.
Strategy analysis
Woolworth is trying to deliver the customers with the best services possible. If we analyze the
corporate strategy of the Woolworths, it defines that its key objectives are to build a low price
retail supermarket with numerous option to choose from. Woolworths ensures that the products
are of good quality and services are better and effective. There are different type objectives that
are included in the strategies that Woolworth is focusing on (Rahim and Liwan, 2012).
Woolworth is focusing on re-establishing the marketing campaign so that it can add values for
the stakeholders and help the business to grow more. Woolworths is trying to accelerate their
leadership in the food and beverages sector. They are also trying some new features like avoiding
GM foods, delivering the best services, responsibly marketing products etcetera. In order to build
more trust among their customers, they are trying to provide the best services possible to their
customers which will also help increase trust between the company and the consumer. All these
strategies are prepared by analyzing the external environment with the help of PESTEL analysis
strategy and SWOT analysis strategy (Tordo, Warner, Manzano and Anouti, 2013). VRIO
strategy is also very helpful in analyzing all the market conditions and environment.
Conclusion
The above report shows that the Woolworths is one of the leading company in the Australian
supermarket and it is focused towards achieving better services and all the aims. External
conditions such as political, economic, legal, social etcetera affect the working of the company
and therefore the company needs to overcome all these problems in order to gain competitive
advantage and growth. Woolworths should work towards a proper strategy that considers all
these affecting factors and then lay out a better plan. By working continuously along with the
innovative and creative ways, Woolworth can enhance its current level of progress.

Strategic Management
References
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gas sector. World Bank Publications.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E. (2017) Strategic management
and business policy. pearson.

Strategic Management
Wood, D.A., Nwaoha, C. and Towler, B.F., 2012. Gas-to-liquids (GTL): A review of an industry
offering several routes for monetizing natural gas. Journal of Natural Gas Science and
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