Holmes Institute: HI5003 Economics for Business - Woolworths Report

This report provides an in-depth analysis of Woolworths, a major Australian supermarket chain, from an economic perspective. It begins with an introduction to business economics and the company, followed by an examination of the retail industry's background and market structure, specifically focu...Read More

Economics for
Business

Table of Contents
INTRODUCTION.......................................................................................................................................2
TASK 1.......................................................................................................................................................2
Introduction to the company....................................................................................................................2
TASK 2.......................................................................................................................................................3
Industry/ Sector Background...................................................................................................................3
TASK 3.......................................................................................................................................................4
The market structure of industry/ sector..................................................................................................4
TASK 4.......................................................................................................................................................4
Factors that influence demand for the company’s products.....................................................................4
TASK 5.......................................................................................................................................................6
Factors that influence supply of the company’s products........................................................................6
TASK 6.......................................................................................................................................................7
Elasticity..................................................................................................................................................7
TASK 7.......................................................................................................................................................7
Impacts of an event on the industry/company..........................................................................................7
CONCLUSION...........................................................................................................................................8
REFRENCES..............................................................................................................................................9

INTRODUCTION
Business economics is a field of economics that deals in organizational, financial, market related
and environmental issues that are faced by various organizations. It is study of consumption,
distribution, product factors and concept of scarcity. It helps to analyze internal factors as well as
external factors that have impact on operations of a business. It is important for a business to
know about the concepts of economics as every business operates within the economy (Castillo-
Vergara, Alvarez-Marin and Placencio-Hidalgo, 2018). This report is based on Woolworth’s
supermarket that is one of the biggest Australian chains of supermarkets and grocery stores that
has its headquarters in Australia. There is further discussion related to the company this report.
Also, the Industry background and market structure of retail sector industry is discussed. It is
important to know about the factors that influence demand and supply of the products of
company. In the end of the report their discussion related to event and its impact on the industry.
TASK 1
Introduction to the company
Woolworth was founded 96 years ago in 1924. The company is one of the biggest chains of
supermarkets and grocery stores owned by Woolworths Group. The company deals in grocery
like vegetables, meat, fruit, packaged foods, etc. Along with that company sells DVDs,
magazines, health and beauty products, pet and baby supplies, household products, and
stationery. The company has its operation both online and offline. It has around 981 stores and
43 Woolworth Metro convenience stores. Additionally, the company provides home delivery
services to its customers. To successfully operate it is important for an organization to make
proper study related to theory of economics. The company understands the needs and wants of
customers to provide them goods and services accordingly. Woolworth provides employment to
around 225000 employees. The company has its operations in 1024 locations. They made their
slogan to attract more customers and establish a strong image in the market. "Fresh Food
People" shows that company will serve fresh food to all its customers. To value the customers,
company provides loyalty rewards to the customers (Lee, 2019). The company has its
headquarters in Bella Vista and is largest company in Australia if measured in revenue. The

company aims to provide fresh fruit and vegetables to all the customers. It is one of the
innovative retailers in Australia that understand the needs and wants of customers and provide
them goods accordingly. The company takes care of all the employees and also take measures to
satisfy them. Woolworth has around 31% of share in retail sector. The company is one of the
major contributors to Australia’s economy contributing 4.1% of GDP of the country.
TASK 2
Industry/ Sector Background
Retail trade industry relates to business activities that are linked with dealing of goods to
its final customers or ultimate buyers. It develops a link between manufacturer, wholesaler and
customer of a particular product. A retailer sells products in small amount or quantity at retail
price to customers for personal use. Retails played a vital role in a distribution channel and a
medium between manufacturer and customer (Brock and Evans, 1989). There is about 140000
retail business that accounts for an approximate of 4.1% of Gross Domestic Product and nearly
about 10.7% of employment level of Australia. It reveals a great diversification in context of
size, format of retailing, nature of goods and services offered, competition within the market area
and other related factors. Australia has left behind various developed and developing countries in
terms of evolution of its retail sector and expanding it through online medium. Commission has
given an estimation that out of total retail sales made in Australia nearly 6% sales are accounted
through online mode and further bifurcated as approx. 4% i.e., about 8.4 billion is amounted of
domestic online retail and about 2% that is equal to nearly 4.2 billion are earned through sales
made from overseas. Australia’s retail sector includes about 39 industries that ranges from
Pharmacies, general stores, groceries store, sprots and camping equipment stores, cosmetic and
toiletry stores, clothing stores, Fuel Retailing stores and many other types serving through retail
stores. There are five major retail sector that is earning huge profit margins in Australia namely
Pharmacies, Garden Supplements, Furniture Stores, Houseware Retail Stores and lastly
Hardware and Building supplies Retail Stores (Acs, 1992). The average profit margin earned by
retail companies of Australia has nearly amounted to 4.3% of total revenue earned in the year
2020. There was a rise of approx. 9.4% in December, 2020 in terms of turnover made by
Australian retailers in comparison to December 2019.

