Strategic Management of Woolworths in Australian Retail Industry

This article discusses the strategic management of Woolworths in the Australian retail industry. It includes a PESTEL analysis of the external environment, Porter's five forces analysis, internal analysis, and business level strategy evaluation. The article also provides a value chain analysis of Woolworths.

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

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Table of Contents
Post 1..............................................................................................................................2
Introduction....................................................................................................................2
PESTEL analysis of external environment....................................................................2
Key factors and their implications on opportunities and threats....................................2
Overall impact of industry growth in future..................................................................3
Conclusions related to macro-environmental analysis...................................................3
Post 2..............................................................................................................................3
Industry analysis.........................................................................................................3
Porter’s five forces analysis of Woolworths..............................................................4
Conclusion based on industry analysis......................................................................5
Post 3..............................................................................................................................5
Internal analysis.............................................................................................................5
Key resources, core competencies and capabilities of Woolworths..............................5
Strengths and weaknesses of Woolworths.....................................................................6
Conclusions based on the analysis.................................................................................6
Post 4..............................................................................................................................7
Introduction to business level strategy...........................................................................7
Evaluating the business level strategies applied by Woolworths...................................7
Value chain analysis of Woolworths..............................................................................8
Primary Activities..........................................................................................................8
Conclusion......................................................................................................................9
References....................................................................................................................10

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Post 1
Introduction
Woolworths is a major Australian retail organization which has its origin in Sydney.
The company has its operations in a huge number of locations in Australia and New Zealand.
The organization has developed the second place in the Australian retail industry after
Wesfarmers. Woolworths was established in the year 1924 and has been successful in its
operations in different areas of Australia. Woolworths is an important part of the Australian
retail sector since its inception (Woolworthsgroup 2018).
PESTEL analysis of external environment
Political factors
 The political stability in Australia
plays a significant part in the
operations and profitability of
Woolworths.
 The levels of corruption in the
government is an important factor
that affects the company.
Economic factors
 The different macro environmental
factors which include, savings rate,
inflation rate and interest rate can
affect the operations of Woolworths.
 The financial markets are able to
affect the revenues of Woolworths.
Social factors
 The culture that is followed by the
people in Australia affects the
product offerings of Woolworths.
 Changes in demands of people
affects the revenues of the company
(Aghazadeh, 2015).
Technological factors
 The fast disrupting technologies are
an important part of the competitive
retail industry of Australia.
 The products of Woolworths are
affected by the changes in
technology (Baporikar, 2015).
Legal factors
 Anti-trust law in the retail industry
is an important part of the ways by
which Woolworths operates.
 The different laws which have been
formulated by the government are
able to affect the operations.
Environmental factors
 The changes that have taken place in
external environment play an
important part in the production
based operations of Woolworths.

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Key factors and their implications on opportunities and threats
The growth that has been seen in the retail industry is an opportunity for the increase
of revenues of Woolworths. This is however affected by the changing demands of the
customers. The major threats that are faced by Woolworths in the Australian retail industry
are from its biggest competitor Coles (Bailey, Mankin, Kelliher & Garavan, 2018).
Overall impact of industry growth in future
The retail industry of Australia is highly growing in nature and has been able to attract
huge number of organizations in an effective manner. The increase in number of
organizations has further increased the competition levels in the market as well. Woolworths
thereby needs to provide unique services to the consumers in order to generate a profitable
position in the market. The retail industry will be able to deliver enormous prospects for
future growth to the company (Bettis, Gambardella, Helfat & Mitchell, 2015).
Conclusions related to macro-environmental analysis
The macro environmental analysis has thereby been able to portray that the
organization has been able to function in a cost-effective way in spite of the external forces.
The changes that take place in different external factors are able to cause huge changes in the
ways by which Woolworths operates in the retail market of Australia. The external factors
thereby play an vital part in the successful operations of the modern organizations.
Post 2
Industry analysis
Industry analysis is considered to be a business based function which is completed by
the owners of the business and the other individuals. The analysis is helpful for the business
organizations to understand the different economic pieces which are present in the

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marketplace and the ways by which these pieces are helpful for the company to gain
competitive advantage (Hill, Jones Schilling, 2014).
Porter’s five forces analysis of Woolworths
Threats of the new entrants – The new companies which are planning to enter the
retail industry are able to bring innovation in the operations. The challenges can be faced by
the company by adding new products to the existing line.
Bargaining power of the suppliers – The suppliers play a significant part in the
operations of food retail industry. Woolworths thereby needs to build an efficient supply
chain in order to reduce the power of suppliers and increase its revenues. The company
thereby needs to maintain an efficient chain of suppliers so that they are not able to access
their power on the prices of raw materials that are used for the manufacture of products (Hitt
& Duane Ireland, 2017).
Bargaining power of the buyers – The buyers in retail industry of Australia are
extremely challenging in nature and Woolworths can develop a huge customer base in order
to reduce their power. The prices of the products can then be decided by the company and not
the customers. The buyers or customers are able to affect the profitability and revenues of the
organization in an effective manner. The long term revenues of Woolworths will be affected
by the high bargaining power of buyers in the industry (James, 2016).
Threats from the substitute products – The threats that are experienced by
Woolworths from the substitute products and services which are offered by the competitors
can play an important role in deciding prices of products. The value propositions that are
offered by the competitors plays an important role in increasing the effect of this force.

