Woolworths Supermarkets: External Environment Analysis and Venturing

This report provides an executive summary of corporate venturing at Woolworths Supermarkets, analyzing the impact of various external environmental factors including technological, economic, competitive, labor, resource, customer, global, and legal/regulatory environments. The analysis highlights how technology enhances the shopping experience, identifies opportunities such as high-quality products leading to higher profit margins, and acknowledges threats like increased compliance costs. The report covers the company's background, external environment analysis, and discussion of opportunities and threats, concluding with a summary of key findings. The study emphasizes the influence of technology, economic conditions, competitive pressures, labor dynamics, resource management, customer preferences, legal compliance, and global market forces on Woolworths' operations and strategic decisions. The report also examines how the company navigates challenges such as resource scarcity, changing customer demands, and stringent regulations. The report is contributed by a student and is available on Desklib, a platform offering AI-powered study tools.

CORPORATE
VENTURING

EXECUTIVE SUMMARY
This study is based on corporate venturing where it analyses the impact of various
external environment factors like technological, economic, competitive, labor, resource,
customer, global, legal and regulatory environment on the operations and productivity of
Woolworths Supermarkets. It has been analyzed that technology has enhanced the shopping
experience by implementing and adapting to various effective social media platforms. It has
further analyzed the opportunity and threat of the organization. The major opportunity to
Woolworths Supermarkets is that they offer products which are of high quality and significance
to customers which leads to higher profit margins. The major threat to Woolworths Supermarkets
is increased cost of burden due to compliance of various legal laws and regulations.

Table of Contents
1. INTRODUCTION.......................................................................................................................1
Overview of the company...........................................................................................................1
2.1 Technological Environment:.................................................................................................1
2.2 Economic Environment.........................................................................................................2
2.3 Competitive Environment.....................................................................................................2
2.4 Labour Environment.............................................................................................................3
2.5 Resource Environment..........................................................................................................3
2.6 Customer Environment.........................................................................................................4
2.7 Legal and Regulatory Environment......................................................................................4
2.8 Global Environment..............................................................................................................5
3. Interpretation and Discussion......................................................................................................5
3.1 Main Opportunities...............................................................................................................5
3.2 Main Threats.........................................................................................................................6
4. CONCLUSION............................................................................................................................7
REFERENCES................................................................................................................................8

1. INTRODUCTION
Corporate Venturing is the investment of corporate funds directly in the external start-up
companies. It is the concept of large industrial organisations either developing, sponsoring or
investing in start-up companies in order to develop innovative product or services. It is the
activity of huge company investing money in a smaller firm in return for a share of its profits.
Woolworths Supermarkets is being chosen in this report. This present report will discuss the
analysis of external forces that influence the operations of the company. Further the threats and
opportunities are also evaluated from the external forces.
Overview of the company
Woolsworths Supermarket is an Australian supermarket grocery store chain which is
founded in 1924. It is owned by Woolworths Limited. It is a retail industry and its headquarter is
located in New South Wales Australia. Woolsworths along with Coles forms a near-duopoly of
Australian supermarkets accounting for about 80 percent of the Australian market. It is mostly
specialises in selling groceries such as fruits, meat, vegetables, packaged food etc. but also sell
DVDs, sell magazines, household products, stationery items and many others products too. There
are about 115000 employees are working in the company.
2. EXTERNAL ENVIRONMENT ANALYSIS
In order to understand the modern corporation, it is very important to consider external
and internal environments. The forces which are included in the external environment which
influence the operation of the company are technological, economical, competitive, labour,
resources, customers, legal and regulatory framework and global environment (Abdulfatah,
Najib and Sanim, 2017).
Here are the forces which are describe as follows-
2.1 Technological Environment:
This is one of the factor which is fast disrupting several sectors across the board.
