Strategic Management Report: Woolworths Corporate Strategies Analysis

This report provides a strategic analysis of Woolworths, an Australian retailer, focusing on its corporate-level strategies. The primary objective of Woolworths is to increase its customer base and sales, and the report identifies and examines the company's cost leadership and diversification strategies. The cost leadership strategy involves offering products at lower prices, competing with rivals like Coles, and leveraging its market position to negotiate lower supplier costs. The diversification strategy includes expanding into new product lines and markets. The report assesses the suitability of these strategies, concluding they are appropriate for the competitive landscape, and recommends further improvements such as skimming pricing and increased advertising. The report concludes that Woolworths' strategic choices are key to its success in the retail industry and offers suggestions for continued growth.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management

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Executive Summary
Identification and formulation of effective strategies is a significant process in order to attain
overall objectives of business. As per the previous assessment, it is analyzed the primary
business objective of Woolworths is to increase its customer base and generate higher sales.
Woolworths is an Australia based retailer that was established in the year 1924 in Sydney. The
organization has its business operations in various locations including Australia and New
Zealand. It has achieved second rank in Australian retail sector after Wesfarmers. After
conducting its strategic analysis in Assessment 1, the objective of this report is to identify the
corporate level strategies of chosen company. Moreover, the report analyzes the suitability of
firm’s current strategies. At the end, recommendations are provided to improve its effectiveness
in competitive business scenario.

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Table of Contents
Corporate Levels Strategies of Woolworths................................................................................................4
Cost Leadership Strategy.........................................................................................................................4
Diversification Strategy............................................................................................................................4
Suitability of Strategies................................................................................................................................5
Recommendations.......................................................................................................................................6
Skimming Pricing.....................................................................................................................................6
More Focus on Advertising and Promotion.............................................................................................6
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7

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Corporate Levels Strategies of Woolworths
In today’s highly competitive business environment, it is very important for the business owners
to develop effective corporate level strategies to place their business for growth and success.
Corporate level strategy is the plan to hit a particular target that is required for attaining overall
business objectives. In order to attain its corporate objectives, Woolworths has formulated and
implemented effective corporate level strategies (Barney, 2014). These strategies are discussed
below:
Cost Leadership Strategy
Cost leadership strategy is one of the most significant corporate level strategies that are
implemented by Woolworths. This strategy includes the pursuit of low input costs the company
offers its products at lower prices in comparison to competing brands. It is involved in the price
wars with the Coles which is also a leading retailer in Australia (Stiles, 2017). Considering the
competition in the area, the Woolworths has lowered the prices of its products to similar levels of
its competitors i.e. Coles. As a market leader in the country, it controls a larger chain of
supermarkets which enhances its buying power thus driving lower prices from the suppliers
(Bennie, 2015). Thus, it is operating its business being cost effective and it attempts to provide
its customers every day lower prices via price deductions on all the products. It is making efforts
to cut down its operating costs by using just-in-time technique. It is used to manage the products
and processes in supply chain so that it can eliminate the costs of wastage and storage by arrival
of products at stores at the time when they are needed. This is the major strategy that enables
Woolworths to increase its customer base and gain more competitive advantage against other
retailers like Coles, Aldi Australia, Harvey Norman etc. (Banker, Mashruwala & Tripathy,
2014).
Diversification Strategy
In addition to above, Woolworths is also implementing diversification strategy as its corporate
level strategy. This is the strategy which looks at the products and services of company and
formulates a strategy for successful marketing and revenues (Ethiraj, Gambardella & Helfat,
2018). There are two types of diversification strategies i.e. single business strategy and dominant
business diversification strategy. Under this strategy, Woolworths is using unrelated

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diversification that describes that this company is focused on adding new product lines in its
business and penetrating in new and international markets. Looking at the needs and demands of
customers, the company has diversified its business in different product lines like home
improvement products, appliances, liquor and other related products (Bowen, Baker & Powell,
2015). Moreover, it is planning to tap in the financial services and establishing joint ventures
with banks. This strategic option is another option that assists this company to increase its overall
revenues in Australian market.
In this way, currently Woolworths is formulating and implementing both cost leadership and
diversification strategies as its corporate level strategies which assist it to achieve its overall
corporate goals (Engert & Baumgartner, 2016).
Suitability of Strategies
Considering the competition in the market, Woolworths has implemented most appropriate
corporate level strategies which are suitable for its business operations and growth in Australian
retail industry (Woolworthsgroup, 2018). This company is using cost leadership as its
promotional pricing strategy that assists it to implement the strategy where prices of products
will be continuously low all over the world. This corporate level strategy is suitable for the
growth of company it assists it to offer the products and services on more affordable prices.
Additionally, it is focused on providing more persuasive offers and better innovation. The
suitable strategy which is related to Woolworths is its range and pricing strategy. It has made its
everyday low-price strategy as the most significant factor. The company implemented cost
leadership strategy that counteracted Coles that is operating its operations as one of the primary
competitors of Woolworths (Bennie, 2015). It is playing a vital role to compete with the
discounted retailers. Along with the competition, it allows the organization to meet the needs and
demands of Australian customers as a significant percentage of population is covered by lower
and middle income people (Australian Bureau of Statistics, 2017). These people prefer to
purchase their household and regular retail products on possible minimum prices.
Moreover, unrelated diversification strategy is also suitable for firm’s effectiveness. To reduce
the gap of product range, this company will produce high quality and improved priced products.
By diversifying its product range, the company is able to cover a larger market in Australia. It

