HI6006 Assessment 2: Competitive Strategy in Australian Supermarkets

This report analyzes the competitive strategies employed by Australian supermarkets, with a particular focus on Woolworths. The report begins with an executive summary, followed by an introduction outlining the report's objectives and the strategic focus on Woolworths' acquisition and structure strategies. The background of the case study, which involves Woolworths, Coles, and Aldi, is presented. The report then delves into the acquisition structure, including stock purchase, asset purchase, and merger strategies. The application of the acquisition and structure strategy by Woolworths, specifically its acquisition of Macro Wholefoods, is discussed, along with the advantages of this strategy, such as increased market share and the ability to compete with rivals. The value proposition strategies, including low-cost, diversification, and sales growth strategies, are also examined. The conclusion summarizes the key findings, emphasizing the role of acquisition and structure strategies in the competitive landscape of the Australian supermarket industry. The report uses secondary data to support its findings and provides a comprehensive overview of the competitive dynamics within the industry.

competitive strategy
2019

Competitive strategy 1
Executive summary
The aim of the report is to discuss one or more strategies related to the organisation that could be
applied. The strategies which can be applied to the company include Business Strategy,
Corporate Strategy, Acquisitions and Structure, International Strategy, Cooperative Strategy,
Sustainability. The purpose of the discussion is to identify the strategies that are applied to the
case study of Australian supermarkets: who will win and when?. The information for the report
has been gathered with the appropriate use of the qualitative method with the major focus on the
use of the secondary data. The report findings say that Woolworth's company emphasis on the
strategy of the Acquisition and structure.

Competitive strategy 2
Contents
Introduction......................................................................................................................................3
Background of case..........................................................................................................................4
Acquisition structure........................................................................................................................4
Application of Acquisition and structure.........................................................................................5
Advantages of acquisition to Woolworths...................................................................................7
Value propositions strategy of Acquisition and structure............................................................8
Low-cost strategy.....................................................................................................................8
Diversification strategy............................................................................................................9
Sales growth strategy...............................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

Competitive strategy 3
Introduction
The purpose of the report includes the strategies that are linked with the case of the Australian
supermarket which include the discussion of the different supermarkets that are present in the
market of Australia. The reason behind the research is to identify the strategies that can be
applied to the organisation. The focus is majorly on the Woolworths Company whose discussion
is done in the case study along with the Coles and Aldi supermarket in Australia. The strategy of
acquisition and structure is explained majorly in the report.

Competitive strategy 4
Background of case
The case study of Australian supermarkets: who will win and when shows the different
supermarkets who are following strategies to survive their business operations in the market.
These supermarkets include Woolworths, Coles and Alde who are competing with each other in
the market. The company which is majorly focused is Woolworths which is selected who is
operating the approx. 873 supermarkets with many other business outlets. This shows that the
company is the leading company in the Australian market and with this, it has the power on the
market share. Further, this has been found that the case study includes the other leading
supermarkets as well. This majorly includes Coles, a company which is a part of the Wesfarmers
which grow in the market to become the highly successful conglomerate in the market.
This has been found in the case that it has become difficult for small players to operate their
business in a market which left the option to become the delicatessen-style operations for the
small business. Though, this has also become difficult as core strategy when Woolworths
Company acquired the macro organics which is the answer to the threat which might be faced by
the supermarket in the Australian market. Thus, this shows the applicability of the acquisition
and structure strategy by the Woolworths Company which is further discussed.
Acquisition structure
The acquisition structure is referred to as the general framework or the arrangement upon which
the acquisition of the company can easily be performed (Cicourel, 2017). The structure of
acquisition majorly breaks down the enterprise value of the company majorly into the cash as

Competitive strategy 5
well as the non-cash components. The non-cash consideration may include vendor takebacks,
earnouts, rolled equity and many others (Capron, 2016).
(Source: CFI, 2018)
The above three reflects the 3 major strategies that fall under the acquisition which include stock
purchase, merger and asset purchase.
 Stock purchase: - The strategy of the stock purchase is applied by the buyer when they
acquire the stock of the strategic company from its stakeholders. Further, the business
conducts their operations with the company (CFI, 2018).
 Asset purchase: - In the asset purchase, the buyer who acquire the company ensure that
they purchase all the assets but not the liabilities.
 Merger: - Merger is one of the techniques which are used by the company for acquiring
the business in which both the companies come together with the motive to combine their
legal entity and to work together (Anand and Lee, 2016).

Competitive strategy 6
Application of Acquisition and structure
The case study reflects that Woolworths Company has acquired Macro Wholefoods and now it is
a part of the one of the company’s leading brand. The company strategy made them bought the
organic food chain Macro wholefoods with the motive to fast track the expansion into the high-
margin gourmet grocery sector. Along with this, it has been found that approx. 8 macro chain
store was rebadged as Thomas Dux, which is considered as the upmarket that woollies
introduced last year that is currently operating in the market of Sydney’s Lane Cove and
Paddington (Speedy, 2009). Moreover, it has been determined that the deal that took place
between the Woolworth’s and Macro organic says that they plan to roll out the brand and its
products across Thomas Dux and Woolworth's supermarket networks with the range approx.
more than 100 products.
Further, this deal of acquiring the organic brand offered the company a strong growth in the
market at the time when there was a shift in the behaviour of the customers towards the organic
product. Further, this has been found that the brand started earning the profit when it was
acquired by the Woolworths Company because they were the one who decided to take the brand
to different areas of the country (Woolworths, 2018). This has been found that the acquisition
strategy which is followed by the company has brought the changes in the structure of the
company. It has been found that the structure of the company should always support the strategy
which is adopted by the company. Moreover, employees of the company at every level must be
empowered to be effectively accomplishing work which is essential to achieve the goals of the
company.
In the case study, this has been reflected that decade ago, Coles Company was outperformed by
Woolworths but this initiated to bring the change when it was further acquired by the

