Business Strategies Used by Woolworths Supermarkets Report

This report examines the business strategies employed by Woolworths Supermarkets, a major Australian retail chain, using Michael Porter's Competitive Strategy Model. It delves into how Woolworths leverages cost leadership and differentiation strategies to gain a competitive edge in its target market segments. The report explores the application of these strategies, including the role of marketing, financial management, and IT strategy in supporting business operations. Furthermore, it highlights the integration of management theories and team development theories, such as Maslow's motivational theory and Tuckman's Team development theory, in enhancing product differentiation and overall business performance. The analysis provides insights into how Woolworths maintains its market leadership position by effectively managing its value chain, focusing on customer needs, and adapting to the competitive landscape.

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Business strategies used by Woolworths Supermarkets

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Executive summary
The report below is based on the business strategies used by Woolworths, a supermarket chain
based in Australia. The report has made use of Porter's competitive strategy model that explains
the various business strategies that Woolworths implement in order to support its growth and
gain a competitive advantage in its target market segments. The report also explains the
principles of management theories and team development theories. It highlights the functions of
marketing, financial management and the IT strategy in supporting business operations.
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Table of content
Introduction 3
Business strategies of Woolworths 3
Michael Porter's Competitive Strategies 3
Conclusion 6
References 7
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Introduction
Business strategies are defined as a set of competitive activities or moves that are utilized by a
business for attracting consumers, competing successfully with the rival organizations and
strengthening the organizational outcome with the achievement of the organizational objectives
and goals (Prajogo, 2016). The present report is based on the competitive business strategies that
are used by one of the major retail organization of Australia, Woolworths. To discuss the
business strategies, in the present study Porter's competitive strategy model has been used.
Business strategies of Woolworths
Woolworths is a multinational retail organization based in Australia and it faces huge
competition in its target market segments (Woolworths.com.au. 2020). Some critical factors and
strategies help Woolworths to set competitive positioning that in turn helps it in having a strong
edge over the competitors. The use of Porter's competitive strategy model can help in
understanding these strategies.
Michael Porter's Competitive Strategies
Porter's Competitive strategies also known as Porter’s generic strategy was developed by
Michael Porter in the year 1980 and the model explains the way in which business organizations
can acquire competitive advantage with the choice of correct strategies (Kyengo et al., 2016).
Figure.1: Porter’s Competitive Strategies
(Source: Kyengo et al., 2016)
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Cost leadership
According to Yang and Meyer, (2019), cost leadership strategy a business organization
determines to be a low-cost producer in the market so that competitive advantage could be
gained over the rival organizations. Therefore, the cost leadership strategy is based on a broad
target while focusing on gaining competitive advantage through low cost. It has been identified
that the cost leadership strategy is the major strategy used by the retail organization Woolworths
in the different consumer markets. The major objective of Woolworths behind the usage of this
particular strategy is to maintain the market leadership position while maintaining an efficient
value chain management. With the implementation of the cost leadership strategy, Woolworths
target the middle-class people of the market and thereby achieve the largest customer base in the
consumer market. To support the cost leadership strategy, the use of marketing strategy is
another major business operation of Woolworths. It has been identified that in marketing its
products, Woolworths greatly concentrates on highlighting the affordability and easy
accessibility of its products across the world that enhances its brand image as well as brand
awareness. Therefore it can be interpreted that, functions based on the marketing strategy helps
in the improvement of Woolworths’ business operation to a greater extent.
Differentiation
As explained by O’Hare et al. (2018), the primary goal of applying a differentiation strategy is to
make the products or services of an organization more valuable and attractive as compared to the
products offered by the competitors. Differentiation strategy is identified to be another major
competitive strategy which is used by Woolworths to gain competitive advantage. This strategy
is used by the company along with the cost leadership strategy for the achievement of the
growth-related organizational goals. The implementation of the differentiation strategy enables
the company to expand the base of customers with the emphasis over new and unique features of
its products. Woolworths uses its marketing strategies to identify the requirements of the
customers and meet them through research and development of new product features. Apart from
that the application of the team development theories on the production unit to support teamwork
for developing new product ideas is another important approach of the company. The use of
Tuckman's Team development theory helps the company to effectively support the product
differentiation process and gain an increased competitive advantage in the market. Management
theory such as Maslow's motivational theory helps the organisation to keep its employees
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motivated toward the differentiation of products and given a sustained competitive advantage in
the market.
Focus strategy
Cost focus
According to Linton and Kask (2017), in the cost focus strategy, a business organisation tries to
focus on gaining advantage through lowering cost in a narrow target segment. Woolworths use
the cost focus strategy for serving the requirements of niche market segments with the provision
of products or services at the lowest possible price. The role of the company's financial
management strategies is vital to support the cost focus strategy. Effective financial management
helps the company to allocate the financial resources in an effective way so that the company can
develop and provide products at a lower price than the competitors in the niche market.
Differentiation focus
In the view of Biddle (2016), differentiation focus strategy can be defined as a strategy that
allows business organisations to differentiate its products or services based on the narrow market
segment. Therefore, like the cost focus strategy, differentiation focus strategy also concentrates
on the narrow target segment. Woolworths use the differentiation focus strategy or best value-
focused strategy to emphasize the design size and taste of the product offerings that can be best
suitable to the needs, preferences, and expectations of the customers in the market segment. As
explained by Burke et al. (2016), with an increased focus on the attributes of products
Woolworths is able to revisit its branding strategies and make a continuous alteration to its
product designing and packaging so that the psychological expectations of the customers can be
satisfied. Apart from that, the differentiation strategy used by the company also helps in
maximization of the value for money to the customers.
The role of the information technology strategies Woolworths plays a great role in actualizing
different competitive strategies. The information technology strategies along with the
competitive strategy help in the tracking of profitability time and maximization of the return on
investment.
Conclusion
From the above study, it can be concluded that Woolworths uses the various competitive
strategies proposed by Michael Porters in Porter's competitive strategy model to serve the
different market segments and gain competitive advantage. The strategic functioning and
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business operation of the organisation is further supported by other functions such as marketing,
financial management, IT strategy. It has been also identified that the organisation makes
positive use of the theories that are associated with team development and effective management
of the organisation.
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References
Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle.
Busidate, 24(3), p.3.
Burke, A., Van Stel, A. and Thurik, R., 2016. Testing the Validity of Blue Ocean Strategy versus
Competitive Strategy: An Analysis of the Retail Industry. International Review of
Entrepreneurship, 14(2).
Kyengo, J.W., Ombui, K. and Iravo, M.A., 2016. Influence of competitive strategies on the
performance of telecommunication companies in Kenya. International Academic Journal of
Human Resource and Business Administration, 2(1), pp.1-16.
Linton, G. and Kask, J., 2017. Configurations of entrepreneurial orientation and competitive
strategy for high performance. Journal of Business Research, 70, pp.168-176.
O’Hare, N., Stewart, A. and McColl, J., 2018. Identifying the unique characteristics of
independent fashion retailers in Scotland by utilizing Porter’s generic competitive strategy model
and the marketing mix.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International journal of production Economics, 171, pp.241-
249. Prajogo, D.I., 2016. The strategic fit between innovation strategies and business
environment in delivering business performance. International journal of production Economics,
171, pp.241-249.
Woolworths.com.au. 2020. Woolworths Supermarket - Buy Groceries Online. Available at:
https://www.woolworths.com.au/ [Accessed 14 Mar. 2020].
Yang, W. and Meyer, K.E., 2019. How does ownership influence business growth? A
competitive dynamics perspective. International Business Review, 28(5), p.101482.
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