Woolworths: A Strategic Report on International Business Expansion

This report provides a comprehensive analysis of Woolworths' international expansion strategy, focusing on the potential of the Vietnamese market. It begins with an introduction to Woolworths and its current market position, followed by a situation analysis using PESTLE analysis to identify the political, economic, socio-cultural, technological, legal, and ecological factors influencing business in Vietnam. Market analysis assesses the Vietnamese market's attractiveness, consumer behavior, and trends. An organizational analysis evaluates Woolworths' resources, capabilities, core competencies, and value chain. Competitive analysis identifies key competitors like Big C. A SWOT analysis summarizes the company's strengths, weaknesses, opportunities, and threats. The report concludes that Vietnam is a promising market for Woolworths, offering growth potential and favorable conditions for foreign investment. The report recommends a strategic approach to compete effectively in the Vietnamese market, leveraging Woolworths' strengths and addressing its weaknesses.

Running header: International business expansion
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International Business Expansion
Woolworths

International business expansion 1
Table of Contents
Introduction...........................................................................................................................................2
Situation Analysis..................................................................................................................................2
PESTLE Analysis..................................................................................................................................2
Market analysis..................................................................................................................................3
Organisational analysis......................................................................................................................4
Competitive analysis..........................................................................................................................5
SWOT Analysis.......................................................................................................................................6
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8

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Introduction
Woolworths was established in the year 1924. It is one of the largest super market chains in
Australia. Together with its competitor Coles the company capture 80 per cent of the
Australian market. It has around 992 stores across Australia. The company has a workforce
of 115,000 members. It works closely with Australian farmers and growers to provide the
best and fresh products to the customer. Woolworths clearly understands the needs of its
customers for easy shopping. Therefore, it has provided its customers with the mobile app.
Through this app, consumers can order their products from their phones and the product gets
delivered directly to the kitchen bench (Woolsworths, 2017). The company is already a
market leader in the Australian market. Now it is the high time that it must plan for its
international expansion. According to Williams (2013), the company is looking for
international expansion but there are no certain plans for the same. The first step taken in this
regard was opening up to Chinese customers by launching a store in on and T- mall (an e-
commerce platform) by Alibaba group. The best opportunity that company can look for is an
expansion is an expansion to Asian markets. The company already has an office in the
continent and has been sourcing its supplies from past many years from the continent
(freshplaza 2013). The country that country should consider for expansion is Vietnam.
Vietnam markets are cheap to enter. The options that can be considered for expanding the
markets of Vietnam would be either to purchase an existing market chain or set up its own
stores. Setting up own stores should be the first priority that is to be considered.
Situation Analysis
PESTLE Analysis
For planning extension into markets of Vietnam, it is important to identify the environmental
forces that can impact the organisation business in Vietnam. This can be done by the tool of
PESTLE analysis. PESTLE analysis can be defined as a framework that identifies six key
areas to determine sources of change. These areas are political, economic, socio- cultural,
technological, legal and ecological (Cadle, Paul and Turner, 2010). PESTLE analysis for
Vietnam:
Political environment-
 Vietnam has a stable government and social structure.
 The government control over the foreign retailers has now been liberalised.
Economic environment-
 The dynamic and emerging economy of South East Asia.
 Plan to decrease corporate tax from 25 per cent to 22 per cent. It is done for the
purpose of helping companies to increase competitiveness, reduce difficulties and
expand production (Vietnam Briefing, 2013).