Technology has influence the retail industry of Australia in very optimistic way. Technology has
enhance the shopping experience. In terms of supply chain, sales, customers services and
operations are influenced by the technological factors and technology is very important in these
activities. Woolworth supermarket is also using advance technologies in order to manage supply
chain along with better customer satisfaction. The landscape of retail industry is changed by the
Artificial intelligence and Cognitive intelligence. On the other hand, it is also affecting in
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negative way to the operations of Woolworths as the competition is very increases which in turn
raise the cost of production of company, similarly, technology has changed frequently which is
also a biggest threat for the organisation. Another challenges that supermarket faced is frequent
obsolescence of product because of emerging technologies as well as now it has become very
challenging for the company to protect the intellectual property rights because of high rates of
product imitation(Arutchelvi and et.al., 2016).
2.2 Economic Environment
This factor is also very essential especially in the context of trade and business. The state
of the world economy decides the sate of profit and sales of particular sector. The Australia
economy has rebounded and it is developing which is a impressive opportunity for the
Woolworths supermarket to the grow and develop in the market. The growth and development of
economy means public is going to spend on shopping. Basically, the period of recession,. The
sales of retail sector is still at the pace of growth as they maintain the sales of the company.
Woolworths Supermarket also faced the period of recession but still the sales and profit is not
excessively affected. On the other hand, the negative impact of economy is when economy is
facing high rate of unemployment as unemployment hinders the customer buying motive. In
addition to this, if the rate of inflation is high it erodes the purchasing power of consumer which
also affect the sales of the company.
2.3 Competitive Environment
Competitive Environment is the driving external system in which business competes as
well as functions. If the sellers are more than the competition is very high. In Australia, there are
8501 retailers of different size and scale, seems like the level of competition is very high. The
strength of competitive rivalry is very strong in retail sector(Çifci and et.al., 2016). There are
mainly three forces ion competitive environment which most important considerations of
Woolworths company are huge number of enterprises in the retail market, huge variety of retail
enterprises and high aggressiveness of retail enterprises. Wooworth has experienced the strong
force of these macro environmental factors which defines the competitive rivalry. But company
is overcoming the forces very effectively because of recognised brand, quality of goods and
services, discount offers, and reasonable prices gain the attention of customers. On the other
hand, the negative impact of competitive environment is the it raised the cost of operations in
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order to sustain in the competitive environment as well as competitors who are exist in the
market.
2.4 Labour Environment
Labour and Environment are two distinct concept which can be united as one. In included
various things which are growing scarcity of knowledgeable and skilled employees, workers
more mobile and less loyal, contract labour and higher labour benefit cost. These are the forces
which exert pressure on the operations and functions of Woolworth company(Ferraris, Santoro
and Dezi, 2017). With the rise in competition, skilled and knowledgeable workers switch as they
have become more and less loyal mobile to other company for their growth and development
needs, so organisation have to focus on self-actualization needs to attracts talent as well as to
retain skilled and loyal workforce. Woolworth supermarket used to provide training and
development opportunities for the staff for polishing and raising there skills as well as for better
customer services. The reward system is also well-organised in the supermarket in order to
overcome the issues of mobility of the employees as well as retain loyal labours. On the other
hand, the negative impact of the labour environment is higher labour benefits cost. It is the cost
which is connected with one workers, including benefits such as incentives, rewards leaves,
medical, etc., wages, salary, insurance and taxes. Thus, it is very essential to manage control the
labour cost because it influence the profit margin of the firm.
2.5 Resource Environment
Woolworths Supermarkets has effective strategy for sustainable growth of business. They
aim to focus on 40% reduction in carbon emission for effective operational efficiency and
growth of the organization. They aim at using reusable products and focus on opening 51 green
stores for effective use of resource of the environment. Resource environment impact the
operational efficiency of the organization due to increased resource scarcity and rapid resource
obsolescence which leas to hamper the performance and productivity of the Woolworths
Supermarkets (Hasan, 2018). Company needs to find an effective way to allocate resources to
satisfy basic needs of customers and achieve organizational goals and objectives. Increase in use
of economy resources affect the economy and leads to depletion of natural resources of the
economy. Scarcity of resources shifts company's focus on more specialized resources and
leads to unknown source of supply of resources to continue its business operations effectively
and efficiently. Company has to find an alternative way to protect scarce resources and use high
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tech equipment and technology to reduce wastage and optimally utilize the resource of the
economy. Woolworths Supermarkets has opt to choose for cardboard packaging which can be
recycled and reused. They aim to protect environment by launching various programs and
campaigns to protect the resources of environment(Lang and Armstrong, 2018).
