Foundations of Workplace Success: Woolworths Business Analysis

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This report provides a comprehensive analysis of Woolworths' business operations within the Australian retail sector. It begins with an executive summary outlining Woolworths' market position and the competitive landscape. The report then delves into a situational analysis, utilizing PESTLE and Porter's Five Forces frameworks to assess the political, economic, social, technological, legal, and environmental factors influencing Woolworths, as well as the competitive dynamics of the industry. A SWOT analysis is conducted to evaluate Woolworths' strengths, weaknesses, opportunities, and threats. The report further examines Woolworths' organizational structure, key stakeholders, and strategic choices. Finally, it offers recommendations for Woolworths to enhance its competitiveness in the Australian retail market, concluding with a summary of key findings and references.
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Running head: FOUNDATIONS OF WORKPLACE SUCCESS
FOUNDATIONS OF WORKPLACE SUCCESS
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Executive Summary
The Australian retail industry is recognized as highly reputable markets encompassing of
about 140,000 businesses performing their operations in this part. Nevertheless, the retail market
principally involves one of the few principal organisations functioning in the retail business. As a
result of oligopoly, major retail giants for example Woolworths make higher proceeds in contrast
to less significant companies. As a consequence, encompassing of nearby 31% of the market
portion in retail subdivision and has been dignified as one of the principal providers to the
Australian economy by producing $53 billion of Australian's GDP. Subsequently, its founding
Woolworths have accomplished to increase and transform with the purpose of revelling its
market stocks. It has mentioned that Woolworths developed as of first store in the world, which
introduced printed bills for its customers through cash registers. However, through range of
procurements Woolworths has achieved to expand rapidly by penetrating overseas markets and
conquering Australia as major percentage of retail sector. Conversely, reports have claimed that
with the entry of Coles in the Australian supermarket sector, Woolworths has been facing severe
competition to increase its market share. Moreover, in recent times, Woolworth has only one
strong contestant, Coles Ltd., besides it has been distinguished that because of demanding rivalry
among them, it has become extremely problematic for a new participant to enter into the
Australian retail sector. In addition, it has been claimed that oligopoly has invigorated the
suppliers to decrease their values, as there are a small number of consumers in the retail sector
and the corporations such as Woolworth can command their environments irrespective of their
barriers. However, one of the likely mediations is to capitalize on the retail market by supporting
farming and food production. The report has conducted a situation analysis of Woolworths’
business operations in the Australian retail sector and further evaluate its current situation related
to company’s key stakeholders organisational structures. In addition to this, the paper has
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provided inclusive insights and few recommendations for Woolworths to attain greater
competitiveness in the Australian retail industry.
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Table of Contents
Introduction......................................................................................................................................5
Discussion........................................................................................................................................6
Situational Analysis.....................................................................................................................6
PESTLE Analysis........................................................................................................................6
Political Factor.............................................................................................................................6
Social Factors...............................................................................................................................6
Technological..............................................................................................................................7
Legal............................................................................................................................................7
Environmental..............................................................................................................................7
Porters’ Five Forces Analysis......................................................................................................7
SWOT Analysis...........................................................................................................................9
Strengths......................................................................................................................................9
Weaknesses................................................................................................................................10
Opportunities.............................................................................................................................10
Threats.......................................................................................................................................11
Woolworths’ Organizational Structure and Key Stakeholders (Mintzberg theory)..................12
Stakeholder Analysis.................................................................................................................13
Strategy Formulation and Choice of Woolworths Australia.....................................................14
Recommendations..........................................................................................................................15
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Conclusion.....................................................................................................................................16
References......................................................................................................................................18
Appendices....................................................................................................................................21
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Introduction
The Australian retail sector is identified as one of the highly established markets
comprising of around 140,000 companies executing their operations in this area. However, the
retail market primarily comprises of one of the few leading organisations operating in the retail
industry. Owing to oligopoly, major retail giants such as Woolworths generates higher revenues
in comparison to smaller companies (Bailey 2017). Thus, comprising of around 31% of the
market share in retail sector and has been measured as one of the leading funders to the
Australian financial system by generating $53 billion of Australian's GDP. Since, its
establishment Woolworths has managed to expand and revolutionize with the aim of celebrating
its market shares. Bailey (2016) has mentioned that Woolworths developed as of first store in the
world, which introduced printed bills for its consumers via cash registers. On the other hand,
reports have claimed that with the entry of Coles in the Australian supermarket sector,
Woolworths has been facing severe competition to increase its market share. Moreover, in recent
times, Woolworth has only one strong challenger, Coles Ltd., and it has been noted that because
of demanding competition among them, it has become highly difficult for a new entrant to
penetrate into the Australian retail sector. Furthermore, studies of Sutton-Brady, Kamvounias
and Taylor (2015) have claimed that oligopoly has encouraged the suppliers to reduce their
prices, as there are few purchasers in the retail sector and the businesses such as Woolworth can
dictate their conditions regardless their barriers. However, one of the likely involvements is to
participate into the retail market by being supportive towards agriculture as well as food
production. The following report aims to conduct a situation analysis of Woolworths’ business
operations in the Australian retail sector and further evaluate its current situation related to
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company’s key stakeholders organisational structures. In addition to this, the paper will provide
few recommendations for Woolworths to attain greater competitiveness in the Australian retail
industry.
