Strategic Planning and Management for Woolworths in Australian Retail Industry

This report analyzes the external and internal environment of Woolworths in the Australian retail industry using Porter's five forces, SWOT analysis, and competitor analysis. It also identifies the resources and competencies of Woolworths based on the Resource-based theory.

Running head: STRATEGIC PLANNING AND MANAGEMENT
Strategic Planning and Management
Name of the Student
Name of the university
Author Note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Porter’s five forces analysis.........................................................................................................2
Resources and competencies of Woolworths..............................................................................6
SWOT analysis............................................................................................................................7
Conclusion:......................................................................................................................................9
Reference List................................................................................................................................10

2STRATEGIC PLANNING AND MANAGEMENT
Introduction
Woolworth’s supermarkets are referred to a highly reputed supermarket chain in
Australia. The supermarket chain belongs to Woolworths limited and the mentioned grocery
chain along with Coles has formed a duopoly in the Australian supermarket. The company
chiefly sales groceries that includes fruits, vegetables, packaged meat along with household
products, baby and pet supplies. Considering the fact that with globalization, the number of
competitions in the Australian retail industry is increasing it is highly crucial for Woolworths to
assess both its internal as well as external environment of the company in order to detect major
loopholes that bear the potential to decrease the revenue of the company. In this report, the
environment of the retail industry in Australia will be assessed with the help of Porter's five
forces. Along with that competitor analysis, SWOT Analysis and identification of the
competencies and resources of the mentioned organization based on the Resource-based theory
will be performed in this report.
Discussion
Porter’s five forces analysis
The Porter’s five forces framework is a tool that is used for analyzing the competition
that a business has to face in a certain industry. Considering the fact that the retail market of
Australia is highly saturated, the external environment of Woolworths has been assessed through
the mentioned tool below.
The threat from new entrants

3STRATEGIC PLANNING AND MANAGEMENT
Considering the fact that Woolworth is a highly recognized supermarket chain in
Australia, the threat from the substitute is low. Since the cost of establishing a new business in
the highly saturated market is high, it is highly difficult for the new grocery store to compete
with the recognized ones. The Australian retail industry is dominated by a few numbers of major
players, Woolworths being one of them. The expensive start-up can be considered to be another
major barrier for new competitors. Moreover, the local laws along with the leasing agreement
with the Landlords gave created an artificial scarcity of grocery store sites.
Rivalry among the competitors
As being discussed earlier, the retail and grocery industry of Austria is highly saturated due to
the presence of large retail firms like Coles, Mayer and Woolworths. Hence the rivalry among
the competitors is high. However, considering the fact that Woolworths have a huge amount of
market share in the Australian retail industry, the risk of losing competitive advantages is low for
the mentioned supermarket chain. Additionally, the new strategies implemented by the company
like selling fresh food items only, lower price range and 24 hours delivery service of the
company along with its subsidiaries like Safeway, Dicksmith and other have created an effective
competitive advantage.
Bargaining power of the suppliers
Considering the fact that a huge number of suppliers are present in Australia, the
bargaining power of the suppliers of the Australian retail industry is low. The vast market share
of Woolworth and Coles can be considered as another reason behind the lack of power of the
suppliers. The two mentioned company controls more than 80 percent of the total market. Hence
all the local producers have extremely limited intermediaries to select from. Hence the major

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purchasers of the production of the producers are Woolworths and Coles. Popular brands like
Nestle and Kellogg even avoid upsetting the mentioned retailers in order to maintain their
business in the Australian retail industry. However, recently, the duopoly of the organizations
has been challenged by the entries like Aldi and Costco. Hence, the bargaining power of the
suppliers is rising from low to moderate due to the emergence of the larger section of
intermediaries to consign to.
Bargaining power of the buyers
The bargaining power of the buyers, when it comes to the Woolworth is moderate.
Majority of the goods sold by the supermarket chain are bought by individual consumers.
Considering the fact that the mentioned retail industry is highly saturated, consumers have the
power to shift preferences from Woolworth to any of its major competitors. As being stated by
(Sah et al., 2016), consumers are found to be attracted majorly towards the price and
convenience of a product. When it comes to price, it has a direct relationship of the consumer to
the store. Considering the fact that the customer service, as well as the quality of the product
offered by the company, is commendable, the company has good consumer retaining capacity.
Threat from substitutes
When it comes to Woolworths the threat of substitute is moderate. The retail company
sells daily consumable products that are highly essential in day to day life and hence lacks an
alternative. The major substitute of the company is Convenience stress, farmer’s market an
specialist grocery stores. According to researchers, indirect competition has the potential to pose
serious threat s in future since convenience stores are already competing with supermarket chain

