Analysis of Strategic Development Tools: Woolworths Company Report

This report provides an in-depth analysis of various strategic development tools and their application within the business context, using Woolworths as a practical case study. The paper commences by introducing the PEST analysis, examining the political, economic, socio-cultural, and technologic...Read More

[Strategic Development Tools]
2018
Woolworths

Strategy Development Tools
This paper is being presented in order to explain different strategic development tools and
their use in a business or organization. In order to explain this, the paper will make use of
PEST Analysis, SWOT Analysis, VMOST Analysis, and Porter five-force framework.
Moreover, to support the discussion regarding all the tools, Woolworths Company has been
selected.
Strategic Development Tool
PEST Analysis
PEST Analysis is an easy and broadly used tool that support in analyzing the Political,
Economic, Socio-cultural, and Technological alterations in the environment of business. This
support in understanding the "big picture" powers of change that business is exposed to, and
through this, they take advantages of the opportunities provided by them.
Political- Here regulations of government and legal factors are measured in regards to their
capability to influence the environment of business and trade markets (Pestle Analysis, 2013).
For example, the political regulations have adversely influenced the Australian retail
industry. Recently, the government has initiated a campaign that was directed to block the
established businesses such as Woolworths from removing smaller retailers by unfair
competition.
Economic- By this factor, companies evaluate the economic issues that are certain to have an
influence on the business. For example, if the purchasing power of the customer is weak, the
company’s performance is adversely affected.
Social- With the support of the social factor, the company can evaluate the socio-economic
environment of the market through the elements such as culture limitations, education,

customer demographics, and lifestyle attitude. For example- The demographic features in
Australia constantly changes; Customers change their demands as per the technical changes,
denoting that they like to use current products, which makes Woolworths change its offering
as per the market trend.
Technology- Technology can affect the introduction of the service or product negatively or
positively in the market through advancements in the technology, role of the internet, and the
lifecycle of technology. For example- Woolworths has initiated the use of green refrigeration
technology in order to store perishable goods (Fern Fort University, 2018).
SWOT Analysis
SWOT analysis is said to be a framework, which is utilized to measure the competitive
position of the company by recognizing its strength, weakness, opportunities, and threats
(Ommani, 2011).
Strength explains what a business shines at and differentiates it from its rivals: a strong
balance sheet, strong brand, unique technology, and a loyal customer base, etc. The strength
of Woolworths is:
 Woolworths is the oldest and famous brand of retail in Australia.
 Offers a variety of services and products
 Strong commitment towards sustainability and environment (SWOT & PESTLE,
2017)
Weaknesses stop a business from performing its operations at its maximum level. They are
the divisions in the business that needs improvement to stay competitive. Weaknesses of
Woolworths are:
 Delayed in making a decision regarding entering in the online retail

 Low presence in the international market
Opportunities mean the favorable external factors that can be used by a business to attain
competitive advantage. For example, the retail industry in Australia reflects the potential of
growth and factors like advance supply chain, customer lifestyle, and computerization
changes have influenced the capability of the retailers and offered growth opportunities.
Threats are the factors that possess the potential of damaging a business. Some of the threats
for Woolworths are:
 Aggressive expansion of ALDI
 Discounting battle with Coles Supermarket
VMOST Analysis
VMOST Analysis is the technique, which is used for assessing all the strategies of the
business and secondary activities, and defining whether these strategies are aligned, or not.
The objectives of the VMOST analysis is to reflect a view of the strategy interpreted into
significant terms for the assistance of consumers, employees, and other stakeholders by
stating it in the system of visions, missions, objectives, strategies, and tactics (Halaychik,
2016). For example-
The Vision of Woolworths is to be the most responsible retailer in the whole world, which
will show their passionate commitment of performing business operations, for their people,
consumers, and the planet (Woolworths Holdings, 2018).
The Mission of Woolworths is to become the heart of the society and most preferred retailer
for family, kids, and home (Woolworths Employees’ Credit Union, 2016).
Objectives- Woolworths is dedicated to enhancing the perception of the consumer,
appreciating present consumers, and enticing new consumers. It pursues to create competitive

advantage by supplying excellent operational efficiencies in a justifiable way. The key
objective of Woolworths is to create a foremost value proposition by putting positive
business efforts. For this, business concentrates on employing competent and skilled human
resource.
Strategies- Woolworths has scheduled diverse strategic priorities for the effective
achievement of long-term goals of the business. Woolworth wants to expand its leadership
position in liquor and food market. It performs to increase the value of shareholder in the
portfolio. Woolworth is determined to create a competitive position in the market in the
sector of retailing.
Tactics- One of the most successful tactics initiated by the Woolworths in 2013 was to
introduce the product Aussie Animal Trading Cards that helped the company in attracting a
huge market of children (Orr Economics, 2018).
Porter Five force framework
Porter’s five-force model helps in recognizing and evaluating five competitive forces that
form all the industry, and support in defining the strength and weaknesses of the industry.
Often utilized to classify the structure of the industry to define corporate strategy, Porter’s
model could be applied in any economic segment to search effectiveness and attractiveness
(Omsa, Abdullah, and Jamali, 2017).
Competition in the industry- This force focuses on the number of rivals and their capability
to threaten a company. For example, the threat of competition as measured in the retailing
industry of Australia reflects that it is considerably higher mostly due to the fact that there are
some key rivals like Wesfarmers, Asda, Woolworths, Coles Supermarket, etc. that are
opposing with each other for greater market share (Fern Fort University, 2018).

The threat of New Entry - The new entrant force in the market influences the power of the
company. For example, the threat of new entrants in the Australian supermarket industry is
low because big companies have made it hard for new companies to arrive in the industry
conditions.
Bargaining power of Supplier- This competitive force talks how easily suppliers in the
market can increase the price of services and goods. It is influenced by the total number of
suppliers of main features of service or good, how exclusive these features are, and how it
will cost a business to shift from one to another supplier. For example- The retail industry of
Australia is concentrated and it involves some big companies that have a maximum of the
market share, which has increased the bargaining power of the suppliers.
Bargaining power of Customer- It talks about the capability of the customer to decrease the
product price. For Example- The bargaining power of buyers in the retail industry of
Australia is high due to the presence of a large number of retail stores and supermarket that
offer general products of the regular need to the customers.
The threat of Substitute- Competitors alternatives that can be utilized in place of the products
or services of the company arises a threat. For example - The daily consumable products are
very important and their use in daily life is very important. In the market, there is no
substitute for them; hence, the substitute threat is lower.
The above analysis has highlighted the use of different strategic development tool with the
help of Woolworth's example, which has concluded that all these tools have provided huge
support to this company in analyzing and evaluating the environment and strategies of the
competitors in the industry.

References
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Omsa, S., Abdullah, I.H., and Jamali, H. (2017) Five Competitive Forces Model and the
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SWOT & PESTLE (2017) Woolworths Limited SWOT & PESTLE Analysis [online].
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Woolworths Employees’ Credit Union (2016) Our History [online]. Available from
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Woolworths Holdings (2018) Our Purpose, Vision And Values [online]. Available from
https://www.woolworthsholdings.co.za/overview/our-purpose-vision-and-values/ [accessed 8
August 2018]