MGT501 Business Environment: Woolworths Risk Analysis & Solutions

This report provides an in-depth analysis of Woolworths' business environment, building upon a previous assessment of micro and macro factors affecting the company. It focuses on proposing solutions to environmental challenges and risks faced by Woolworths, utilizing frameworks such as PESTLE and Porter's Five Forces. The report discusses general and historical responses to political, economic, social, technological, legal, and environmental factors. It also evaluates the competitive landscape using Porter's Five Forces, analyzing the threats of new entrants, supplier power, buyer power, substitute products, and industry rivalry. The report recommends using scenario planning and wargaming as analytical approaches to mitigate external risks and improve strategic decision-making. Ultimately, the report aims to provide Woolworths with actionable insights to navigate its complex business environment and maintain a competitive edge.

Business Enviornment
Woolworths
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Contents
Introduction......................................................................................................................................2
Background information..................................................................................................................2
General and historically relevant responses the factors...................................................................3
PESTLE.......................................................................................................................................3
Porter’s five forces analysis.........................................................................................................6
Respond with a solution to all of the environmental risks...............................................................7
Scenario Planning........................................................................................................................8
Wargaming..................................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
In the current era, this has been found that it is essential for the company to conduct the analyses
related to the environmental factors that can affect the working of the company. This report is
environment scan report which is prepared with the objective to propose the solutions to the
challenges which is faced by the firm in the environment in which they are managing their
operations. This reflects that the report is the continuation of the previous one in which the
discussion related to the Woolworths external factors has been done. These factors lead to the
issues which affect the company as they won’t be able to meet the needs of the customers. The
major focus of the report is to find out the solution of problems that offer the convenience to the
company while conducting their business operations in the market.
Background information
Woolworths is a well-known company that is present in the Australian market and came into
existence in the year 1924. The company is specialized in selling the groceries item in their
supermarkets which mainly include vegetables, fruit, meat and many others. The company is
able to manage more than 1000 stores within Australia. In the Australian market, Woolworths is
getting affected by the micro and macro factors which are discussed in the previous assessment
(Woolworths, 2018). Considering the competitive market, it is essential for the company to find
the solutions to the factors.

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General and historically relevant responses the factors
PESTLE
Political factors
Woolworths Company is operating their business operations in Australia and New Zealand and
both the countries are stable in terms of policies (Armstrong, Adam, Denize and Kotler, 2014).
The performance of the company was affected by the campaign introduced by the government
which was based on the unfair competition offered by the company to small retailers. This has
exploited the image of the company in the market of Australia. The company took the steps to
manage the same by appointing a dedicated team who look towards the step taken by the
company as this helps them in managing the sustainable position in the market.
Economic factors
The economic factors affect the profitability and revenue of Woolworths. This has been found
that the rise in the GDP of Australia and New Zealand is offering the benefit to the company
with the rise in purchasing power (Chernev, 2018). This will also bring the changes in the prices
of products offered by the Woolworths. The rise in the prices helps the company to earn the
profit in the market of Australia.
Social factors
The change in the preference of the customers is affecting the operations of the Woolworths
Company. The choices of the customers and demand are affected by the changes in technologies
(Hill, Jones & Schilling, 2014). Along with this, the rise in the awareness among the customers

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related to the organic products is bringing the changes in their preference and choices.
Considering the changes in the demand and needs of the customers, the Woolworths Company
has started offering organic products. This reflects the way through which the company
responded towards the change in the needs of the customers.
In addition, the company initiated offering organic products by evaluating the reviews of the
housewife customers for their babies. The below-given image reflects the organic baby food that
is offered by the Woolworths company.
(Source: Woolworths, 2018)
This change reflects that the company is a concern related to the demand and needs of the
customers due to which they are bringing organic products. Thus, this is clear that change in the
factors brings the changes in the response of the company.

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Technological factors
The change or up gradation in the technology is one of the major factors which is influencing the
decisions of the retail industry which include the Woolworths company in the Australia market.
Woolworths Company makes use of technology in different areas of their operations which make
their operations effective. One of the major decisions took by the company after considering the
use of the technology is to make use of the self-checkout based machine which helps the
company to reduce the cost. This technology helps the customers to scan the products and make
the payments without any involvement of a third person (Kotabe & Helsen, 2014). This reflects
that the change in technology made the company respond to the change which influenced the
other companies in the retail industry. The convenience which is offered by the Woolworths
increased the expectations of the customers from the different retailers present in the market.
This leads to the rise in the competition among the market.
Legal factors
It is essential for the Woolworths to abide with entire laws and regulations which help the
company to perform their operations in an ethical manner. Responding to this, the Woolworths
Company started making the step guidelines for their staff which helps them to align the staff
with different constitutional imperatives. This helps the company to respond to the legal
obligations effectively.
Environmental factors
In the current era, both Australia and New Zealand has some set environmental policies which
are essential to be followed by the Woolworths (Grant, 2016). The company is following the
different sets of environmental standards that help them to enter into the area and to manage their