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(Sah et al., 2015). Moreover, with the increasing inclination towards a healthy diet, consumers
are opting for organic food items.
Competitor analysis
high
Low Product range
low high
Figure 1: Competitive position of Woolworths
Source (created by author)
Competitor analysis is defined as an assessment of the strength and weaknesses of current
as well as a potential competitor of an organization in a certain industry. In this paragraph, a
competitor analysis of Woolworths Company has been conducted. This analysis will provide
Woolworths
Coles
Aldi
Product Distribution

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Woolworth with both offensives as the well defensive strategic context so that it can identify its
opportunities as well as threats. The major competitor of Woolworths in the Australian retail
company includes Coles, TESCO, ALDI and Walmart. As being discussed earlier, Woolworths
along with Coles-Myer comprises more than 2/3rd of the total market share of the Australian
retail company (Dos Santos, Svensson & Padin, 2013). The chief reason behind the brand equity
of both the company is the vast product range and high quality of service to the consumers.
These two factors have helped both the companies to gain competitive advantages over other
competitors. IGA has been able to maintain 13.5 percent of the total market share due to its
market entry in 1988 and a good range of products. In comparison to IGA, Foodland and ALDI
have 2 percent and 2.5 percent of the market share respectively (Keith, 2012). However, Aldi is
found to have a greater product chain compared to Foodland and hence it is emerging as a
potentially strong competitor of Woolworth. Franklin, on three other hand, bears 11 percent of
the market share and its chief strengths include being the original discount grocery of Australia
and been in the market for over 50 years.
Currently, the most crucial competitor of Woolworths is Coles-Mayers. Woolworth and
coles are considered to be the strongest leader in the mentioned industry. Aldi is considered to be
another big challenge since it provides the consumer with products in the lowest price range as a
German chain. Both Woolworths and Coles apply various strategies to gain competitive
advantages. Coles is considered to be the most popular online shopping centre in Australia. The
strategy of Coles includes free shipping when it comes to online shopping. Woolworths is
following the same strategy as Coles to prevent the later to gain competitive advantages. Aldi,
being a more recent player is beating both the above-mentioned company when it comes to

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online shopping. The price difference varies from 113 for a basket at Woolworths and 114 in
Coles while Aldi could cost $87 (Gibson, Michayluk & Van de Venter, 2013).
Resources and competencies of Woolworths
According to the resource-based theory, the possession of resources is highly valuable,
difficult to imitate, rare and cannot be substituted. The mentioned theory suggests that every
company should search for the source of competitive advantages through the usage of their
resources. The resource of any organization can be segregated into a tangible resource and
intangible resources. Tangible resources are referred to resources that can be touched, seen and
quantified. When it comes to Woolworths, some of its major tangible resources include the
property, equipment, factory and even cash of the company (Sah et al., 2014). Tangible resources
can easily be bought by other retail organizations. Thus it can be understood that in the long run,
physical resources has the capacity to provide only a fraction of advantages to the company.
However, tangible resources are a must have that has helped the company to achieve its goal.
Unlike tangible resources, intangible resources lack physical form. Intangible resources
like trademarks or copyrights an patents are not used directly for production purposes in any
organization. The total worth of intangible assets for the quarter that ended in December 2017
was 4,913 Mil dollars. Woolworths has applied the relevant account standard AASB 138 in order
to treat their intangible asset. The Management of the company does not reveal the amortization
rate used for their intangible assets in order to gain a competitive advantage.
The core competency of Woolworths
1. World-class supply chain: The supply chain of the company is considered to be the chief
reason behind its innovative and competitive advantages,. The management of the

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company is highly focused on cost-cutting and efficiency while managing unnecessary
expenses (Gilbert & Du Plessis, 2013).
2. Innovation: In order to gain a competitive advantage through innovation, the company
has implemented strategies like “refresh and “new idea program” petrol retailing.
3. Integration: The Company has imposed vertical integration on several supplies by
producing its own output for increasing marketing power along with responding to the
private level trend.
4. Branding and market: The slogans used by the company like "The fresh food people"
creates a unique image of quality as well as a healthy product range at a justified price.
SWOT analysis
Strengths
 High brand equity: Woolworths is one
of the oldest as well the most reputed
retail brand in Australia.
 Good Consumer base: The consumer
base of the company is commendable
due to the effective consumer-company
relationship and excellent quality of
goods and services served by the
supermarket chain.
 The number of products as well as
services offered by the company to its
consumers is vast (Putra, 2013).
Weaknesses
 Woolworths is currently present in
Australia an New Zealand only. Hence
it can be said that the company lacks an
international presence (Parsons &
Wilkinson, 2015).
 Due to high competition in the
Australian retail organization, the
company is losing competitive
advantages to the competition.
 The late entry into the online retail
store can be considered as another
major weakness of the company.

