Analysis of Countdown-Woolworths Group International Business

This report provides a comprehensive analysis of the international business collaboration between Countdown and Woolworths Group. The study delves into the strategic alliance, exploring how the collaboration has enhanced organizational effectiveness through innovation, increased shareholder value, improved customer experiences, and evolved the drinks segment. It examines the motivations behind the alliance, including overcoming market competition, business growth, and risk sharing. The report also discusses issues related to partner selection and management, governance and structure, and performance evaluation, including market and financial indicators. Furthermore, it addresses the challenges faced, such as motivation, partner selection, governance, and exit strategies, offering a detailed overview of the factors contributing to the success and sustainability of this international business partnership. The analysis covers various aspects such as innovation implementation, value for shareholders, customer experience, and portfolio value, providing a holistic understanding of the collaboration's impact and strategic importance.

Running head: INTERNATIONAL BUSINESS
International Business
- Countdown-Woolworths Group
Name of the Student
Name of the University
Author Note

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Introduction:
International collaborations are alliances or partnerships between two or more
organizations (profit or non profit) from more than one country with the aim of fostering
development of the allied organizations though a collaborated effort, sharing of knowledge
and information as well as resources. The collaborations help the organization by utilizing the
strengths of each of the participating organization in a way that can support the collaboration
or alliance (Ganotakis & Kafouros, 2015). The collaborations can also help foreign
companies to enter into a new market, increase the product sales, increase their profits,
achieve a competitive advantage, secure a stable supply of raw products, reduce vulnerability
of the business and incorporate diversity through the collaboration with a local organization.
In such kind of collaboration, the local partner can support the organization with their
knowledge and experience in the local market while the international partner can provide
resources, knowledge and help in the diversification and growth of the alliance (Melander &
Lakemond, 2014; Luzzini et al., 2015).
Countdown-Woolworths Group is an International collaboration between two
companies, Countdown supermarket based in New Zealand and Woolworths Group based in
Australia. This collaboration have let to the setup of Countdown supermarkets which operates
across New Zealand with a total of 180 stores and is a subsidiary of Woolworths Limited.
This collaboration also have allowed the Countdown to develop itself as the biggest
supermarket chain in New Zealand, having the maximum number of stores in the countries
and outcompeting its competitors such as Four Square. This alliance was formed in 2005
when Woolworths NZ was purchased from Foodland Associations Limited by Woolworths
Limited (Australia), followed by the rebranding of the Foodtown and Woolworths Stores to
Countdown Stores in 2009 (woolworthsgroup.com.au, 2018).

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The aim of the study is to analyze this collaboration to understand how and why the
collaboration has increased the organizational effectiveness, the different issues faced while
developing the collaboration, feasibility of the collaboration and any alternative exit to the
collaboration.
Discussion:
-HOW and WHY this collaboration will increase organizational effectiveness.
The collaboration between Countdown and Woolworths have helped to increase the
organizational effectiveness of the Countdown Stores across New Zealand and helped it to
grow to become the biggest supermarket chain in the country (woolworthsgroup.com.au,
2018). Discussed below is how and why this collaboration has helped to increase the
organizational effectiveness:
Implementing Innovation:
The collaboration have enabled the implementation of innovative ideas such as digital
business to support organizational effectiveness and make the business transactions easier
and more seamless. The Countdown stores have implemented the WooliesX which is a new
digital arm of Woolworths which combines digital business strategies with e Commerce,
customer experiences and customer services. This have enabled the company to make more
than AUD 1 billion in sales helping them to service 6.2 million orders (between 2017 and
2018) with a promising growth rate of 30%, thereby supporting better organizational
effectiveness (Mortimer & Milford, 2018; woolworthsgroup.com.au, 2018).
Increasing value for shareholders:
Between 2017 to 2018, the organization was able to make a total return of 22.4% of
their profit to the shareholders, thereby helping to increase the value for the shareholders.

