Comprehensive Strategic Management Analysis of Woolworths

This report provides a detailed strategic management analysis of Woolworths, a prominent Australian supermarket. It begins with an executive summary and company background, followed by an examination of Woolworths' internal strengths, including its extensive store network, large employee base, and unique product offerings. The analysis employs Porter's generic strategies to evaluate the company's competitive positioning and value chain analysis to assess its operational efficiency. The report also utilizes the PESTLE analysis to understand the external environment and the 7's framework to assess the organizational structure. Furthermore, Porter's Five Forces analysis is applied to evaluate the competitive landscape, highlighting challenges from new entrants and alternative products. The report concludes with implications, recommendations for enhancing employee engagement and customer service, and a discussion of Woolworths' growth potential within the Australian retail industry.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
This present report evaluates the strategic management in the context of Woolworths. However,
this is a well-known supermarket of Australia and having the strong strategic position in the
Australian supermarket segment. Hence, it has been understood from the internal analysis that
such organization has a huge number of stores and employees that are a big strength of their
business. Therefore, they provide the unique product, which makes them different from their
competitors. This is the another strength of such organization. Value chain analysis model
highlights on the inbound, outbound logistic and operation process of such organization. From
the PESTLE analysis, the external environment of the industry is analyzed. 7's model addresses
the current system, style, strategy and other functions of the organization. Moreover, it has been
inferred from the Porter five force analysis that new rising organizations and the alternative
products bring challenges for Woolworths in Australian retail industry. In order to gain
competitive advantages, this organization needs to mitigate such threats. Apart from this it has
been found that Woolworths is a growing organization with high profitability despite this there
are several challenges occuring in the operation process of such organization. Hence, more
employee engagement and improvement in the customer service will be the beneficial approach
for such organization to maximize their business performance.

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Table of Contents
Introduction......................................................................................................................................4
Company Background of Woolworths............................................................................................4
Internal Strength Analysis in context of Woolworths.....................................................................4
Generic Strategy..............................................................................................................................5
Porter competitive strategies........................................................................................................6
Value chain analysis........................................................................................................................7
Porter value chain analysis model...................................................................................................7
7s framework.................................................................................................................................10
Industry Analysis in context of Woolworths.................................................................................12
Porter’s Five Force analysis...........................................................................................................14
Implication of the Analysis............................................................................................................17
Recommendations..........................................................................................................................18
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

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Introduction
Strategic management refers to the formulation and the development of specific
objectives that are carried out by an organization in order to achieve the competitive advantages.
Strategic management is based on the resources of an organization and the assessment of the
external and internal environment of an organization (Wheelen & Hunger). This study deals with
the different aspects of strategic management such as strength, competitive advantages,
leadership, organizational structure and resources in the context of Woolworths. Moreover, the
strategic position and current strength of this organization will be addressed through Porter five
forces, model, value chain analysis and 7 s framework in this present study.
Company Background of Woolworths
Woolworths is a well known Australian supermarket offers a verity in the grocery. They
offer online grocery and food service to the customers. The vision of such organization is to
make their business financially strong and secure. However, Woolworths provide financial
security to their employees and their immediate families. The mission is to provide value to their
customers and to provide quality service, which can satisfy their consumers. They aim to build
customer oriented service and store-led culture. Apart from these developing sustainable sales in
their business is also a part of their mission (Wecu.com.au, 2017).
Internal Strength Analysis in context of Woolworths
Internal strength of an organization refers to the internal components such as capabilities
of an organization, competitive advantages, structure, resources, and system of an organization
(Ibscdc.org, (2017). In the context of Woolworths, they have strong resources includes 180000

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employees, 3000 stores, and well-designed logistics and innovation skills. Therefore, this
organization has started their business from 1924, which ensures that they are capable to
incorporate right person in their business and they are able to utilize their resources properly.
They use their strength to gain competitive advantages. The competitive advantages of
Woolworth have developed through their supply chain. The main focus of Woolworths is to cut
the cost in order to mitigate the unnecessary expense and to maximize the efficiency of staffs.
Development of the slogan “The fresh food people” by Woolworth has improved their brand
image as it ensures the consumers of providing healthy food with reasonable price.
The innovative idea of Woolworth as for example, the "re-fresh" is another internal
strength of their organization to compete in the global market. Vertical integration of
Woolworths with its supplier through the development of own input increases their market
power. In order to get success from the competitive strategies, it is necessary for the business
organization to make their strategy based on the sources of competitive advantages (Rees &
Smith, 2017). One of the distinct competitive strategies of Woolworths is to provide assurance
about the quality and freshness of their products through the excellent management of their
supply chain. This strategy of Woolworths makes them unique from the other retailers in the
Australian supermarket. This strategy of the competitive advantages makes Woolworths
different, which enables them to obtain the unique market position in the Australian supermarket
chain.
Generic Strategy
Porter competitive strategies are used to evaluate the generic strategies regarding an
organization. In the recent year, Woolworths has been facing the threat of new rivalry in the