9STRATEGIC PLANNING AND MANAGEMENT
 The company has a good amalgamation
of brick and mortar as well as online
sale channels.
 Woolworth being a highly reputed
supermarket chain of Australia had a
strong commitment towards
environmental sustainability.
 The company has an efficacious CRS
program.
Opportunities
 The promising growth of the retail
industry in 2018 can be considered as a
major opportunity for the company.
 Considering the fact that the retail
industry of the Asian as well as eastern
countries are way less saturated
compared to the western industries, the
company can expand its branches there
(Gunjal 2017).
 In spite of being a late entry in online
shopping platform, Woolworth has
invested a lump sum of money in the
online platform. This investment has
Threats
 Lack of regular innovative product
supply can be considered as a major
threat to the company. This lack of
innovation is a potential reason for
losing a competitive advantage over its
competitor.
 Another major threat of Woolworths is
the rising price of raw materials (Babu,
2012).
 The emergence of international players
in the Australian retail industry can be
considered as another major threat to

10STRATEGIC PLANNING AND MANAGEMENT
opened a new channel for the company.
In the upcoming years, Woolworth can
use this opportunity by knowing its
consumer better with the help of big
data analytics.
the company.
Conclusion:
From the above discussion it can be concluded that Woolworth being a highly reputed
company possess enough potential to maintain its brand equity in the Australian retail market.
The company has maintained its 1st position in the mentioned retail industry in spite of the
existence of internal brands like Coles, Aldi, Tesco and others. However, the fact that the less
number of international presence of the company along with its late entry into the online
shopping sector has adversely affected the company. Hence Woolworths should expand its
branches in the retail industry of the eastern zone in order to enhance its revenue and its
consumer base.

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Reference List
Babu, H. S. (2012). SWOT analysis for the opening of FDI in Indian Retailing. European
Journal of Business and Management, 4(3), 55-65.
Dos Santos, M. A., Svensson, G., & Padin, C. (2013). Indicators of sustainable business
practices: Woolworths in South Africa. Supply Chain Management: An International
Journal, 18(1), 104-108.
Gibson, R. J., Michayluk, D., & Van de Venter, G. (2013). Financial risk tolerance: An analysis
of unexplored factors. Financial Services Review.
Gilbert, E. S., & Du Plessis, S. A. (2013). Mark-ups and competition–a comparison of the
profitability of listed South African and American industrial companies. Time Series
and Competition Policy. Stellenbosch.
Gunjal, T. D. (2017). A SWOT ANALYSIS AND RECENT FDI CONTROVERSY OF
RETAIL SECTOR IN INDIA. International Research Journal of Multidisciplinary
Studies, 3(4).
Keith, S. (2012). Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of
Regional Food Studies, 2, 47-81.
Parsons, A., & Wilkinson, H. (2015). Retailing in New Zealand: Where Are We and Where To
Next?. In European Retail Research (pp. 141-160). Springer Gabler, Wiesbaden.
Putra, Y. H. S. (2013). FINANCIAL ACCOUNTING APPROACH FOR DECISION MAKING:
A CASE ON FOOD RETAILER COMPANY. El Muhasaba: Jurnal Akuntansi, 2(1).

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Sah, B. N. P., Vasiljevic, T., McKechnie, S., & Donkor, O. N. (2016). Physicochemical, textural
and rheological properties of probiotic yogurt fortified with fibre-rich pineapple peel
powder during refrigerated storage. LWT-Food Science and Technology, 65, 978-986.
Sah, B. N. P., Vasiljevic, T., McKechnie, S., & Donkor, O. N. (2015). Effect of refrigerated
storage on probiotic viability and the production and stability of antimutagenic and
antioxidant peptides in yogurt supplemented with pineapple peel. Journal of dairy
science, 98(9), 5905-5916.
Sah, B. N. P., Vasiljevic, T., McKechnie, S., & Donkor, O. N. (2014). Effect of probiotics on
antioxidant and antimutagenic activities of crude peptide extract from yogurt. Food
Chemistry, 156, 264-270.