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helped Woolworths to make a diverse customer base. About the effectiveness and
appropriateness of diversification strategy, it can be stated that it can save the costs to company
and generate synergy (Keith, 2012). It is able to set off the loss of a business with the surplus of
other businesses. For example, the company has confronted huge losses in its liquor business that
was covered up with the revenues of retail business.
This suitability analysis indicates that both of its corporate level strategies capitalize the core
competencies and strengths of Woolworths Company. These strategies are consistent with the
existing culture of Woolworths and they are aligned with the external context i.e. political,
environmental, social and economic context. Both strategies offer different advantage to
Woolworths Company to stay competitive in Australian retail sector.
Recommendations
However, Woolworths Company has implemented effective and fruitful business level and
corporate level strategies but still the company needs to make more improvements in order to
enhance the effectiveness of its operations. There are two recommended strategic initiatives
which this company can take in the future. These initiatives are stated below:
Skimming Pricing
Under this strategic initiative, the marketing team of Woolworths should set relatively higher
prices in the preliminary phase of product introduction. After that, it can reduce the process with
the passage of time. The company can implement this initiative considering the needs and
demands of customers towards retail products. After fulfilling the demands of first few
customers and considering the increased competitiveness in the market, Woolworths can lower
the prices of its products. It will help the company to entice price sensitive customers (Robson,
2015).
More Focus on Advertising and Promotion
Additionally, this organization should emphasize on the advertising and marketing processes. Its
diversification business has shifted its focus from its core business. It should make more
emphasis on its supermarket business than liquor and food segments (Peppard & Ward, 2016). It
should develop a marketing team which will be involved in advertising and marketing of
businesses. Thus, Woolworths should make investment in the marketing and promotion

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activities. These strategic initiatives will help the organization to enhance its effectiveness in
retail industry.
Conclusion
In the limelight of above discussion, it can be concluded Woolworths is a major player in
Australian retail industry. The major reason behind company’s growth is its business level and
corporate level strategies. These strategies support this firm to achieve its objectives and a
superior position in industry. The above report shows that this company is using productive
corporate level strategies to get a superior place in retail sector. In order to improve its
performance, Woolworths should take recommended strategic initiatives.

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References
Australian Bureau of Statistics. (2017). Household Income and Wealth, Australia, 2015-16
Retrieved from http://abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2015-
16~Main%20Features~Characteristics%20of%20Low,%20Middle%20and%20High
%20Income%20Households~8
Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more
sustainable financial performance than a cost leadership strategy?. Management
Decision, 52(5), 872-896.
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Australia: Pearson Higher
Ed.
Bennie, S. (2015). Coles and Woolworths weighing up strategies. Retrieved from
https://www.insideretail.com.au/news/coles-and-woolworths-weighing-up-strategies-
201506
Bowen, H. P., Baker, H. K., & Powell, G. E. (2015). Globalization and diversification strategy:
A managerial perspective. Scandinavian Journal of Management, 31(1), 25-39.
Engert, S., & Baumgartner, R. J. (2016). Corporate sustainability strategy–bridging the gap
between formulation and implementation. Journal of cleaner production, 113, 822-834.
Ethiraj, S.K., Gambardella, A. & Helfat, C.E., (2018). Theory in strategic management. Strategic
Management Journal, 39(6), pp.1529-1529.
Keith, S. (2012). Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of
Regional Food Studies, 2(5), 47-81.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a
digital strategy. US: John Wiley & Sons.
Robson, W. (2015). Strategic management and information systems. Australia: Pearson Higher
Ed.

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Stiles, J. (2017). Woolworths new price strategy is ‘psychological conditioning. Retrieved from
https://thenewdaily.com.au/money/your-budget/2017/04/13/woolworths-prices-whole-
numbers/
Woolworthsgroup, (2018). Woolworths supermarkets. Retrieved from
https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/
Woolworths

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