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supermarket such as Aldi and German retailer Lidl. In order to mitigate the power of such
rivalry, Woolworths needs to obtain competitive strategies.
Porter competitive strategies
The current position of an organization highlights on its profitability whether it is below
or above of the industry average (Simões & Sebastiani, 2017). Porter competitive strategies
include cost leadership, cost focus, differentiation, and differentiation focus. However, by using
cost leadership strategy Woolworths will be able to become a low-cost producer in the retail
industry. Through this strategy, this organization will be able to get all the sources of cost
advantages, which enable them to gain sustainable development in the cost leadership.
The differentiation strategy allows the organization to be different from the other
organizations by providing unique product or service (Patel, Guedes & Pearce, 2017). However,
Woolworths makes itself more competent through its unique product quality freshness of their
product. Hence, by applying such strategy this organization will be able to ensure their
significant characteristics for which the buyers are interested to pay for their products.
Focus strategy is another component of Porter’s competitive strategy, which enables the
organization to concentrate in particular component such as particular product or particular
market segment (Rowlands & Iles, 2017). In order to gain competitive advantages, Woolworths
needs to give their concern towards their product or market or technology. Woolworths is
famous for their product quality. Hence, by following this strategy they will be able to
understand the demand of the current market and the evolving technology that are essential to
obtain competitive advantages. However, the focus strategy is categorized into cost focus and

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differentiation focus. Cost focus will allow the firm to get cost advantages in its target market
while differentiation focus allows Woolworths to make the differentiation in its target market.
Figure 1: Porter Generic strategies
(Source: Rowlands & Iles, 2017)
Value chain analysis
Porter value chain analysis model is useful to understand the value chain of Woolworths
Porter value chain analysis model
Primary activities
Inbound logistic

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Inbound logistic refers to the relationship between the suppliers and the organization
consists of the activities from receiving to disseminate the product (Chan, Ngai & Moon, 2017).
Woolworths use own distribution center and take products in bulk in order to get the discount
from the supplier and to reduce the cost price.
Operation method
Operation process involves the transformation of input to output, which is delivered to
the consumers (Johansson & Kask, 2017). Woolworths have their own farmers, as a result, they
can supply fresh foods to their customers with reasonable rate.
Sales and marketing
Sales and marketing include the process through which an organization is able to
motivate their clients towards their service by establishing effective communication with them
(Peppard & Ward, 2016). This allows them to resists their clients from going to their
competitors. Woolworths expands huge amount in their marketing, which increases their brand
awareness in the customer domain.
Outbound logistic
Outbound logistics deliver the products towards the customers through the collection,
storage and distribution procedures (Flax, Bick & Abratt 2016).Woolworths uses in store process
of vendor management to deliver their products as it keeps the products fresh.
Nature of service

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Service includes the process to maintain the value of the products after it is purchased by
the consumer (Kim & Gray, 2017). Woolworths follows refined policy and trolley mounted
scanner that reduces the waiting time of their customers while purchasing the products.
Support Activities
Woolworths has strong human resources in their Australian sector, which includes a large
team in their organization. Firm structure is another aspect of support activities that ensure the
strength of an organization (Dapiran & Kam, 2017). Woolworths follows hybrid framework in
their organization that enables them to share their mission with their employees in order to take
the proper decision regarding the service. Apart from this, it is crucial for Woolworths to cope up
with the changing technology to compete and mitigate the power of rivalry in the global market
as technology is vital to develop the existing system and improvement of service.
Figure 2: Porter value chain analysis
(Source: Dapiran & Kam, 2017)

