Environmental Scan Report: Micro Environment of Woolworths (BIZ202)

This report provides a comprehensive analysis of the micro environment of Woolworths Limited, an Australian retail giant. It delves into the company's internal environment, including its strengths such as market leadership, segment penetration, employee policies, customer tracking, supplier relationships, and promotional strategies. The report also identifies weaknesses, such as partiality to specific market segments and price competition. Furthermore, it explores opportunities like enhancing customer experience through AI-based shopping assistance and leveraging its experience in the UK and Australian markets. The report discusses potential threats, including high competition and changing consumer preferences, offering recommendations to address these challenges. The report suggests that Woolworths should adapt its product portfolio, increase technological aids in its outlets, and develop third-party manufacturers to control supplier bargaining power. In conclusion, the report emphasizes Woolworths' strong market position and the importance of addressing micro-environmental factors for continued success.

Running head: MICRO ENVIRONMENT OF WOOLWORTHS
MICRO ENVIRONMENT OF WOOLWORTHS
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Executive summary
This report has discussed the micro environment of a famous Australian retail company namely
the Woolworths Limited. Since the company has been operating in the Australian market for a
prolonged period, it has acquired great conception about the market demographics and the
geographic sales dispositions. As an outcome, the company is in a favorable position to analyze
the customer market and hence they can easily tackle the inputs from the internal and external
stakeholders in the industry. The strong market positioning of the company has been achieved as
an outcome of possessing major shares of the retail market of Australia. The report has discussed
micro environment and recommended some matters so that the company can improve the
situation.

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Table of Contents
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
Recommendation:............................................................................................................................5
Conclusion:......................................................................................................................................6
References........................................................................................................................................7

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Introduction:
The aim of this report is to discuss the micro environment of the reputed company of
Australia Woolworths Limited that has been working in the market of Australia since 1924
(Woolworths.com, 2018). The internal environment of the company has been considered to be a
part of micro environment. In addition to this, the suppliers, customers, intermediaries,
competitors, direct and indirect stakeholders and other markets where the company has been
operating directly. This report will be discussing the micro environment of Woolworths by
discussing the competition level, market segmentation, new entrants, suppliers and other
stakeholders’ analysis. The effect of these environmental factors on the company has also been
discussed. This report concludes with the recommendation about how the company can counter
the potential risks.
Discussion:
The micro environment of Woolworths consists of the direct and indirect stakeholders
and the internal environment of the company that helped it to become one of the most reputable
and largest supermarket chains of Australia (Martínez-Torres, Rodriguez-Piñero, & Toral, 2015).
The gamut of operations of the company leads to gain the strengths. The strengths of
Woolworths include:
 Market leadership: this company plays one of the most important roles in the Australian
retail market. It holds 80% of the market share that has reduced the competition threats
(King & Thobela, 2014).
 Segment penetration: Woolworths targets the wealthy class of the Australian market
therefore, has well stocked in the upscale brands. This super market chain also after the

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lower value segment and ensure that the private labels are valued brands which has given
the company presence in the both spectrums.
 Employee policies: the recruitment process of the company has special feature. It
employs people savvy employees and recruit well trained and courteous workers so that
the customers get help from the employees effectively (Ethiraj, Gambardella, & Helfat,
2018).
 Customer tracking: the company uses business analytics tools so that it can continue keep
watch on the demands and preferences of the customers. This also includes the analysis
of bills so that the stocks get replenished immediately.
 Relation with the suppliers: the company’s relation with the suppliers has committed and
long-term connection for which both the suppliers as well as the company get benefitted
and reduce the bargaining power of the suppliers (Scarborough,, 2016).
 Promotions: Woolworths follows aggressive strategy of promotions by informing the
about the offers continuously. It also highlights the value proposition and keep the entry
level price reduced in the Australian market.
As mentioned before, the company has a huge experience in operating in the market of
Australia but despite having all these strengths at the operational level also have some
weaknesses based on which the company needs to improve its operations (Molina-Azorín, Tarí ,
& Pereira-Moliner, 2015) .
 Partial behavior to specific market: the company has targeted both the premium and value
segments which compel it to sell both the aspirational products as well as affordable ones
(Ethiraj, Gambardella, & Helfat, 2018). however, Woolworths shows some partiality to
the higher income group by serving them with high quality products.