2.6 Customer Environment
Woolworths Supermarkets offer one of the most quality products to its customers which
help in increased customer base and customer satisfaction. Customers are of core significance to
the company which helps them in building brand reputation and strong goodwill for effective
market share than its competitors. Woolworths Supermarkets aims to target high income earners
which leads to strong customer base and higher profit. Company do not focus on larger section
of the economy who can only afford products at economical price which leads to lower market
share than its competitors and affects its operational efficiency(Walton, Petrovici and Fearne,
2017).
Woolworths Supermarkets has operations with over 3500 locations across Australia and
New Zealand. Customers are becoming more aware about their rights and leads to more
demanding customers which influence the operations of the organization. They aim to invest in
newer technologies and software to reach large number of people from the positioned market to
offer high value products and services. They have a benefit of offering services online which
helps them cater large customer base which eventually leads to higher sales and profits.
Woolworths Supermarkets also aim at providing connected, personalized and convenient
shopping experience and take into consideration diverse culture and language of different
customers (Lei, Guo and Liang, 2016).
2.7 Legal and Regulatory Environment
Woolworths Supermarkets has to work in compliance with various legal regulation
imposed by government of Australia for smooth and effective operations of business in legal
manner. They have to abide with product and safety to laws to protect interest of consumers.
They also have to work in compliance with various laws like worker's compensation regulation,
corporate registration regulations, good transportation regulations and other import and export
tariffs for effective and smooth functioning of organization in a legal manner. Government
impose very stringent and aggressive regulations to protect the interest of the economy and
general public this affects operational efficiency of the organization. Mandatory employee
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benefit increases cost of the company which lowers the profit margins of the company (Sánchez-
Díaz, Holguín-Veras and Wang, 2016). Ensuring compliance with various laws and regulations
impose burden on Woolworths Supermarkets and has proved to be onerous and costly for the
organization. Compliance with various national and international standards impose additional
burden on the company.
2.8 Global Environment
Woolworths Supermarkets take necessary effective measures to create operational
efficiency and productivity of the organization(Smith, 2018). They aim at implementing and
adapting to various new technologies like social media platforms and personal website to
effectively communicate with customers on a real time basis. Strong global network with the
help of various advanced technology helps company distribute goods to the larger section of
market effectively and efficiently in a coordinated manner. They have a strong supply chain
which helps them reach products to large customer base which increases operational efficiency,
performance and productivity of the company in an effective manner which help company
achieve organizational goals and objectives(So And et.al., 2016). Woolworths Supermarkets is
influenced by large number of competitors who are present in the market and offering same
range of products with more attractive prices and quality. Woolworths Supermarkets aims at
achieving competitive advantage by penetrating and diversifying business to the markets which
will help them attain competitive advantage by offering larger range of products at attractive
price.
3. Interpretation and Discussion
3.1 Main Opportunities
The major opportunity to Woolworths Supermarkets is that it has a strong supply chain
for effective transportation of goods from one place to another. This helps in timely supply of
goods and effective customer satisfaction. Woolworths Supermarkets adapt to advance
technology and this gives them an opportunity to reach larger customer base effectively and
efficiently(Venkatesh, Rathi and Patwa, 2015).
The major opportunity to Woolworths Supermarkets due to economic environment is that it
helps in effective trade and business of goods and services which helps them reach prospective
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customers in an effective manner. Australia is a growing and developing economy which gives
Woolworths Supermarkets impressive opportunity for sustainable growth and success.