TASK 3
The market structure of industry/ sector
The nature of Australian market structure of retail sector/ industry is oligopolistic. In such
market structure number of small organizations none of which have a significant impact and the
competition among few big companies are very less, as these are dominated by few large firms
selling homogenous and some differentiated goods or services (Kay, 1996). There are two major
retail super markets of Australia namely the Woolworths and Coles. There is a direct impact of
Australia’s economic condition at its retail industry. Market structure of Australian retail
industry is changing because of shift of customers from offline shopping mode to online
shopping platforms. In recent times there is an increase in online retail stores with highly
competitive pricing strategy. An interesting fact about Australian retail store is, there is a
variation in growth rate of grocery and non-grocery retail stores. Non- grocery stores have shown
an immense growth in comparison to the grocery stores form the year 2015 till recent times, and
this difference is due to intense pricing competition. Retail sector of Australia has witnessed a
constructive growth despite of the fact that, there was a low increase in income of people. This
growth has influenced customers spending and buying pattern, supported by low rates of interest
and increased credit taken by households. The upcoming future aspects of retail stores of
Australia are dependent on attention giving forces like changing customers needs and
preferences, change in buying behavior, inflow of foreign competitors that emphasizes on
strategies formulation keeping in mind new approaches used in retailing. It requires coordinating
activities and various delivery plan of action for identification of non-responsive retailer.
TASK 4
Factors that influence demand for the company’s products
Demand is desire of customers to buy a product and their willingness to pay for it. It is
important for an organization to study the factors that impact the demand of product offered by
the company (Samuelson and Marks, 2021). The major factors that impact the demand of
Woolworth are as follows:

Taste and Preferences: Taste and preference is one of the major factors that have impact
on demand. The organization serves its products according to the preference of customers
usually have higher demand. It is responsibility of company to know about the preference of
customers. It is important for every organization to conduct a proper research and analyze
demand of products to customers (Lenka, 2017). In relation to Woolworth company understand
the needs and wants of customers and serve them product accordingly that fulfil their preference
understand the needs and wants of customers and serve them product accordingly that fulfil their
preference.
Income of people: Another factor that has impact on the demand of product offered by
an organization is income of people. The mode is the income of people greater is their capacity
to buy and that is directly related with demand of a product. Purchasing power of customers
depends on income of customers. Woolworth provides goods and services at reasonable price so
it has huge demand in the market. It is important for an organization to serve the products
according to value offered for the product.
The Number of Consumers in the Market: Market demand of a product can be
obtained by adding all the individual demands of the customers at possible price. The more the
number of customers demand also increases. The greater number of potential customers of the
company the more is demand of the products offered by the company. In relation to Woolworth,
the company has captured the market in an effective way. It is prominent for a company to attract
more and more customers as that will help the company to produce foe to satisfy the needs and
wants of customers. The company has loyal customers due to quality products provided by the
company. Loyal customers are important for an organization as they help the company to
become successful.
Advertisement: Advertisement also impacts the demand of product. As it helps to raise
awareness about the product offered by a company to its customers. Promoting the goods and
services is vital for an organization (Dranove, Besanko, Shanley and Schaefer, 2017). In respect
to Woolworth the company has established a brand position in the market of Australia and the
company use innovative ways to promote its goods and services. This is another reason that
enhances the demand of products offered by the customers.

TASK 5
Factors that influence supply of the company’s products
Supply means the quantity of products that a producer is planning to sell in the market. The
videos factors that impact the supply off Woolworth Company are mentioned below:
Competitors: The number of firms that are offering the same product and services shows
the competition in the market (Elert and Henrekson, 2019). The greater number of players have
positive impact on the supply of a company. In relation to Woolworth the company has
competitors but is leader in the market. The company supplies goods and services as per the
requirement of customers.
Productivity of workers: Supply of an organization also depends on the workers as they
are the one responsible for the production process. The productive and efficient employees are
more company able to supply. A company provides proper training to all the employees so that
they help to achieve the goals and objectives of the organization effectively. In relation to
Woolworth the company has motivated employees that are productive and help the organization
to meet the targets.
Technological improvements: It is important to innovate. The production or supply of in
organization is also influenced by the technique of production. There are regular updates in the
technology. It is prominent for an organization to study about the technological advancement as
it helps to enhance the supply. It is important to use effective technology that helps to reduce cost
and produce more. In respect to Woolworth Company, it uses updated technology and new
machines to achieve economies of scale.
Transportation: It is another factor that has impact on the supply of products offered by a
company. Transportation helps to reduce the cost and increase the supply of products (Jonker,
Stolk and Versteegh, 2017). Woolworth has advantage of transportation facility that benefits to
increase the supply of products offered by the company.