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 Price competitions: as the company has a strong competitor present in the market of
Australia, there is always a price war among Coles and Woolworths. This is the reason
why the company many times faces loss to maintain a competitive price.
However, in discussing the micro environment of the company, the mentions and analysis
of the opportunities of Woolworths is mandatory. The company has the chief opportunities
regarding its focus on customer experience. It has the opportunity to create difference in the store
experience that can include self-checkout, personalized loyalty schemes ad personalized services
though the AI based shopping assistance (Martínez-Torres, Rodriguez-Piñero, & Toral, 2015).
These can create differentiation and the super market may charge additionally to those who avail
those services. Secondly, the company has a huge experience in operating in the UK and
Australian market therefore, the building capacities as well as spending money in the research
and development process are better that the new entrants. This helps the company to keep
defining its standards regularly (Scarborough,, 2016).
Woolworths also have such factors that may be detrimental for the growth of its business.
First of all is the higher level of competition in the market of Australia (Molina-Azorín, Tarí , &
Pereira-Moliner, 2015). The main competitor in this market is Coles but now the online market
retailers like Amazon has been opposing great threat for Woolworths. Secondly, the increased
awareness or concern regarding health food habits among the Australian citizen may affect the
demand of the product types offered by the company (Keller, 2017).
Recommendation:
Woolworths though has a very strong position in the retail market of Australia, need to
focus on the weaknesses and threats that can affect the company in the long run. First of all, it

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needs to change the product portfolio according to the changing food habits and demands of the
Australian customers. Secondly, it needs to increase the technological aid in the outlets in the
market so that the customers can save time and efforts. This will give the company an additional
leverage than its competitor in one hand and attract the customers to visit the stores on the other.
Thirdly, the company can develop third party manufacturers whose business completely depends
upon Woolworths itself so that it can control the bargaining power of the supplies.
Conclusion:
Therefore, it can be concluded that Woolworths has a strong position in the market which
gives it an additional benefit to increase the business in the market of Australia. The micro
environment of Woolworths includes the internal situation of the company as well as the
competitors, suppliers, customers and other stakeholders effect the policies, operation and the
overall business of the company. Despite the fact that the company has a strong competitor
present in the market but has a huge strength to overcome all the threats. The promotional
strategies, relationship with the suppliers, employee policies and other operations support the
over all business. However, there are some problems present in the micro environment which can
be overcome with some initiatives effectively.

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References
Ethiraj, S. K., Gambardella, A., & Helfat, C. E. (2018). Theory in strategic management.
Strategic Management Journal, 39(6), 1529-.
Keller, K. L. (2017). Managing the growth tradeoff: Challenges and opportunities in luxury
branding. In Advances in Luxury Brand Management. Palgrave Macmillan, Cham.
King, L., & Thobela, S. (2014). Woolworths farming for the future. International Food and
Agribusiness Management Review, 17(B).
Martínez-Torres, M. R., Rodriguez-Piñero, F., & Toral, S. L. (2015). Customer preferences
versus managerial decision-making in open innovation communities: the case of
Starbucks. Technology Analysis & Strategic Management, 27(10), 1226-1238.
Molina-Azorín, J. F., Tarí , J. J., & Pereira-Moliner, J. (2015). The effects of quality and
environmental management on competitive advantage: A mixed methods study in the
hotel industry. Tourism Management, 50, 41-54.
Scarborough,, N. M. (2016). Essentials of entrepreneurship and small business management.
Pearson.
Woolworths.com. (2018). Woolworths. Retrieved from https://www.woolworths.com