The main opportunity to the company is that Woolworths Supermarkets value the
economy the most and offer products which are of higher significance to its customers. The main
opportunity with Woolworths Supermarkets is that they focus on green and recyclable products
which leads to lower carbon emission in the economy. killed, talented, knowledgable and
experienced labour force helps increase operational efficiency of Woolworths Supermarkets
which leads to higher productivity and performance. Resource environment gives major
opportunity to company as they focus on green economy and focus more on environmental
friendly products with lower carbon emission. The major opportunity with Woolworths
Supermarkets is higher customer base which leads to higher profit margins. The major
opportunity with Woolworths Supermarkets is that they have strong international strategic
alliance and major competitive advantage through global outsourcing(Independent retailers call
for stronger laws to prevent Coles, Woolworths eliminating competition, 2014).
3.2 Main Threats
The major threat due to technological environment is that technology is obsolete and
changes at a faster pace which leads to higher cost to the company.
Economic environment pose a major threat on Woolworths Supermarkets at the time of
economic downfall, unemployment and higher inflation rate. This affects the operational
efficiency of the organization.
Increased number of rivalry competitors offering same range of products and in the
existing market impose major threat to the business which hamper the market share and
profitability of business(Impact on the Environment, 2019). Labour environment impose major
threat on Woolworths Supermarkets as with increase in number of competitors skilled and
knowledgable workers shift to different companies for better growth and career prospects.
Recruitment and selection process leads to rise in cost to the company which leads to lower
profit margins. Increase in scarcity of resources leads to ineffective operational efficiency and
productivity. Increase in awareness of customers leads to influence operations of business.
Compliance with major regulations and standards impose major burden on the Woolworths
Supermarkets and leads to higher cost and lower profitability.
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4. CONCLUSION
From the above study it has been summarized that there are various external environment
factors which influence the operational efficiency of Woolworths Supermarkets. Technological
factors influence the operations of the business in the most effective manner which helps attract
larger customer base. It also concludes economic environment factors like unemployment, high
inflation rate, which influences operations of the business. Legal regulations impose major
burden on the company which leads to higher cost to company. Further it also includes
opportunities and threats of the company.
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REFERENCES
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among Employees in Retail Industries. International Journal of Engineering and
Management Research (IJEMR). 6(4). pp.141-147.
Çifci, S and et.al., 2016. A cross validation of Consumer-Based Brand Equity models: Driving
customer equity in retail brands. Journal of Business Research. 69(9). pp.3740-3747.
Ferraris, A., Santoro, G. and Dezi, L., 2017. How MNC’s subsidiaries may improve their
innovative performance? The role of external sources and knowledge management
capabilities. Journal of Knowledge Management. 21(3). pp.540-552.
Hasan, A., 2018. Impact of Store and Product Attributes on Purchase Intentions: An Analytical
Study of Apparel Shoppers in Indian Organized Retail Stores. Vision. 22(1). pp.32-49.
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product-service retail models. Journal of Fashion Marketing and Management: An
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Conference on e-Business Engineering (ICEBE) (pp. 134-138). IEEE.
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effects on freight trip attraction. Transportation. 43(1). pp.177-196.
Smith, S., 2018. An assessment of factors influencing the valuation of retail petroleum
companies (Doctoral dissertation, North-West University).
So, K.K.F. And et.al., 2016. Enhancing customer relationships with retail service brands: The
role of customer engagement. Journal of Service Management. 27(2). pp.170-193.
Venkatesh, V.G., Rathi, S. and Patwa, S., 2015. Analysis on supply chain risks in Indian apparel
retail chains and proposal of risk prioritization model using Interpretive structural
modeling. Journal of Retailing and Consumer Services. 26. pp.153-167.
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Walton, B., Petrovici, D. and Fearne, A., 2017. Factors Impacting the Success of new Product
Development in the UK Grocery Retail Industry: An Empirical Examination of Product
Innovation Performance. In The Customer is NOT Always Right? Marketing
Orientationsin a Dynamic Business World (pp. 182-185). Springer, Cham.
Online
Impact on the Environment. 2019. [ONLINE]. Available through:<https://retailsector-
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Independent retailers call for stronger laws to prevent Coles, Woolworths eliminating
competition. 2014. [ONLINE]. Available through:<https://www.abc.net.au/news/2014-
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