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This was enabled by an improvement of the financial performance of the organization after
the collaboration and expansion. The profits helped in the increase in the share price of the
organization, thus showing an improvement in the organizational effectiveness
(woolworthsgroup.com.au, 2018; Parkinson, 2018).
Creating better experience for the customers:
The collaboration has helped to improve the experience of the customer mainly
because of the following reasons. Firstly the collaboration have allowed sharing of
knowledge between Woolworths and Countdown through better customer loyalty programs
and customer services implemented across the Countdown Stores. Secondly, involvement of
effective customer relations team from Woolworths has supported better customer
experience. This has provided the customers a convenient, personalized and a connected
shopping experience, thereby making it a highly successful collaboration in the New Zealand
market (woolworthsgroup.com.au, 2018; Gupta & Singh, 2015).
Evolving the Endeavour Drink Business:
The collaboration has allowed a significant growth to the drinks segment of
Countdown through an evolution in the business. The collaboration has allowed growth in
sales of the organization thereby supporting the growth of the organization through effective
marketing strategies and addresses the changing habits and choices/preferences of the
customers. This has also helped the organization to stay ahead of the competition
(woolworthsgroup.com.au, 2018; Biddle, 2016).
Portfolio Value:
The sharing of resources between Woolworth and Countdown has enabled a reduction
of the prices of more than 4000 products across the supermarket chain. The collaboration has

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allowed an increase in the value of the portfolio of the organization, as the market values for
both Woolworth and Countdown was improved by this collaborated effort. The strategic
alliance also led to the implementation of customer loyalty programs, wholesale food supply
as well as improving the fuel supply across the convenience stores. The alliance helped to
improve the network of fuel sites where the customer can redeem fuel discounts and earn
reward point in order to increase the inflow of customer to the Metro Stores and also benefit
the petroleum business further improving the value of the portfolio of the alliance
(woolworthsgroup.com.au, 2018; Spillan & Ling, 2015).
Implementing End to End process:
As a result of the strategic alliance, the ensuing rollout included the training for
90,000 employees, up gradation of the wifi across 850 stores and added more than 9500
remote handheld devices in the stores which allowed end to end customer service and
improve the customer experience in the stores. This development helped to increase the speed
of checkouts for the customers, simplified the process for the stores and eliminated the
paperwork, making the process much simpler for the store owners. These new rollouts further
helped to improve the efficiency of the organization allowing it to process more orders every
day, and thus service more customers in an effective manner while helping to improve
customer experience (woolworthsgroup.com.au, 2018; Morrison, 2016).
-issues pertaining to (1) motivation, (2) partner selection and management, (3)
governance and structure, and (4) performance evaluation and exit strategies.
Motivation:
The formation of the strategic alliance between Woolworth and Countdown was
motivated by many factors such as:

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Overcoming the market competition: Due to the formation of this alliance, the organization
was able to overcome competition from other businesses (like Four Square), and acquire a
better market hold in New Zealand (Cameron & Green, 2015).
Business Growth: The alliance also helped in the business growth due to the sharing of
resources and knowledge from both Woolworth and Countdown, allowing them to share their
expertise in the retail market in a way that can help the collaboration to grow and prosper in
New Zealand (Cameron & Green, 2015).
Increase in customer Base: Due to the collaboration, the market segments for both
Woolworth and Countdown could be effectively merged into a larger customer base, thereby
increasing the popularity of the brand across Australia and New Zealand (Cameron & Green,
2015).
Sharing risks: The collaboration also helped to share the market risks by both the
organizations and thus ensured any potential adverse effects and impacts of the collaboration
or any future market crashes to be shared among the partners in order to avoid the full impact
on any one organization (Cameron & Green, 2015).
Partner Selection and Management:
Selection of the business partner was influenced by several factors such as:
Similarity in organizational Vision: Both Woolworth and Countdown shares similar
organizational vision of providing the best service and experience for the customers, which
helped in the development of the alliance to a significant level (Spillan & Ling, 2015).
Business Network: Woolworth already had an extensive business network across Australia
and New Zealand which allowed the alliance to easily spread its business across New

