Woolworths Value Chain Engineering System Analysis Report

This report provides an analysis of Woolworth's value chain, focusing on strategies to improve its efficiency and competitiveness. The report begins with an introduction to Porter's Five Forces as a strategic tool for analyzing the current and future competitive landscape. It then identifies three key are...Read More

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Value Chain Engineering System
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Introduction
Porter's Five Forces is used as a holistic strategy that does not only focus on the current
competition but also the future trends. This report seeks to identify possible situations that can be
used to improve on Woolworth’s value chain hence improving its productivity and efficiency.
The three identified scenarios are then tested by use of Porters Five Forces to determine their
benefits and risks.
Part One: Improving the Value-Chain
The company’s three value-creating functions include the inbound logistics that
facilitates the company to monitor its product’s distribution network. Second is the operations
whereby there are strict quality assessments as well as inventory management procedures which
help in value creation (Arli, Dylke, Burgess, Campus and Soldo, 2013, pp.95). Last is the
marketing and sales where the company carries out promotional activities to make sure that the
company remains competitive.
First, to improve the value chain, the company should improve its supply chain aimed at
minimizing costs. To ensure that the company remains competitive, it should continuously keep
on improving its technological capabilities thus making it hard for rival companies to imitate,
enhance its supplier relationships, and continuously improve its distribution expertise. The
second capability that would improve the value chain is improving the brand reputation. The
company should make more investment in its fresh variety of healthy meals (Dobbs, pp.36). This
would result in the improved brand being recalled in the customers’ minds thus increasing the
possibilities of purchase. The third capability that would improve the value chain is making sure

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that the top-level management is effective. The management should focus on investing in other
profitable ventures where the sales’ growth are forecasted to rise in the long-run.
Part Two: Porters Five Forces Analysis
The threat of substitutes: Woolworths has many indirect competitors such as the
specialist grocery stores. By improving its brand reputation through advertising, Woolworths
would be in a position to retain its loyal customers who would prefer their products over that of
their rivals. This is also beneficial to its value chain since advertising helps increase the
company’s sales.
Rivalry among existing competitors: the Australian supermarket industry has a high
degree of rivalry. By improving its supply chain through improving their technological
capabilities and distribution expertise, Woolworths would benefit because it would make it hard
for its rivals to imitate their sophisticated technology (Keith, 2012, pp.48). The value chain
would also benefit in that the operations of the company would be efficiently monitored to
ensure that quality and quantity does not go below the desired levels.
Bargaining power of suppliers: the industry’ supplier bargaining power is viewed to
moderate in future due to new entrants (Soosay, Fearne, and Dent, 2012, pp.71). However, by
improving the supply chain through good supplier relationships, the company would benefit
from its loyal customers. The value chain would also benefit from the operations would be
assured of inventory.
Bargaining power of the buyers: new entrants have resulted in increased bargaining
power. However, through brand reputation, and improved marketing and sales department, the

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company would counter this by giving their clients promotions which they do not enjoy in other
supermarkets. This would attract more customers.
The threat of new Entrants: the company through its top-level management may decide to
venture into other businesses which are expected to grow in future. However, this is faced with
the risk of uncertainty since the outcome of the new venture is unknown.
Conclusion
Improving Woolworth’s value chain would result in several benefits that can be
demonstrated using the Porters Five Forces. This would ensure that the company remains
competitive even with the increased rate of rivalry.

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Bibliography
Arli, V., Dylke, S., Burgess, R., Campus, R. and Soldo, E., 2013. Woolworths Australia and
Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business &
Accountancy Ventura, 16(1).
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Keith, S., 2012. Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of
Regional Food Studies, 2, pp.47-81.
Soosay, C., Fearne, A. and Dent, B., 2012. Sustainable value chain analysis–a case study of
Oxford Landing from “vine to dine”. Supply Chain Management: An International
Journal, 17(1), pp.68-77.