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 The per capita income in Vietnam has increased in last decade this will lead to
increase in per capita income which signifies an increase in customer retail spending
(The World Bank, 2017).
Socio cultural environment –
 Consumers prefer foreign brands because they consider them of high quality and
hygiene standards.
 Vietnam has entered the golden era of the highest percentage of young people in the
population till now (UN Vietnam, 2016).
 It is expected that 45 per cent of the population of the country would be dwelling in
cities by 2020 (Vietnam news, 2011).
Technological environment-
 About 44 per cent of the population in Vietnam is connected to the Internet
(Thanhniennews, 2015).
 The major technological advancement can be seen in the field of E-commerce.
 In Vietnam, the e-commerce platforms and websites in 2014 were doubled in 2015
(Nguyen, 2017).
Legal environment-
 Under WTO membership from the year 2015, the Vietnam now allows setting up 100
per cent owned subsidiaries to foreign retailers.
 For opening a single retail outlet company needs to own a business licence. For
opening more than one the company is subject to follow ENT (Economics needs test
process). However, exemption has been given to foreign investors since 2013, for
opening outlet less than 500 square metres in area.
Ecological environment-
 In Vietnam, the authority responsible for environmental matters is Ministry of Natural
Resources and Environment.
 Some organisations are required to have Environmental impact assessment reports
whereas those who are not having these reports are required to have environmental
protection undertakings.
Market analysis
Market analysis can be defined as the process which identifies different characteristics of a
market that are helpful in solving problems of a company (brown, 2008). It involves
analysing various elements of the market such as market segmentation, market target,
consumer behaviour, market trends, distribution channels, success factors of markets and all
the components that affect the firm in a particular market.
Vietnam market is an emerging market. Recently the government has opened its doors for the
foreign investors. The customer data reveals that majority of the population in Vietnam is

International business expansion 4
young and working class. Therefore consumers prefer the ease and comfort at shopping
place. The consideration for cost is low whereas the consideration for quality, food safety and
hygiene is high. People do not have much time, therefore, they need various things at one
place. These factors are in favour of setting up a supermarket. In few interviews, it was also
figured out that customers now prefer supermarkets more than the traditional settings (Cho,
Gregory and Thai-Ha, 2014). Recent market trends witness that now people are becoming
more tech savvy, therefore the company can also go for an e commerce platform. In Vietnam,
the focus is been shifted from brand ownership to new experiences (Burrage, 2016). This is
an opportunity for an international firm to enter the markets of Vietnam. Cost of setting up a
new business and wage rates in Vietnam are quite low as compared to various other
countries. Overall scenario depicts that the market of Vietnam holds potential for growth and
profitability for Woolworth. These market trends are positive and in the favour of company.
Organisational analysis
The organisational analysis involves analysing the internal factors of the organisation n that
can impact the performance of the company. For organisational analysis of Woolworths we
need to analyse four basic factors that are resources, capabilities, core competencies and
value chain.
Resources
Woolsworth has around 992 and team size 115,000. It is a popular name in the Australian
markets. Thus it can be identified that the company has strong resources including both
tangible and intangible. The well-established brand image is another advantage for the
company. It has a well-developed product portfolio. It deals with a variety of super market
products and has now included a separate section for stationary items, DVS’s and magazines.
The company has efficient management, well-developed logistics and innovation skills.
Capabilities
Capabilities of an organisation can be defined as the ability to the firm to effectively manage
its resources and put it to the productive use. The companies growing profitability and
marketing share since 1924 demonstrates that the company is capable enough to put its
resources to productive use. It firm has strong built in capabilities.
Core competencies
Innovation
The firm cultivates the culture of innovation in its organisation. The company has set up an in
store innovation lab to provide best to its customers (thoughtworks, 2017). It has also set up
its food innovators centre which will be developing the Woolsworth’s own brand products
(Woolsworths, 2017).
Brand image

