Strategic Management Case Study Report: Woolworths in Australia

This report provides a strategic management analysis of Woolworths, an Australian retail company. It begins with an introduction to the topic and an evaluation of the organization's environment, including external analysis using Porter's Five Forces and PESTEL models, and internal analysis focusing on core competencies and value chain analysis. The report then examines Woolworths' competitive advantage, strategic framework, and competitive rivalry within the Australian retail market. Strategy formulation, including vision, goals, and initiatives, is discussed, followed by recommendations for the company's management. The analysis highlights Woolworths' challenges in a competitive market, particularly with discounters like Aldi and Lidl, and suggests strategies to achieve cost leadership and differentiate its product offerings. The report concludes with an overview of the company's strategic framework and recommendations for future strategic decisions.

STRATEGIC MANAGEMENT

Executive Summary
The paper analyses the strategic management of Woolworth, an Australian retail giant.
At the very beginning of the study, the researcher provides a brief introduction to the
topic followed by the discussion on the environment which the organisation may belong
to. Such discussion will entail the critical analysis of both internal and external
environment of the business base on the relevant established theoretical framework,
such as PESTEL, Porter’s Five Forces Model etc. In the subsequent sections of the
paper, the researcher attempts to identify the competitive advantage the business has
in the market segment and thereby derive the strategic challenges that the management
may face while framing the relevant policies in this regard. Based on such discussion,
the researcher chalks out strategic options available to the management of the said
business in order to implement the same for attaining the corporate goal in long-term.
Finally, the report, in its last part, provides a recommendation for the management and
thereafter, wraps up the discussion by way of concluding note.

Table of Contents
1.0 Introduction..................................................................................................................4
2.0 Evaluation of Organization’s Environment..................................................................5
2.1 External Analysis......................................................................................................5
2.1.1. Porter’s Five Forces Model...............................................................................5
2.1.2 PESTEL (Social and Technological)..................................................................5
2.2 Internal Analysis.......................................................................................................6
2.2.1 Core Competencies...........................................................................................7
2.2.2 Value Chain Analysis.........................................................................................7
3.0 Analysis of Competitive Advantage.............................................................................8
3.1 Strategic Framework................................................................................................8
3.2 Competitive Rivalry................................................................................................10
4.0 Strategy Formulation and Choice..............................................................................12
4.1 Vision......................................................................................................................12
4.2 Goals......................................................................................................................12
4.3 Initiatives.................................................................................................................12
5.0 Recommendation.......................................................................................................14
6.0 Conclusion.................................................................................................................15
References.......................................................................................................................16

1.0 Introduction
Business strategy may be considered to be one of the most discussed and
widely evaluated topics in the studies of business research. The process of business
strategy formulation and thereafter implementation of the same may require
consideration of several aspects that are not only internal but also external to the
business organisation (Block, Kohn, Miller & Ullrich, 2015). A well-defined and
articulated strategy sets may largely help the management of a business to implement
the same in the operation on a real-time basis and thereby achieve the desired goal of
sustainability in a most ideal and optimum way. The instant report delves into the
analysis of corporate strategy in the context of a real word organisation, Woolworth, an
Australia based retail company. The analysis considers the implications of real-world
strategic positioning and analysis of the same against the established theoretical
framework in this regard.

2.0 Evaluation of the Organization's Environment
2.1 External Analysis
2.1.1. Porter’s Five Forces Model
Bargaining powers of suppliers
The Australian market is highly saturated with several numbers of players in the
retail segment and similar to the numbers of suppliers as well (Block et al. 2015).
Brands always have the availability of other suppliers in case they face conflicts with
their current ones. Moreover, the switchover cost is relatively low, which places
suppliers’ bargaining powers at moderate range.
Bargaining power of customers
Since high numbers of brands have entered into the organised modern trade
market, hence, customers also have greater choices to choose or buy their retail
products (Madsen & Walker, 2015). Same as above, the switching cost is quite low,
which can influence the segment to try new products of competitors if quality assurance
is given at affordable prices. Hence, the bargaining powers of customers are high.
Threats of substitutes
The threat of substitutes is also strong, where brands are continuously imitating
the unique formulas of its competitors to create a relative product and offer a moderate
range to gain a competitive advantage. Herein, customers also look for substitutes that
ensure high-quality assurance at a similar or lower price range.

