Strategic Management Analysis of Woolworths: A Detailed Report

This report provides a strategic management analysis of Woolworths, an Australian supermarket chain. It delves into the company's internal environment, identifying key resources, core competencies, and capabilities. A VRIO analysis assesses Woolworths' competitive advantages based on value, ra...Read More

Running head: STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
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1STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Table of Contents
Introduction....................................................................................................................2
Internal environment analysis........................................................................................2
The resources, core competencies and capabilities of Woolworths...........................2
VRIO Analysis...........................................................................................................3
Value chain analysis of Woolworths..........................................................................5
Organizational culture....................................................................................................6
Strategic issues in Woolworths......................................................................................7
Conclusion......................................................................................................................7
References......................................................................................................................8

2STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Introduction
Woolworths is an organization of Australian origin which operates in the industry of
supermarkets. The chain of supermarkets is owned by Woolworths Limited and it was
founded in the year 1924. The organization mainly specialises in the selling of groceries,
magazines, beauty and health products, household products, baby products and pet products.
Woolworths operates around 1000 stores all over Australia and 19 additional convenience
stores as well. The organization has been able to acquire around 80% of the entire market of
Australia. Woolworths has also started its online operations which is also known by the name
of “HomeShop” (Woolworths.com.au 2018).
The three major key performance indicators or priorities of Woolworths are,
 The positive culture in the stores of Woolworths and the providing high levels
of customer service. The customer satisfaction levels are a part of the
incentive plans that are provided to employees.
 The company aims to generate the momentum of sales in the food related
sector. Woolworths is also planning to lower the prices of its products so that
they can attract more customers.
 The stable merchandising platform of Woolworths has helped the company in
increasing its revenues. The process of human capital management is live in
the stores of Woolworths. The improvement of end-to-end process has also
improved the performance of Woolworths (Albrecht, Holland & Peters, 2016).
Internal environment analysis
The resources, core competencies and capabilities of Woolworths
Resources – The major resources of Woolworths mainly include the employees of the
organization who are responsible for providing the highest levels of satisfaction to the

3STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
customers. The inventory that is possessed by the company and the distribution related
capabilities of Woolworths will further act as the most important resource for Woolworths
(Chatzoglou et al., 2017).
Core competencies – The core competencies of Woolworths include the world-class
supply chain of the organization and ways by which it decreases the time of production. The
brand value and the market position of Woolworths has helped the organization in gaining a
sustainable position in the market. The innovation related capabilities of Woolworths has
further been helpful in creating a competitive position in the market. The sales and marketing
related capabilities of Woolworths are also a part of the core competencies of the
organization (Cosic, Shanks & Maynard, 2015).
Capabilities – The capabilities of an organization are mainly related to the
coordination of resources by putting them into use. Woolworths has been running its business
operations quite successfully since the time of its inception in the year 1924. This depicts that
Woolworths has the capabilities to use the resources in an effective and efficient manner
(Gereffi & Lee, 2016).
VRIO Analysis
VRIO analysis is an analytical tool which is used for the purpose of evaluating the
internal resources that are possessed by an organization. The tool mainly analyses the
capabilities of the organization and the competitive advantage or the weaknesses of the
company in the industry. The various types of resources that are analysed with the help of
VRIO framework are financial resources, material resources, human resources and non-
material resources. VRIO is the abbreviation that is used for four particular factor of analysis
which are, value, rareness, imitability and organization (Knott, 2015).

4STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Value – Woolworths has high value in the retail market and it has a strong global
presence as well. The global presence and brand value of the company is considered to be
one of its most important assets. This has helped the organization in increasing its size,
market share and sales in the industry. Woolworths has been operating in the Australian
market for many years which has enabled the organization to gain a position in the industry
and create its own value (Lin & Tsai, 2016).
Rare – Woolworths is mainly known in the Australian market for the production and
supply of fresh food items. Manty other organizations in the market also claim to provide
these products, however Woolworths has been able to gain a trust in the minds of Australian
citizens regarding the quality of its products. Many products that are offered by Woolworths
in the market are rare in nature and are not easily found in the stores of the other
organizations. The wide range of products that are offered by Woolworths are a major
advantage that is gained by the company in the industry (Lin & Wu, 2014).
Imitability – The revenues that are generated by Woolworths and the position that the
organization hold in the market has been unique in nature. The competitors of the company in
the Australian retail market like. Coles, Distributors and Aldi have not been successful in
imitating the company in all its aspects and gain a competitive position in the market. This
has provided Woolworths a shield from getting totally imitated by the other companies in the
market.
Organization – Woolworths has been taking constant advantage of the capabilities
and the core competencies that it possesses. The company has more than 300 stores in entire
Australia and New Zealand and employs more than 1,00,000 people in all its branches, stores
and facilities. The innovation related skills of the company have also been helpful in creating
a strong image of its brand (Los, Timmer & Vries, 2015).

5STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Value chain analysis of Woolworths
Woolworths has been able to create a valuable position in the market with the help of
its various value chain related activities that are discussed further,
Inbound logistics – The suppliers of Woolworths are spread in thousands of
businesses on a global platform. The organization is heavily dependent on its
suppliers for the purpose of gaining the best products that can be supplied to
the customers. The management prices of the products are easier for Walmart
as it purchases products in bulk from the suppliers. The company is able to
exert pressure on the suppliers based on the financial position of the business
in the industry (Schroeder & Kotlarsky, 2015).
Operations – Woolworths has its operations in the retail sector and this
industry has been growing steadily for many years. Woolworths has also been
able to expand its operations and revenues with the help of its extensive
operations in all the markets.
Outbound logistics – The core of the inventory management related technique
of Woolworths is related to the successful management of its supply chain
related activities. The products are delivered by the suppliers to the stores in
such a manner so that the costs related to these activities are low. The
products are replenished on an immediate manner so that the customers do
not have to wait for a long time (Taglioni & Winkler, 2016).
Sales and marketing – The pricing strategy of Woolworths is considered to be
the key element related to the success of its marketing activities. The
company has been investing a lot in the marketing activities and promotes its
brands with the help of many different marketing channels.

6STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Technology – Woolworths has made extensive use of technology to improve
the offline or store sales related processes. The online processes have also
been improved by developing the website of the company and adding more
features (Xu et al., 2016).
Human resource management – Woolworths has been successful in creating
an employee base which consists of the best of people. The recruitment
process of the company is transparent in nature and the candidates are treated
in a fair manner.
Procurement – The procurement and supply chain related activities of
Woolworths have efficient in nature. The company has introduced a world-
class approach to manage the supply chain activities and offer the products to
the customers in time.
Infrastructure – Woolworths has a huge infrastructure which includes the
various departments like, human resources, supply chain and many more. The
management of employees of Woolworths is also performed in an efficient
and successful manner (Schroeder & Kotlarsky, 2015).
Organizational culture
The organizational culture of Woolworths consists of two major factors which are
integrity and hard work. The company follows a down-to-earth culture in which the
employees celebrate the values of the organization which are family-friendly in nature. The
business operations are mainly led by the customers and their needs and demands. The
customers are always at the heart of the decisions that are made by the company
(Woolworths.com.au, 2018).

7STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Strategic issues in Woolworths
The major strategic issue that was faced by Woolworths in the recent years
was related to the high prices of the products as compared to its competitors.
The company had been showing slow growth due to the prices that had been
decided for its products in the market.
The company has changed its strategy of focussing on short-term profits and
have been able to sacrifice these profits for long-term profit growth.
The liquor and food business of the company has not shown growth in the
recent times which has further led to changes in the leadership and
management (Schroeder & Kotlarsky, 2015).
Conclusion
The report can be concluded by stating that Woolworths has been successful in the
retail market of Australia and New Zealand. The internal resources of the organization have
been analysed based on VRIO and Value chain framework. The analysis has depicted that
Woolworths has huge capabilities and resources to grow in the retail market and increase its
international presence as well. The company has however faced some strategic issues that the
management has tried to solve to increase the revenues in the market.

8STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
References
Albrecht, C., Holland, D., & Peters, M. (2016). Strategic revenue analysis. Strategic
Direction, 32(7), 32-34.
Chatzoglou, P. D., Chatzoudes, D., Sarigiannidis, L., & Theriou, G. (2017). The role of firm-
specific factors in the strategy-performance relationship: revisiting the resource-based
view of the firm and the VRIO framework. Management Research Review, (just-
accepted), 00-00.
Cosic, R., Shanks, G., & Maynard, S. B. (2015). A business analytics capability
framework. Australasian Journal of Information Systems, 19.
Gereffi, G., & Lee, J. (2016). Economic and social upgrading in global value chains and
industrial clusters: Why governance matters. Journal of Business Ethics, 133(1), 25-
38.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Lin, C., & Tsai, H. L. (2016). Achieving a firm’s competitive advantage through dynamic
capability. Baltic Journal of Management, 11(3), 260-285.
Lin, Y., & Wu, L. Y. (2014). Exploring the role of dynamic capabilities in firm performance
under the resource-based view framework. Journal of business research, 67(3), 407-
413.
Los, B., Timmer, M. P., & Vries, G. J. (2015). How global are global value chains? A new
approach to measure international fragmentation. Journal of Regional Science, 55(1),
66-92.

9STRATEGIC MANAGEMENT ANALYSIS OF WOOLWORTHS
Schroeder, A., & Kotlarsky, J. (2015). Digital resources and their role in advanced service
provision: A VRIN analysis.
Taglioni, D., & Winkler, D. (2016). Making global value chains work for development.
World Bank Publications.
Woolworths.com.au (2018). Woolworths.com.au. Retrieved 12 April 2018, from
https://www.woolworths.com.au/
Xu, L., Gao, S. Y., Zhang, L., Zhang, H. F., Yu, H., & Song, C. Y. (2016). Strategic Human
Capital in Organization: Frontier Review, Prospective Commentary, and Guiding
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