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7s framework
The 7's framework describes the way through which an organization is able to organize
their firm. There are seven elements in this model which focus on the appropriate designing in an
organization.
Demographic segment
The demographic segment focuses on the characteristics of the population and the general
environment (Dapiran & Kam, 2017). However, in the context of Woolworths, the characteristics
focus on its system of such organization that includes a hybrid structure. On the other hand, the
geographic distribution and income distribution is also undertaken under this segment.
Woolworths has a huge number of brands worldwide that ensures its geographic distribution.
Economic segment
Economic segment refers to the economic condition of an organization in which the
organization is able to compete in its near future (Chan, Ngai & Moon, 2017). However, the
economy of the Australia is not good as rising cost of the fuel is a big factor that affects its
economy. Hence, inflammation, interest rate, trade deficit, budget deficit and the investment rate
are undertaken in this segment. However, due to rising cost the investment rate is high in context
of Woolworths in the Australian market.
Political and legal segment
Political and legal segment the interest group and the organization compete to get
attention of the individuals (Dapiran & Kam, 2017). However, the operation of Woolworths in
the Australian market is influenced by the government regulation and the government is also

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influenced by the business regulation of certain organization. Hence, it is important for such
organization to follow the government rules to carry out their business operation without any
legal issue in the Australia.
Socio-cultural segment
Socio-cultural segment focuses on the attitudes of people from the different societies and
the cultural values of them (Kim & Gray, 2017). However, Woolworth has established their
business in the different segments of Australia. Hence, the changing style of consumers and the
behavior of the consumers from different classes is a big factor, which influences their business
strategy and the product diversification.
Technological segment
Technology focuses on the rapid enhancement of the technology that introduces new
features in the product out to improve the quality of product (Rowlands & Iles, 2017). However,
Woolworths has adopted new technology to improve their system and operation process as well
as the quality of the product. Woolworths has faced issues in their IT system after that they have
implemented leaner operating model in their IT system that is an effective approach of such
organization as this model makes the system stable.
Global segment
Global segment highlights on the global market and the existing competitors (Simões &
Sebastiani, 2017). This segment identifies that Woolworths is able to survive in the competitive
market where the customers and the competitors are global. Competitors are no longer be
domestic and the customers have changing demand as awareness has been increasing among

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them regarding the global product. Hence, utilization of the rapid technology is an effective
approach to cope up with global challenges.
Physical environmental segment
This segment refers to the environmental sustainability (Rowlands & Iles, 2017).
Changes requires in the business practice in order mitigate the issues regarding global warming,
and energy consumption. Hence, Woolworths needs to change their existing business practice to
decrease such physical issues.
Industry Analysis in context of Woolworths
PESTLE analysis is beneficial to carry out the industry analysis in the context of
Woolworths.
Political environment
The political environment is based on the stability of the government within a country
(Price, 2016). However, the Australian government has a great impact on the supermarket
regarding legislating the trading hours. Therefore, Woolworths has to maintain the rule of Trade
Practice Act and Australian Competition and Consumer Act in order to avoid any legal issue in
their business otherwise the company will be forced to change their operational process in this
country.
Economic environment
The slow growth in the Australian economy is a big threat for the retail sectors in the
recent years (Dapiran & Kam, 2017). However, if this situation prevails for a long time then it

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may prohibit the growth of the retailers in the Australian market. On the other hand, the rapid
unemployment and the rising price of fuel will bring another threat for Woolworths in the
Australian market.
Social environment
Changing lifestyle and attitudes of the consumers leaves a great impact on the Australian
supermarket (Ahsan & Rahman, 2016). People are too much health conscious in the current
years and they want healthy food, which is easy to cook. Keeping this mind Woolworths and
other retailers try to innovate new features in their products to attract the customers.
Technological environment
Technology has been changing rapidly in the Australian market, which needs to be
adopted by the retailers to obtain the competitive advantages (Pandey, Singh & Pathak, 2016).
Woolworths has adopted new technology as for example, Global Electronic Marketing and
Merchandising Network (GEMM net) has been obtained first by Woolworths. This technology
enables Woolworths to develop their online marketing through website and it also a cost saving
process.
Legal environment
Legal requirements are crucial for the organization that they have to maintain (Li & Luo,
2016). In Australia, Woolworths has to follow the rules of the Commonwealth Government in
order to carry out their operation without any legal issue.
Environmental norms

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An environmental norm means the maintenance of the sustainability of the environment
(Reimers & Scheepers, 2016). Woolworth needs to adopt the CSR activities in their business to
keep the sustainability of the environment as it is a prime area to enhance the business by
maintaining the hygienic requirements.
Porter’s Five Force analysis
Porter five force model is vital in order to understand the structure of an industry and its
competitive strength in the global market (Simões & Sebastiani, 2017). In the context of
Woolworths Porter's five force model will be beneficial to understand the competitiveness of
such organization in the Australian supermarket.
Bargaining power of the consumer
Supermarket of the Australia offers similar products with the low price that increases the
bargaining power o the consumers (Burke, van & Thurik, 2016). Hence, the bargaining power of
the customers in the Australian market is high that often forces the organization to change their
product price. However, keeping this in mind Woolworths offers the quality product with
reasonable rate to resist the bargaining power of the customers. On the other hand, such
bargaining power of the buyer often affects the profitability of the business as the organization
has to decrease their product price in order to compete in the market.
Bargaining capacity of the Supplier
Bargaining capability of the supplier leads the organization to face high cost during the
input process of their production (Pandey, Singh & Pathak, 2016). However, in the Australian
market, the bargaining capacity of the supplier is based on the brand and the size of the

