Analysis of Globalisation Issues for Woolworths Limited: Case Study

This case study examines the issues faced by Woolworths Limited due to globalization. The company, a major supermarket chain in Australia, is experiencing challenges related to increased competition from international players like Aldi and Tesco, leading to declining domestic sales and market share. The analysis employs a cause-effect diagram to identify factors such as ineffective communication, poor distribution networks, and high operational costs as key contributors to these problems. The study recommends strategies to improve both domestic and international performance. These include market segmentation, online marketing, sales promotion, and loyalty programs to combat internal competition. For international expansion, the recommendations emphasize customer needs analysis, logistical arrangements, building distribution channels, and effective supply chain management. The study provides a detailed plan with timelines for implementing these strategies to enhance Woolworths' competitive position and achieve sustainable growth in a global business environment.

Case Study

Contents
COMPANY INTRODUCTION......................................................................................................1
Woolworths Limited:...................................................................................................................1
PROBLEM IDENTIFICATION & ANALYSIS.............................................................................1
Issues related to Globalisation for Woolworths Limited:............................................................1
RECOMMENDATIONS.................................................................................................................4
Coping with the problems related to Internal competition as a result of Globalisation:.............4
Coping with the challenges in International expansion and better performance in a global
business environment:.................................................................................................................6
REFERENCES................................................................................................................................8
APPENDICES.................................................................................................................................9

COMPANY INTRODUCTION
Woolworths Limited:
Woolworths is one of the largest supermarkets chain which has been operating in Australia
with more than 995 stores spread across the whole continent with the headquarters of the
company located at New South Wales, Australia. The company established its first store in the
year 1924 in Sydney. Since then, the operations of the company have been expanded by the
management and more and more stores and branches are being established (Raghuram and
Kuberkar, 2008). In the year 2019, the company generated a revenue of A$39.568 billion and
employed more than 1,00,000 people which demonstrates the market potential and growth aspect
of the company. International operations of the company are limited to few other countries which
includes New Zealand, Hong Kong, Singapore etcetera. The operations of the company are
aimed at providing a wide range of products and daily consumables to its customers ranging
from vegetables, meat, fruits, packed foods and other grocery items to other consumer goods
such as magazines, health and beauty essentials, pet and baby supplies, DVDs, stationery
etcetera (Keith, 2012). Riding the wave of technology and innovation, the management of the
company has also opened up a new sales platform which is online sales which provides the
comfort of ordering grocery and other products while sitting at home to the customers. The
management of the company have huge growth and expansion plans for the company and has the
main objective of promoting the trade practices of the company beyond the national boundaries.
Some of the key issues which are being faced by the management of the company are being
discussed in the following sections of the report.
PROBLEM IDENTIFICATION & ANALYSIS
Issues related to Globalisation for Woolworths Limited:
Pace of globalisation and rapid internationalisation of trade has influenced and encouraged
the management of almost every organisation in any industry to expand the trade activities of the
company beyond national boundaries. Changes in the field of technology and innovation have
been drastic which has helped many companies to effectively monitor and control the operations
and activities related to the international trade. Similarly, the managers of Woolworths have also
made efforts to keep up with the trend of globalisation and expand the international trade
operations of the company. Several issues have been faced by the company which has affected
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the process of internationalisation for the company such as increasing competition and price-
wars (Gill, 2007). The key issues related to globalisation can be better identified with the help of
a cause-effect analysis for the company which is being done as follows:
Cause-effect analysis:
Cause-effect analysis is an important technique which is used by business managers to
analyse all the possible causes of a given business problem with the help of a diagram-based
approach. It is a very useful tool for thorough analysis of any business problem or situation and
helps in identification of main reasons causing any problem (Pearl and Mackenzie, 2018). A
cause-effect analysis for Woolworths helps in determining the reason or causes for the issues
which are being faced by the company in globalisation and based on this analysis, future policies
and decisions of the management can be influenced. There are four main steps in the process of
cause-effect analysis:
Step 1: Identification of the problem
First and foremost step in the process of cause-effect analysis involves identification of
the problem which is being faced by the management of any organisation or company. Defining
the problem is important and there should not be any vagueness or ambiguity in the problem
identification stage which could possible hinder and affect the effectiveness of the whole
process. The problem which is being faced by the managers of Woolworths Limited translates
into issues being faced by the company for globalisation of its operations and trade. As a result
of low competency when it comes to globalisation, the sales and revenues in the domestic
markets of the country is also being affected. Slow pace of internationalisation is the major
problem which is being faced by the management (Coe and Wrigley, 2017). Globalisation has
resulted into two-faced problems for the company – the company is not being able to perform
good in the international markets and as a result of increased competition, domestic sales figures
and market share of the company have also declined. Aldi now accounts for 15% of the market
share in supermarkets industry in Australia and the brand value of Woolworths have also
declined as a result over the past few years. These are the main issues which are being faced by
the company due to globalisation.