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Zealand by rebranding and refurbishing the existing stores under Countdown without having
to develop its own network from scratch (Biddle, 2016).
Experience: Woolworth group was established in 1924, making it operational for almost 94
years, making it one of the oldest businesses in this industry. Through the alliance,
Woolworth was able to share their business experience with Countdown which was
established in 1981 (37 years ago) and thus develop a vast pool of experience gathered be
both these organizations to support the alliance (Cameron & Green, 2015).
Financial Strength: Woolworth also was able to provide a significant financial strength to the
alliance through its robust financial structure and reserves which helped in the development
and growth of the strategic alliance, making it the fastest growing retail in New Zealand
(Biddle, 2016).
Resilience to market risks: The alliance also provided resiliency towards market risk in a
dynamic consumer market where changing consumer needs and preferences are very
common (Spillan & Ling, 2015).
Governance and Structure:
The strategic alliance utilizes a hierarchical structure of governance in which the
Chairman and CEO (Gordon Cairns) is at the top of the hierarchy to whom the rest of the
management reports to (woolworthsgroup.com.au, 2018). Discussed below is the governance
strategies used in the organization.
Shared Understanding: The governance of the alliance is based upon a shared understanding
of the organizational values, goals and objectives, which guides the management towards its
strategic decision making process. This can be a useful governance strategy since it allows

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both the partners to be on the same page, having a common or shared goal in mind to
continue with the management of the alliance.
Accountability: Accountability is of key importance in the organization which ensures that
every employee has a complete responsibility and ownership of their actions and is
answerable to the stakeholders and management of the organization for their actions and the
ensuing outcomes. By ensuring accountability, the organization can ensure that the business
partners take responsibilities of their activities and decisions.
Commitment towards the organization also influences the governance system of the
organization which starts at the top of the hierarchy and ends with each employee. Through
the focus on commitment, the business partners can show their seriousness towards the
growth of the organization and lead the employees towards the shared objectives of the
business.
Codes of conduct and leadership: The organization maintains a strict code of conduct based
on customer centricity and business objectives and values and the management uses
participatory leadership strategies.
(Spillan & Ling, 2015; Biddle, 2016)
Performance and Evaluation and Exit Strategies:
Evaluation of the performance of the organization is an important concept which can
help the management and stakeholders to assess how the business is performing and if they
are able to achieve the business goals and objectives. The performance is quantified and
evaluated using various strategies by the organization. Discussed below are those strategies:
Market Performance: This is indicated by the market penetration of the brand as well as the
market share. This also helps to understand how well the organization is able to use its

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economic resources to an optimum level. The market performance is determined through
several factors such as product efficiency (effectiveness of the organization to produce
goods/products), distribution efficiency (usage of cost effective distribution systems and
minimizing costs of distribution), pricing efficiency (setting up a fair but effective price for
the product), performance of the product (the ability of the products to address the needs and
expectations of the customer), technology and innovation (improving organizational
performance and efficiency through technology and innovations) (Parmenter, 2015; Anand &
Grover, 2015).
Financial Indicators: The financial performance of the organization is assessed using various
financial indicators such as operating cash flow, working capital, gross profit margin, net
profit margin, current ratio, return on equity, inventory turnover, Liquidity and solvency
ratio, Revenue vs. target ratio and expense vs. budget ratio. These values help to understand
the performance of the organization in pure technical terms and compare with other
organizations to assess performance (Levanon et al., 2015; Amaitis et al., 2016).
Quality of the product: Product quality is an important index that shows an improved
performance of the organization in product development and manufacture in order to ensure
better satisfaction of the customers and therefore improve the profitability of the
organization. The quality of the products can moreover be measures through the following
values such as defect ratio, cost of defects, product volatility, product complexity, product
returns and customer satisfaction index (Wang, 2017).
Customer Satisfaction: Customer satisfaction is another index that helps to understand
whether the organization is able to satisfy the customers. Customer satisfaction can be
measured through customer feedbacks and reviews. Additionally, number of repeat orders
help to measure customer loyalty and customer retention (Powers et al., 2017).