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The Woolworth has a well-developed brand image in the market. It positioned itself in the
market coupons, less waiting time in lines with its statement ‘the fresh food people’. This
creates an image of high quality, healthy, fresh and safe products in the minds of consumers.
Well-developed supply chain
The Woolworths main competitive advantage is gained through the well-developed supply
chain. The company maintains good relations with its suppliers. The firm always focuses on
attaining efficiency by cutting down the various costs along the supply chain.
Value chain
The firm effectively manages all the activities along its value chain. Inbound logistics of the
firm include producing and acquiring from suppliers in bulk to reduce overall cost.
Operations of the firm are effective as the company has talented employees and its own
farmers. The firm use vendor quality management system for effectively handling its
outbound logistics. Firm spends a lot in marketing activities to increase its sales. The
customer services of the firm include easy refund policies and coupons. The firm also has
well-developed support activities which include infrastructure, human resource management,
procurement and technology.
Competitive analysis
Competitive analysis can be described as continuously analysing the firm that works to
achieve similar goals (Fleisher and Bensoussan, 2015). Competition is a major force
impacting the business standing in the market. Therefore it is always necessary to analyse the
activities and strategies of the competitors that prevail in the market.
The firm’s main competitor in the Australian market is Coles. Both the companies are in
close competition with each other. In Australian market there exists the duopoly of both of
these firms. The firm is planning to enter the hypermarket segment of Vietnam. The reason
for the same is it offers high-quality services and diverse product portfolio. In Vietnamese
market, the completion in this sector is not much intense. There is only one brand name ‘Big
C’ that can give tough competition to Woolworth. The major advantage associated with Big
C is it has understood every detail of domestic market since it is operating from a very long
time. The strength of the company lies in the well-developed logistics system. It also has
financial support from group Casino. The cheap price is the competitive strategy for the firm
(Cuong, 2014). The firm has to adopt a well-planned competitive strategy to stand against the
Big C.
SWOT Analysis
SWOT analysis can be described as a process of identifying, strengths, weakness,
opportunities and threats. This is done because current strengths and weakness can be a
source of potential future risk (Webster, 2010). SWOT analysis for Woolsworth is done as
follows:

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Strengths
The key strengths of the company are following:
 Well established and one of the oldest brand name in Australia.
 Large market share.
 The committed and talented workforce of 115,000 employees.
 Well-developed supply chain.
 992 stores all over Australia.
 Wide product portfolio.
 Strategy for growth and satisfying all the shareholders.
Weakness
The weaknesses of the firm are as follows:
 Confined to national borders.
 Close competition with Coles
 Entry in the online retail segment was late.
Opportunities
 The various opportunities available for the firm are:
 Expansion in Asian markets
 Using digital marketing for increasing consumer base
 More potential in the area of health and nutrition.
Threats
 Increasing health issues from alcohol have created government pressure to slow down
this business.
 Economic uncertainties
 Constant technology up gradations.
 Aggressive expansion of another competitor Aldi.
 The growth rate of online retail is not very fast in Australia.

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Conclusion
From the above report, it can be concluded that Woolsworth is a strong supermarket brand
name in the Australian market. The firm is in close competition with Coles. The major
drawback associated with Woolsworth is that it is only confined to national borders. The
company has begun to realise this and opened its online store On Tmall an e-commerce
platform of Alibaba Group. This provides company’s products and services to Chinese
customers. The company’s now planning expansion to international markets. Based on the
analysis it can be said that expanding to Asian markets will be the most preferred option for
the company. In Asian markets, Vietnam is an attractive option Vietnam is an emerging
market and holds potential for the growth of the firm. Also in recent years, the government of
Vietnam have liberalised rules for foreign investors to enter into Vietnam’s market. The
company’s major competitor in Vietnam’s market is Big C. Big C is an old and trusted brand
name of Vietnam and holds a profound knowledge about the markets. Therefore Woolsworth
has to enter the market with the well-developed competitive strategy. The company should
make use of its key competencies such as brand name, innovation and, world class supply
chain to face competition in the international market. To position itself in the Vietnam market
the firm's focus should be on healthy, safe and good quality products. Also, it should make
efforts to reduce the waiting lines and make the shopping experience comfortable and easy
for customers. Because majority population in Vietnam is young and working class, they
want shopping experience to be relaxing and time-saving. The various environment and
market factors and organisational factors are in the favour of firms expansion to the
Vietnam’s market.

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