Step 2: Identifying the major factors involved
The next step in the process of cause-effect analysis is to identify the major factors which
are involved in the issue or the problem which is being faced by the company. The main factors
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which are involved in the issues related to globalisation for Woolworths Limited are factors such
as declining domestic sales and market share, low performance of the brand in international
markets, high rates of customer turnover and increasing operational costs of the company. These
factors form the major part of the issues which are being faced by Woolworths Limited with
respect to globalisation.
Step 3: Identifying possible causes
The next step which is most important in the complete process of cause-effect analysis is
to identify the possible causes for each of the factors which have been determined in the second
step of the process. Woolworths Limited is facing many issues related to globalisation which
have various causes. For example, declining domestic sales and market share is primarily due to
the increasing competition in the markets of Australia as more and more international
supermarket chain such as Aldi, TESCO etcetera are expanding to the company’s home market
(Wickham and Hanson, 2005). Poor supply-chain management, lack of using tools for sales
promotion, lack of cultural understanding and communication and ineffective distribution
networks in international markets is one of the biggest reasons for company’s bad performance
in the international markets. As a result of incentives and goods of better quality which are being
offered by the multinational companies, the customers of Woolworths are shifting to other
supermarket stores and the company is facing the problem of high customer turnover.
Operational costs of the company are also increasing due to low profitability and high costs
which are being incurred in arranging the logistics for international trade and initial set-up. Profit
margins of the company have declined as a result of operational costs which have increased
substantially as a result of ineffective globalisation for the company.
Step 4: Analysing the diagram
The last step in the process of cause-effect analysis is to analyse the diagram which has
been prepared by the managers of Woolworths for problem identification and analysis.
On the basis of diagram in Appendix I, it can be observed that the key issues related to
globalisation which are being faced by the company are being caused due to ineffective
management of operations for both international trade as well as domestic trade. Cause-effect
analysis of the issues related to globalisation helps in determination of the major causes which
are ineffectiveness in communication and distribution networks which has hindered the
expansion of international trade. Company is not being able to generate high revenues from
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international trade because of high operational cost as well (Gunasekaran and Ngai, 2012).
Increasing operational cost restricts the ability of the company to offer additional discounts to
customers. The management of Woolworths should adopt policies and take decisions which can
help the company to improve its international performance and maintain the competitive position
of the company in its domestic industrial environment.
RECOMMENDATIONS
The management of Woolworths Limited are recommended to follow the below mentioned
strategy and step-by-step approach which can help the company in improving both domestic
performance as well as international performance over the period of next 1 year. Here are the
recommendations which are being made to the company:
Coping with the problems related to Internal competition as a result of Globalisation:
Woolworths Limited is facing the problem of declining sales and market share in the
domestic markets of Australia as a result of stiff competition from companies such as Aldi,
TESCO etcetera. The management needs to follow a step-by-step approach which is being
described below to improve the sales and performance of the company in the domestic markets:
Identification of Sales Goals:
The management of the company needs to determine the goals for the domestic sales in
terms of figures and according to the territories. It helps in evaluation of the effectiveness of
measures which are being used to improve sales by comparing goals against actual outcomes.
Market segmentation and analysis:
The next step in the process is to classify the target market of the company on the basis of
various groups or segments. It will help the company to identify what kind and extent of
marketing efforts are needed to influence the purchasing decision of its various customer
segments.
Building customer personas:
Building a customer persona and specification will help the managers of Woolworths
Limited in better identification of potential customers and consumers.
Online Marketing:
Social media has influenced the buying decisions of the consumer for the past few years
and it is recommended to the company to use various channels or platforms of social media such
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as Instagram, Facebook, Company Website, Blogs and Articles for promoting the products
which are being offered by the company and increasing the brand value of the company (Bashar,
Ahmad and Wasiq, 2012).
Use of Tools for Sales Promotion:
To fight the competition from supermarket giants such as Aldi and TESCO, the
management of Woolworths Limited need to offer attractive pricing to the customers by using
various tools of sales promotion such as discounts, incentives, buy one get one free, discount on
additional purchases etcetera.
Implementation of loyalty programs:
The management of the company needs to follow an approach for influencing repeated
sales and long-term customer retention with the help of launching a loyalty program which offers
additional discounts and cashbacks to customer which can be redeemed on future purchases
made by them within a given time period.