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Competitiveness among the existing players – The levels of competition that exists
in the industry are based on the competitors of Woolworths and prices based on which they
offer products and services. The competitive industry thereby requires Woolworths to build a
differentiation which is sustainable in nature (Johnsen, 2015).
Conclusion based on industry analysis
The analysis of retail industry of Australia based on the operations of Woolworths has
depicted that the industry is highly competitive in nature. Woolworths thereby needs to apply
the service oriented strategy in order to create a sustainable place of the firm in the market.
The revenues and profitability of the organization can be increased with the help of proper
service and products that are provided to the consumers.
Post 3
Internal analysis
The process of internal analysis is mainly related to the study of the competencies, the
competitive viability, cost based position of the company in the industry. The internal
analysis based process can thereby include different tools that can be used for the proper
analysis of the strengths and weaknesses in an effective manner. The threats and the
opportunities of the firm can also be examined with the help of internal analysis based tools.
The internal environment and competences of the companies can thereby be examined with
the help of these tools (Lacerda, Ensslin & Ensslin, 2014).
Key resources, core competencies and capabilities of Woolworths
The financial and human resources of Woolworths have been able to play a key part
in the methods by which the company is able to create its position in the Australian retail
industry. The customer first based policy that has been implemented by Woolworths is a

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significant part of the capabilities of the firm. The company has thereby been able to increase
its sales momentum with the help of its Drinks based business (Merigó, 2015).
The convenience that has been provided to the customers can play a significant part in
the improvement of strategies in the retail industry. The different portfolio based businesses
of Woolworths have been an important part of the revenues that have been generated in the
retail industry in an effective manner. The culture that has been developed by the company
has been able to create effective profits and revenues that have been gained (Meyer, Neck &
Meeks, 2017).
Strengths and weaknesses of Woolworths
Strengths – The market leading position which has been developed by Woolworths is
a major strength of the company. The leadership based position of the organization has been
enhanced with the help of high levels of technological resources and human resources. The
company has tried to reduce the carbon footprint in the industry with the help of minimisation
of resource usage in an active way (Michael, Storey & Thomas, 2017).
Weaknesses – The major weakness that has been faced by Woolworths in the retail
industry is based on the lack of proper growth strategy. The external environment based
factors of Woolworths has been able to affect the methods by which it operates and the
strategies are developed. The higher price ranges of the company have also been an important
part of the weaknesses which have been faced by Woolworths (Morschett, Schramm-Klein &
Zentes, 2015).
Conclusions based on the analysis
The strengths of Woolworths have been able to affect its operations in the Australian
retail industry. These resources and strengths can play an significant part in the development
of revenues in the market in an effective manner. The weaknesses of Woolworths have been

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able to affect the revenues of the organization in the Australian retail industry. The mitigation
weaknesses are however important for Woolworths in order to operate in the industry in a
sustainable manner.
Post 4
Introduction to business level strategy
The business level strategies are mainly built on the methods by which the company is
able to satisfy the needs and the demands of customers in a profitable manner. These
strategies are mainly focussed towards the on positioning the organization in an advantageous
position as compared to its competitors in the industry. The company can also stay updated
with respect to the trends that are present in the industry. The technological changes can also
be detected with the help of proper implementation of business level strategies. The business
level relates strategies are able to increase the levels of profitability and revenues in an
effective manner (Ryall & Gans, 2015).
Evaluating the business level strategies applied by Woolworths
The business level approaches that have been developed by Woolworths are largely
based on the ways by which the firm is able to satisfy the customers in an efficient way. The
five major priorities that have been a part of the business strategies of Woolworths are as
follows,
Building the proper store-led culture and customer base.
Generation the sales of the company in a sustainable manner.
Evolving the drinks based business to create more value for the consumers.
Empowering the portfolio business in order to pursue the strategies in to
deliver the worth to shareholders.

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To develop a lean retailer with the help of end-to-end process based
excellence.
The most significant part of business level strategy is the customer first based policy
to provide them with effective value (Shepherd, Mcmullen & Ocasio, 2017).
Value chain analysis of Woolworths
Woolworths mainly believes in the ways by which the trust of the customers can be
gained in an effective way. The inside operations and the store based operations of the
company are able to affect the profitability levels.
Primary Activities
Inbound logistics – The relationships that are developed by Woolworths in
the retail industry are able to involve the distribution based services of the
company in an effective manner.
Operations – Woolworths has been able to create an active place in the
Australian retail industry with the assistance of its standardized processes and
processes.
Outbound logistics – The ways by which Woolworths is able to provide its
services to the customers can play a major role in the development of an
effective value chain (Morschett, Schramm-Klein & Zentes, 2015).
Sales and marketing – The maximization of the profits are based on
marketing and promotional activities which have been developed by
Woolworths.
Service – The services that are provided by the company to the customers can
play an important part in the improvement of proper value chain.
Support Activities

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Infrastructure of the firm – The huge number of stores of Woolworths
which are present in retail industry which are a part of the value chain.
Human resource management activities – Woolworths possesses more than
2,00,000 employees which form an effective human resource base (Meyer,
Neck & Meeks, 2017).
Technology – The services that are provided by Woolworths to the customers
are based on modern technologies.
Procurement – The platform that has been selected by Woolworths for its
logistics and procurement based process is “Trandenstone’s Merchandise
Lifecycle Management” (Bailey, Mankin, Kelliher & Garavan, 2018).
Conclusion
The discussion can be concluded by stating that Woolworths is able to retain its place
in the retail industry with the help of effective business level approaches. The value chain of
the company is effective for its operations in retail industry of Australia.

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