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Internal Indicators such as employee training and job satisfaction are important internal
indicators which impacts the employee retention and employee turnover rate as well as the
performance of the employees. Also, the number of trainings given to the employees and
average length of service of the employees also acts as effective internal indicators of
organizational performance in the alliance (Parmenter, 2015).
Operational Variables such as sales and profitability are important operational variable that
helps to assess operational efficiency. Additionally, product life cycle and production time
also helps to analyze the operational efficiency of the business (woolworthsgroup.com.au,
2018).
The exit strategy that can be used by the business partner to exit from the alliance in
case of any adverse incident can be Liquidation and Closure, using which the exiting partner
can liquidate its share of properties and holdings. Also, the exiting partner can sell of its share
of the business to another company with similar expertise, helping in the maintenance of the
alliance after the exit of a partner (Devi, 2016).
-Justification of feasibility
Potential investments in the alliance can be justified through several aspects. These
aspects have been discussed next:
Financial Justification: The financial performance of the organization can be a significant
justification for investing in the business. With a good financial performance, the potential
investors are more likely to feel assured and comfortable to start investing or continue
investing in the business and help the company to grow and give them positive benefits
(Miletkov et al., 2014).

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Cost Justification: The investors can also be attracted through the justifications of the costs of
investments, which can impress the investors upon the exact costs that would be incurred
through their investment, which they can then compare to the potential gains from the
investment and assess the feasibility of the investment (Williams et al., 2015).
Return on Investments: This can help the investors to assess how much return they can expect
from their investment which can thus influence their investment related decisions. Better ROI
can also assure investors to start or continue investing in the alliance. Through the ROI, the
effective efficiency of the investments can be understood and identify whether the gains from
the investments is able to cover the costs of investment, thus attracting potential investors
(Westcott, 2016).
Customer Satisfaction and Customer Retention Rates: These factors help the organization as
well as investors to understand the performance of the organization to address the customer
needs and expectation and thus the possible sustenance of the business. Good customer
satisfaction and customer retention shows that the business has a significant customer base
consisting of a significant number of loyal customers which reflects towards a good
performance of the business (Ennew et al., 2015).
Market Share and Profitability: This is a vital indicator that can help the investors and
stakeholders to understand the extent to which the alliance was able to penetrate and hold
market shares and the extent of the awareness of the brand thus supporting better profitability
of the business. A good market share is an indicator of a stable business which can help to
attract potential investors to the business (Spillan & Ling, 2015).
-alternative exit to collaboration

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Apart from the merger and acquisition, additional exit strategies to the collaboration
can also be utilized. These alternatives include:
Planned Voluntary Exit or Voluntary Buyout: This strategy can help the partners to
voluntarily exit the alliance in case of any adverse events preventing the partner to continue
working in the alliance. The business partners can make a predetermined plan on the
situations that can warrant exit of a partner from the alliance, such as financial conditions,
performance issues or loss of business allowing the other partner to buyout the complete
business transferring the ownership to themselves (Klatzke, 2016).
Initial Public Offering: The organization can also use initial public offering strategy which
can allow the partners to offer their company stocks to public stock exchange, thereby
transferring the ownership in a strategic manner. This can also help to minimize any potential
losses for the business partner exiting the alliance without affecting the operations of the
business. Listing the shares in the public exchange also helps the alliance to acquire new
business partners or enable the existing partner to continue without the need for a new
alliance (Fjesme, 2016).
Liquidation and Closure: In case of serious crisis situation where the alliance is completely
failing to provide any fruitful results and causing losses for the partners, liquidation and
closure of the business can be strategies to cut any further losses by completely resolving the
alliance, and closing the business. Liquidation of the assets can help to take out any possible
financial gains to cover the loss as much as possible (Spillan & Ling, 2015).
Selling it to similar businesses: The business partners can also exit the alliance by selling the
organization to other businesses in the same industry, having similar experiences, which can
help them to continue the business through the transfer of its ownership, thus preventing the