Entry barrier
The threat of new entrants would be minimum in the retail market. Since, the
leading giants like Woolworths, Coles, Tesco, etc had already formed its steady
operation with their definite customer groups showing high commitments (Engert &
Baumgartner, 2016). Hence, a new entrant would find it challenging to pool a similar
base. Moreover, the cost of set up is also high in this sector, thus, the risk of uncertainty
and loss would be high.
Competitive rivalry
The degree of competition in the Australian retail market is quite high (Prajogo,
2016). Herein, the leading brands like Tesco, ASDA, H&M are relatively imposing the
pressure of high competition by introducing new and innovative products on a frequent
basis. Moreover, the discounters like Aldi and Lidl also imposing severe threats of
conversion, where the economic pressure is enforcing the customers to prefer
discounted offering at higher margins. Hence, the rate of competition is strong ( Demil,
Lecocq, Ricart & Zott, 2015).
2.1.2 PESTEL (Social and Technological)
Social
The retail operation in the Austrian market as created several employment
scopes, where the domestic population are offered with job opportunities as per their
calibre and skill sets (Rugman & Verbeke, 2017). Moreover, the customers are also
showing a strong inclination towards retail offerings, specifically the ones with high
discounted margins.

Technology
The retail brands are installing advance technological measures to improve their
speed of operation. The demand rate in the sector is increasing, hence, brands
including Woolworths are required to invest heavily on technologies to match up the
pace and demand rate.
2.2 Internal Analysis
2.2.1 Core Competencies
The marketing strategy of Woolworths forms its core competency (Namada,
2018). The brand has been efficient in terms of endorsing its product both in the online
and offline platform to tap the customers of all age groups. Furthermore, the brand
name or image is effectively popular (Hess, Matt, Benlian & Wiesböck, 2016).
Woolworths already set strong goodwill by offering superior quality and fresh products
to the customers, whereas, the discounters like Aldi and Lidl are compromising on the
quality factor to balance their high discounting rates.
2.2.2 Value Chain Analysis
Woolworths have a strong inbound logistic unit that internally supports the supply
of raw materials. The operation unit is in charge of the entire production and the final
order delivery methods (Rothaermel, 2015). The outbound logistics look after the
product distribution activities. The marketing and sales team conduct endorsement
actions to pool greater customer base and the service unit try to retain a similar base.

3.0 Analysis of Competitive Advantage
3.1 Strategic Framework
The corporate website of the firm shows that the company has strategized its
operations on the basis of six priorities which may provide them with a competitive
advantage in the market. These six priorities are briefly discussed below:
Customer 1st Team 1st Culture
The concept establishes the fact that the company prioritises its customers as
well as staffs. In short, the company values its people and that this is the reason the
management is able to create value for the society either through customer satisfaction
and loyalty as well as employee satisfaction and thereby operational productivity
(Teece, 2018).
Connected, Personalised and Convenient Shopping Experiences
The given approach focuses on the fact that the management is committed to
delivering the value to the customers through personalised services. In this context, it
may be noted that personalised and convenient shopping experience is critical for the
success of retail businesses and the company has well inculcated the same within its
strategic framework.
Differentiate our Food Customer Propositions
Since the food service segment is completely different from that of another
segment in terms of increasing rate of health consciousness among the customers, the

company has considered the aspects and separated the given product line from other
offering in order to create a unique selling proposition (USP) for the customers by way
of offering green and organic food products etc (Wheelen, Hunger, Hoffman & Bamford,
2017).
Accelerate Innovation in our Drinks Business
In a similar manner, the drinks and beverage segment has also been segregated
from other product lines so that the innovation may accordingly be applied therein as
needed.
Unlock Value in our Portfolio
With the support of motivated team members and efficient management board,
the company has been aiming to create value for the consumers on a consistent and
timely manner so that the offering and value proposition by the firm may not get
outdated in the market.
E2E Processes - 'Better for Customers' and 'Simpler for Stores'
The end-to-end process enables the management to simplify the supply chain
and thereby enhance the efficiency of the value chain of the business ( Hess, Matt,
Benlian & Wiesböck, 2016). Such initiative reduces the cost components of the
business to a certain extent through value engineering and thereby optimises thy cost
structure of the operation and achieves the cost leadership in the market for a longer
term.

Figure 1: Business Strategy Framework of Woolworth: Six Priorities
(Source: "Strategy and objectives - Woolworths Group", 2019)
The figure above shows the given six priorities pictorially which depict the fact
that the management has been well efficient to incorporate a strong strategic framework
within the operational manual and thereby control the entire business in a sustainable
manner.
3.2 Competitive Rivalry
Porter's Five Forces Model, as discussed earlier, shows that the market is
extremely competitive and all the big market players are engaged in a price war. It has
been identified that Woolworth reduced almost 2.1% of its average price in the year

2017, in order to compete it the market giants like Aldi and Coles (Pash, 2017). The
competition has been extremely aggressive that
Figure 2: Retail Market Share by Major Players in 2017
(Source: Pash, 2017)
The figure here shows the market share which may be affected by way of acute
price war and it has been observed that the market giants like Woolworth and Coles
have been suffering on their profitability because of the given issues.