Competitive strategy 7
Wesfarmers Company which had the resources to throw at the industry of retailing. When the
Wesfarmers company adopted the acquisition strategy them they found that the Coles was able to
manage the turnover of only A$17 billion annually comparing it with the woollies A$37 billion.
Then the Wesfarmers Company acquired Coles and brought they improvement not only in the
services of the company but also rejuvenated the stores which lead to increase in the turnover of
Coles and gradually the company was able to maintain the huge market share in the Australian
market. This reflects that the acquisition is considered as one of the major strategies which are
followed by most of the Australian supermarket who are effectively managing their business
operations in the market (Lubatkin, 2013).
On the other hand, the structure of the company is referred to as an entrepreneur with the dreams
of offering the employment to the highly educated and the trained workforce at the different
segments of the company. In the case study, this is clear that Woolworth’s and Coles Company
follow the complex market structure because they have different operations across Australia
which they accomplish. This has been found that there are different types of corporate structure
which include Functional, divisional and matrix structure (Ingram, 2018). Out of all these
structures, the company follows the matrix structure which is the combination of the remaining
two structures. This structure provides the company with an advantage of the decentralization
decision making with greater autonomy, more inter-departmental interactions with the high
productivity and innovation. Thus, all these advantages are attained by the company which will
help them to effectively manage their business operations within the Australian supermarket.

Competitive strategy 8
Advantages of acquisition to Woolworths
The case study reflects that there are different advantages that are attained by the Woolworths
Company with the effective implementation of the acquisition strategy. Some of the benefits are
given below: -
Rise in the market share: - Woolworths Company has attained the rise in the market share of
the company as they acquired different companies due to which they earned a good market value
and market share in the market.
Deal with rivals: - In the market of Australia, this has been found that there is intense
competition among the Australian supermarket. The acquisition helps the company to expand the
business and profit which is again invested by the company in other opportunities due to which
they are able to grab the attention of the customers so quickly (Schriber, King and Bauer, 2018).
Advance technology: - Woolworths Company makes use of the online mode through which they
can meet the needs of the customers and satisfy them with their effective skills. The company
need to identify that they are required to keep up the pace with the motive to understand that the
customers are majorly looking for the effortlessly and seamlessly physical store where they can
shop according to their preference (Angwin, 2015).
Value propositions strategy of Acquisition and structure
This has been found that most of the company involved in the acquisition strategy to generate the
value for the acquirer who is taking the company (Rothaermel, 2015). This has been found that
the management team of the company have specific value proposition strategies through which
they can satisfy the needs of the shareholders. Some of them are given below: -

Competitive strategy 9
Low-cost strategy
Low-cost strategy is one of the effective strategies which are followed by the company which
help them to offer the effective value to the customers that are present in the Australian market
(Chernev, 2018). Woolworths and Coles Company ensure that they are offering the products at
the low cost because they are able to source the products in bulk with low price. In the
companies, this has been witnessed that Coles, Aldi, and Woolworths Company is able to
achieve the lowest cost position which helps them to get the different acquisition options. Thus,
Woolworth’s receive the different acquisition options and the company have successfully applied
the strategy which helps the company to produce the product at low-cost.
Diversification strategy
Diversification strategy is also considered as one of the effective value proposition strategies
which are attained by the company when they start acquiring different companies (Accounting
tools, 2018). Most of the supermarkets ensure that they are able to maintain the diversify
products and services in the market which is essential for meeting the needs of the customers
(David, 2011). This has been found that in the fluctuating market the needs of the customers.
This has been found in the case study that the diversification strategy is not only followed by the
Woolworths but it is followed by Coles and Aldi who are operating their business operations.
Sales growth strategy
One of the reasons for implementing the acquisition strategy by the company is that they want to
improve the sales of the company (Grant, 2016). Woolworths found that the people are shifting
towards the organic products due to which the sales of the company get affected due to which the
company decided to select the acquire the company which will effectively contribute in
increasing the sales and goodwill of the company. This will also help the company to open the

Competitive strategy 10
new links in the different product line which will make them diversify. In the case study, this has
been found that not only Woolworths but Coles and Aldi company is also making the different
strategy to increase the sales. Coles majorly make use of the cooperative strategy with the motive
to enhance the sales.

Competitive strategy 11
Conclusion
In the end, this can be concluded that the report is based on the case study with the title of
Australian supermarkets: who will win and when?. The case study is based on the competitive
rivalry present in the Australian supermarket. This has been found that the companies dealing in
the Australian supermarket follow the Acquisition and structure while effectively performing
their business operations. The major focus of the report is based on the Woolworths Company
but the discussion also includes the support of Coles and Aldi. Along with this, advantages of
acquisition and structure to Woolworths are also defined with the value proposition strategy that
is followed by the company. These strategies majorly include low cost, diversification and sales
growth.