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operations on time. This reflects the positive response of the company towards environmental
standards.
Porter’s five forces analysis
Australia and New Zealand market is very competitive due to which it is essential to analyse the
competitiveness of the industry by applying an appropriate framework that is Porter's five forces.
This includes the analyses related to the customers, suppliers and competitors of the Woolworths
Company (Kotler, 2015). The response of the company considering the competitiveness of the
Australian market is given below: -
 Woolworths has large operations in the market due to which there is a low threat related
to the new entrants. The entry of the global organisation within the industry can affect the
profitability level of the Woolworths Company. Due to which the company implement
the low-cost strategy which help them to remain the leader of Woolworths.
 The supplier maintains the high bargaining power which affects the prices of products
that is kept by the company (Wheelen, Hunger, Hoffman & Bamford, 2017). The
company demand for the raw material varies according to the season and the needs of
customers which helps the suppliers to maintain their prices in the market. In addition to
this, the company response to the supplier’s prices is the effective implementation of the
supply chain.
 The bargaining power of the customers is high for the Woolworths Company as these
buyers always demand a wide range of products. This is the reason due to which the
buyers can easily switch from one supermarket to another in the search of the wide range
of products (David, 2011). Woolworth’s response to the situation is that they offer a wide

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range of customers on time after understanding the trends and changes in the preference
of the customers.
 There is a presence of the high threat of substitutes for the products and services that are
offered by Woolworths. Responding to this change the company implemented the
differentiation based strategy which helps them to attract more and more customers by
fulfilling their needs with the actual and substitute products which they are searching in
the market (Wilson and Gilligan, 2012).
 The market where the Woolworths Company is operating their business operations is
intense as there is the presence of Coles, Aldi, Asda and many others. The company is
maintaining the competition with the use of the competitive price. This will help the
company to gain a greater share in the market.
Respond with a solution to all of the environmental risks
In the current working environment, it is essential for each and every business to effectively
manage their risk which plays a vital role in managing the qualitative distinctions related to the
numerous types of the risk that are mainly faced by the company. This has been found that
mainly there are three types of risk that are faced by the company (Hollensen, 2015).
Woolworths deals with the preventable risk, specific risks and the different external risks.
Majorly the company deals with the external factors which affect the operations of the company
and it ultimately creates an impact on the profitability and the success of the company. The
major sources of the risk which are faced by the company include the political and natural
factors. The company also faces the risk due to the major shift in the macroeconomic factors.
Woolworths Company cannot avoid the risk or reduce it while dealing in a competitive

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environment. It is further recommended to the company to focus on evaluating the impact and to
respond according to the changes because these change can’t be control by the Woolworths. This
has been found that few of the risk need a different analytic approach that contributes in reducing
the risk that can contribute in reducing the external factors (Baker, 2014). The analytic approach
is used for the analysis to break a problem down into the elements that are essential to solve.
Woolworths make use of the various approaches for different sources of external risk.
Scenario Planning
Scenario planning is considered as effective systematic proves that define the plausible
boundaries related to the future states of the world. Participants examine different external forces
such as social, technological, political and regulatory and many others (Kumirska, et al, 2016).
The advisor informs the Woolworths Company to make them aware of the changes that are
essential. According to the changes, the manager of the company makes use of the strategy to
deal with the changes.
Wargaming
This analytical approach supports the vulnerability of the company to bring the changes in their
strategies of the competitiveness of the industry. In the approach, the company creates a team
that helps in identifying the strategies in the coming years (Kaplan & Mikes, 2012). Woolworths
can make use of this approach in dealing with the competitors according to their current beliefs
and possibility of actions. The company can evaluate the strategies related to the suppliers,
customers, new entrants and many others. Woolworths Company should make use of this
analytical approach that helps them to deal in the competitive industry.

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Conclusion
In the end, it can be concluded that Woolworths Company is dealing with the different factors
which include the macro and micro environmental factors that can influence the decision of the
company. The issues related to the environmental factors are discussed in the previous
assessment. According to the issues, the company take their future steps which help them in
responding in an effective manner. This report includes the different responses of the company
that influence the environmental factors and leads to the risk. The company should make use of
an analytic approach that helps them in overcoming or reducing factors. The analytical approach
includes the scenario planning and war-gaming that helps the company in offering the respond to
the solution of the issues which are majorly faced by Woolworths.

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References
Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014) Principles of marketing. 6th edition.
Welbourne: Pearson Australia.
Baker, M. J. (2014). Marketing strategy and management. London: Palgrave Macmillan.
Chernev, A. (2018). Strategic marketing management. 9th edition. Chicago: Cerebellum Press.
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Grant, R.M. (2016). Contemporary strategy analysis: Text and cases edition. New Jersey: John
Wiley & Sons.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. US: Cengage Learning.
Hollensen, S. (2015). Marketing management: A relationship approach. India: Pearson
Education Limited.
Kaplan, R.S. & Mikes, A. (2012). Managing Risks: A New Framework. Retrieved from
https://hbr.org/2012/06/managing-risks-a-new-framework
Kotabe, M., & Helsen, K. (2014). Global marketing management. New Jersey: John Wiley &
Sons.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.

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Kumirska, J., Wagil, M., Stolte, S., Maksymiuk, M., Puckowski, A., Maszkowska, J., ... &
Stepnowski, P. (2016). Anthelmintics in the aquatic environment: a new analytical
approach. Current Analytical Chemistry, 12(3), 227-236.
Wheeler, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management
and business policy. India: Pearson.
Wilson, R.M. and Gilligan, C. (2012). Strategic marketing management. New York: Routledge.
Woolworths. (2018). Organic. Retrieved from:
https://www.woolworths.com.au/Shop/Browse/fruit-veg/organic