Competing with Aldi: Woolworth's Differentiated Pricing Strategy

strategic management
System04099

Executive summary
With the increasing competition in the supermarket industry, Woolworth has been suffering
fierce rivalry and competition to Aldi. To analyse the market of Australia and how entry of
Aldi has affected the operations of the Woolworth. It is important for the management to
maximise the opportunities and reduce the power of rivalry by attaining a competitive
advantage. Now a days, supermarket industry has been facing a fiercely competition in
Australia with the entry of German supported company Aldi. Aldi has become a threat to
Woolworth existence and market share and the company has decided to overcome it by
making differentiated pricing strategy. The strategy offers high quality products at low price.
To analyse the environment around, this report brings out a range of concepts and models to
identify the problems. For identification, PESTLE Analysis, five porter forces model,
business level strategies, and VRIO framework has been carried out of Woolworth. In 2015,
Aldi has stolen the market share of Woolworth. The company had to think more and finally it
decided to invest in hiring high-qualified staff and technology.

Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................3
Macro environmental analysis..............................................................................................................3
Porter’s five forces analysis...................................................................................................................5
Company analysis (VRIO).......................................................................................................................6
Competitor Analysis..............................................................................................................................7
Business-level strategies........................................................................................................................8
Recommendation and suggestion.........................................................................................................8
Conclusion.............................................................................................................................................8
References...........................................................................................................................................10

Introduction
Woolworths operates its retail stores in grocery businesses and have its establishment in
Australia and New Zealand. The company has a considerable market share of nearly 40
percent. Moreover, Coles and Woolworth almost have acquired 80 percent of the supermarket
industry (Woolsworth Group, 2018). In addition to this, the company has invested in
diversifying its portfolio by providing the customers with wide range of products. As the
company is expanding, it has increased and created employment for many people. As more
employees get employment, the employment rate keep increasing which has further improved
the Gross Domestic Product (GDP). The entry of Aldi in 2015 has affected the business
operation of Woolworth. Wesfarmers also stands equal when it comes to compete with
Woolworth and Coles. The case study highlights the potential of alternative market share of
different retail stores. The probability of winning state of Woolworth is more as due to
partnering hands of Coles with it.
Macro environmental analysis
Legal- political factors- For the supermarket, government has direct effect on the industry in
relation to legislating trading hours through proper monitoring of Australian competition,
trade practises act, and consumer commissions. New Zealand and Australia enjoys a good
time of political stability where it is imperative for Woolworth by abiding legal provisions.
Instituted policies that guides the staff to align with imperative constitution of both the
countries. Understanding the situation of contravening legal requirements that can employ
law experts to consult and advice the management faces uncertainty. Several government
campaigns aimed and asked the Woolworth not to eliminate the new and existing small
companies by unfair competition rather the policy and campaign should promote small
enterprises by less influences of Woolworth. Moreover, consumer commission and
competition has affected the performance of Woolworth (Kim, Lee, and Shin, 2015).