TASK 6
Elasticity
It is a measure that is used in economics to show the responsiveness of quantity demanded
of a product to change in its price. It helps to analyze the sensitivity of products in respect of
price. All the products have different elasticity. It is vital for an organization to calculate the
elasticity of demand. In relation to retail sector, it helps retailers to decide the price of products
that help them to attain maximum profit.
For ascertaining growth and success of retail sector, it is important to know the elasticity of
demand that affects their growth. It is analyzed from the market that price elasticity gives a great
impact on demand (Ehret and Wirtz, 2017). There is an inverse relationship between price and
demand. That means increase in price leads to less in demand and vice versa. Retail sector firstly
analyze the elasticity then take decision accordingly in which they decide price of product. Rice
gives impact on demand of retailing sector products. They identify the current scenario of market
such as price of product. After that take decision regarding supply of product.
TASK 7
Impacts of an event on the industry/company
Analyzing demand and forecast: It relates about buyer behavior that shows the consumers
inclination that affects the demands and its changes. It includes the price of the goods that causes
consumer preferences as per like income, taste etc. the list will continue. Forecasting demand is a
method that is utilize for the future demands as per forecasting it may predict that it is based on
the former performance. This is an essential factor for an enterprise to done adequate estimation
that assists them to generates the required skills and values as per quantities of product and
services at the adequate period of time which is eventually knowledge the arrangements to be the
virtual part of the main section at various elements of production that assist them to make it more
effective like raw materials, labor, tools and equipment etc. that assures the business economic
terms as offers it to scientific valued term that generally help in forecasting of demand.
Production and cost analysis: An economist has the following criteria and obligations in
respect to the production values that are based on minimum size of the outcome that ensures the

objective and goal orientation of the firm that is also ensures about an enterprise that did not
incur the unduly of cost manner. By this the production examine that the organization have the
several options to select it in an efficient way or in an effective way of generating the outcome of
the value of cost (Pitelis and Runde, 2017). The cost factor analysis that it enables the company
and its behavior and nature of cost that influence its outcome, period of time and the main
evaluated size of the plant change. Whether by utilizing as such task and field the firm can
evaluates the more profit generated thoughts and ensures the minimum level of outcome which is
providing its least possible cost effects.
CONCLUSION
From the above report it can be analyzed that economics is important to be studied by an
organization. As every business operate in economy. Woolworth is a famous organization that
has large contribution in Australia’s economy. The company has largest sales in the country is
retail sector. The report has discussion related to the company and industry. There is information
related to market structure of the retail sector. After that factors that have impact on demand and
supply of Woolworth are mentioned. Elasticity is also described in the report. In the end there is
discussion related to an event and its impact on the organization. It can be said that an
organization should have knowledge about business economics as it helps to achieve success.

REFRENCES
Books and Journals
Acs, Z.J., 1992. Small business economics: A global perspective. Challenge, 35(6), pp.38-44.
Brock, W.A. and Evans, D.S., 1989. Small business economics. Small business economics, 1(1),
pp.7-20.
Castillo-Vergara, M., Alvarez-Marin, A. and Placencio-Hidalgo, D., 2018. A bibliometric
analysis of creativity in the field of business economics. Journal of Business
Research, 85, pp.1-9.
Dranove, D., Besanko, D., Shanley, M. and Schaefer, S., 2017. Economics of strategy. John
Wiley & Sons.
Ehret, M. and Wirtz, J., 2017. Unlocking value from machines: business models and the
industrial internet of things. Journal of Marketing Management, 33(1-2), pp.111-130.
Elert, N. and Henrekson, M., 2019. The collaborative innovation bloc: A new mission for
Austrian economics. The Review of Austrian Economics, 32(4), pp.295-320.
Jonker, M.F., Stolk, E.A. and Versteegh, M.M., 2017. Are health state valuations from the
general public biased? A test of health state reference dependency using self‐assessed
health and an efficient discrete choice experiment. Health economics, 26(12), pp.1534-
1547.
Kay, J., 1996. The business of economics. OUP Oxford.
Lee, H., 2019. Against the microfoundation hegemony: cooperation in biology, business and
economics. Against the Microfoundation Hegemony: Cooperation in Biology, Business
and Economics., pp.53-77.
Lenka, S., 2017. The relationship between company returns and leverage depending on the
business sector: Empirical evidence from the Czech Republic. Journal of
Competitiveness, 9(3), pp.98-110.
Pitelis, C. and Runde, J., 2017. Capabilities, resources, learning and innovation: a blueprint for a
post-classical economics and public policy. Cambridge Journal of Economics, 41(3),
pp.679-691.
Samuelson, W.F. and Marks, S.G., 2021. Managerial economics. John Wiley & Sons.