Follow-up and Review:
Following up with the help of sales data and customer feedback forms is extremely vital
for the managers of Woolworths Limited to ascertain the effectiveness of the measures which are
being implemented to improve the domestic sales and revenues.
ACTIVITY START DATE END DATE
Identification of Sales Goals: 10/05/2020 20/06/2020
Market segmentation and analysis: 21/06/2020 31/07/2020
Building customer personas: 1/08/2020 20/08/2020
Online Marketing: 21/08/2020 21/10/2020
Use of Tools for Sales Promotion: 22/11/2020 15/01/2021
Implementation of loyalty programs: 16/01/2021 25/03/2021
Follow-up and Review: 26/03/2021 30/04/2021
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Coping with the challenges in International expansion and better performance in a global
business environment:
To improve the performance and the sales of the company in international markets, the
management of Woolworths Limited is recommended to follow the below mentioned step-by-
step approach:
Customer Needs & Market Analysis:
It is crucial for the management to undertake customer and market analysis for the country
where the company wishes to expand its trade. It helps in identification and determination of the
needs and requirements of the customers and also helps in determination of any existing gaps
between customer expectations and satisfaction levels.
Logistical Arrangement:
Proper arrangement of all the logistical requirement such as communication channels
etcetera should be made by Woolworths Limited.
Building Distribution Channels:
Effective strategy of distribution should be implemented by the company which helps in
targeting wider areas and makes the products of the company accessible to more and more
potential customers (Olhager, Pashaei and Sternberg, 2015).
Effective Supply Chain Management:
It is imperative for Woolworths Limited to maintain relationship with suppliers which helps
in smooth flow of production and manufacturing process in the target country (Barney, 2012).
Online Marketing:
The management should make use of online marketing to create brand awareness for
Woolworths Limited in the country where it is wishing to expand. It helps in creating a suitable
atmosphere for the company to carry out its trade activities.
Use of Tools for Sales Promotion:
Discounts and offers which helps in increasing the price-value for the company should be
used to initially attract customers and acquire a market share. It will help the company to fight
competition from existing supermarket stores in the locality.
Follow-up and Review:
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Comparing the actual sales performance of the company and the effectiveness of marketing
strategy helps in building better strategies for the management of Woolworths Limited in future.
ACTIVITY START DATE END DATE
Customer Needs & Market Analysis: 10/05/2020 10/06/2020
Logistical Arrangement: 11/06/2020 21/07/2020
Building Distribution Channels: 22/07/2020 20/08/2020
Effective Supply Chain Management: 21/08/2020 11/09/2020
Online Marketing: 10/09/2020 11/11/2020
Use of Tools for Sales Promotion: 12/11/2020 25/03/2021
Follow-up and Review: 26/03/2021 30/04/2021
It can be concluded that with the help of above recommendations, the management of
Woolworths Limited can improve the profitability and sales of the company in domestic markets
as well as international markets. It can help the company in strategically coping with the
challenges and taking advanatage of the opportunities which arise as an outcome of
globalisation.
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REFERENCES
Books and Journals
Barney, J.B., 2012. Purchasing, supply chain management and sustained competitive advantage:
The relevance of resource‐based theory. Journal of supply chain management. 48(2).
pp.3-6.
Bashar, A., Ahmad, I. and Wasiq, M., 2012. Effectiveness of social media as a marketing tool:
An empirical study. International Journal of Marketing, Financial Services &
Management Research. 1(11). pp.88-99.
Coe, N.M. and Wrigley, N., 2017. Towards new economic geographies of retail globalization.
In The new Oxford handbook of economic geography. Oxford: Oxford University Press.
Gill, K., 2007, September. Challenges And Opportunities Of Globalisation: A Case Study Of
Indian Retail Industry. In PACIFIC RETAIL CONFERENCE (p. 105).
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and
analysis. International Journal of Production Economics. 135(2). pp.687-701.
Keith, S., 2012. Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of
Regional Food Studies. 2. pp.47-81.
Olhager, J., Pashaei, S. and Sternberg, H., 2015. Design of global production and distribution
networks: A literature review and research agenda. International Journal of Physical
Distribution & Logistics Management. 45(1-2). pp.138-158.
Pearl, J. and Mackenzie, D., 2018. The book of why: the new science of cause and effect. Basic
Books.
Raghuram, G. and Kuberkar, G., 2008. Woolworths Limited, Australia.
Wickham, M.D. and Hanson, D.J., 2005. The Australian retail wars: Coles Myer and
Woolworths battle for brand value.
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APPENDICES
Appendix I
Appendix II
Coping with the problems related to Internal competition as a result of Globalisation:
Coping with the challenges in International expansion and better performance in a global
business environment:
9