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Australian supermarket. Hence, Woolworths has to face high bargaining power of the suppliers,
which may increase the operation cost of such business.
Threat of new entrants
Entry of the new player in the existing market is a big challenge for the retailers (Ahsan
& Rahman, 2016). However, in the Australian supermarket, the price is low and the government
has strict regulation, thus it is difficult for the new organization to get the quick entry in the
Australian supermarket segment. This leads Woolworth to get the competitive advantages in
Australian retail industry. On the other hand, in order to establish own distribution center by the
retailers needs the partnership working with the new entrants that may bring a threat for such
retailers. Apart from this, the threat of the new entrants in the Australian retail industry is
moderate in nature.
Rivalry between the existing competitors
A strategy that is taken by the existing competitors is a concerned thing for the retailers in
the Australian supermarket segment (Price, 2016). However, Aldi and Lidl are the main
competitors of Woolworths. Hence, such rising organizations may bring new challenges for
Woolworths in their business operation.
Threat of the substitutes
Consumers prefer to pay the high price based on the availability of the products (Ahsan
& Rahman, 2016). However, in the Australian supermarket, people buy products with the high
price if they get it from the nearest store of their residence. On the other hand, sometimes online
marketers offer similar products with the low price that have resemblance with the product of a
well-known organization. That brings the threat for the Woolworths in the Australian

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supermarket. Many small stores offer alternative products with the very low price that affects the
business of the popular organization.

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Figure 3: Porter Five force model
(Source: Ahsan & Rahman, 2016)
Implication of the Analysis
The entire analysis of the above-taken model will enable people to understand the
structure, system, operation process, external environment and the competitive advantages in the
context of Woolworths. However, the value chain analysis model highlights on the operation and
the logistic process of the organization (Price, 2016). This model will enable Woolworths to
identify the issues in their logistic process and the operation process thus they can take necessary
steps to resolve the issues. On the other hand, the 7's model includes the demographic segment,
technological segment, physical segment and son on to analyze the organizational environment
of the Woolworths. Analysis of such model focuses on the external factors that influences the
business of such organization. Therefore, the PESTLE analysis reveals the industry analysis,
which highlights the macro elements of Woolworths. Hence, analysis of the external

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environment will allow the organization to carry out a proper market research before launching
new products in the market. This also enables them to understand the present market demand and
the government rules regarding any service through this analysis Woolworths will able to carry
out a safe business operation in the Australian market. Apart from this analysis of the Porter Five
force model reveals the threats of the Woolworths in the Australian supermarket. Evaluation of
such model enables Woolworths to understand the ways through which they can gain
competitive advantages in the Australian supermarket segment. This model is also beneficial for
such organization to identify the present challenges, which is essential to develop the new
strategy to cope up with such challenges.
Recommendations
To offer reliable and consistent customer service
Achieving competitive advantage is the major issue for the retailers in the global market.
Hence, providing reliable and consistent service to the customers will be effective for
Woolworths to enhance the customer loyalty for a long time.
Keeping the cost down
Rising cost of the operation cost and the customer service cost affects the business.
Hence, it will be beneficial for Woolworths to use human capital analytics to cut the cost of their
operation to achieve sustainable growth in business.
Reduction the high turnover
Rising price of fuel and huge turnover of the employees are the big factors that affect the
business of the retailers in the Australian supermarket. Hence, by enhancing the employee

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engagement and providing job security Woolworths will be able to retain their employees for
long period.
Comply with the government law and proper market research
Compliance with the legal requirements can be effective for Woolworths to operate easily
in the Australian market. Therefore, proper market research will enable them to keep updated
information regarding the new entrants and the strategic position of the competitors.
Conclusion
The above study reveals the strategic position of the Woolworths in the Australian
supermarket segments. Hence, PESTLE, Porter five force analysis, 7’s model and value chain
analysis focuses on the strength, weakness of the current organization system and emerging
threat in the market in the context of Woolworths. However, more employee engagement and the
market research will enable such organization to achieve competitive advantages and sustainable
growth.

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