Discussion
Situational Analysis
PESTLE Analysis
Political Factor
Each state in Australia aligns with Food Standards Codes, which implies that all
packaged foods supplied by Australia must have nutritional detailed facts table on the brand
revealing the proportions of energy, sugars, protein in addition to sodium as proportion of
acclaimed regular requirements and per 100g or ml servings (Woolworthsgroup.au 2019). This
guiding principle assists superstore sector in Australia in order to present all the nutritional
information to avert obesity among customers.
Economic Factors
Woolworth functions in an economically rigorous setting. Moreover, due to the changed
buying behavioural patterns of Australian customers, low cost products are in high demand thus
reducing their level of consumption of healthy products as well as luxury goods.
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7FOUNDATIONS OF WORKPLACE SUCCESS
Social Factors
Investors and consumers who have the understanding of environmental impacts of their
capitalizing as well as consuming behaviour they choose businesses with green-tag and buying
and support products, which are organic (Spiteri, Olstad and Woods 2018).
Technological
Woolworth has efficiently aligned increasing inventions of information communication
technology in order to increase the productivity of their service as well as content of their
clientele. As per reports, Woolworths has launched ‘self-checkout ‘machines which assist the
purchaser to “scan, weigh and pay” intended for their rations through cash, credit or debit cards
paying facilities. Lately, Woolworths has presented the Visa’s pay Wave with an intention of
reducing waiting time of clienteles spent in counter lines.
Legal
The Australian Competition and Consumer Commission in addition to the Trade
Practicing Act as well as other foreign exchange strategies provide significant support to
Australian supermarket retail business.
Environmental
Supermarket players and petrol chains have been associated through rebates and has been
offering discounts on customers’ purchases owing to Woolworth’s acquirement of Caltex and
Coles with Shell although the channels of each are not geographically linked.
Porters’ Five Forces Analysis
The analysis of Porters’ Five Forces enables organization to understand the structure of the
respective industry and venturing out relevant position which does not only show greater
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profitability but also has less exposure towards threats and risks. The below mentioned section
will evaluate the profitability and desirability of the Australian supermarket sector in recent
times.
Bargaining power of suppliers- The bargaining power of suppliers has been noticeably low. As
per reports of Spiteri, Olstad and Woods (2018), Woolworths and Coles with their acquisition of
over 80% of Australian market share have constricted several local Australian retail producers
with restricted selection of intermediaries for selection. However, in the view of Jie and
Gengatharen (2019), recent entry of Costco besides expansion of Aldi accompanied by the recent
drive of Australian Competition and Consumer Commission (ACCC) has lowered the
competition barriers in the segment. As a result, the bargaining power of suppliers recently has
been evaluated to be moderate owing to likely larger selection of intermediaries for consignment.
Bargaining Power of Buyers- Federal Government and the ACCC to reduce competition
barriers, have facilitated new market rivals to penetrate Australian retail sector and consequently
increase customer preferences of buying products. Thus, these factors possibly would bring
future bargaining of consumers to ‘moderate level’.
Threat of Substitution- Studies have revealed that indirect market rivals have been considered
as sustainable substitutes to Woolworths and tend to pose severe risks in future business
operations. Also, the growing development towards healthy and organic substitutes has enabled
farmer’s market to sell organic produce, further posing critical threats to Woolworths’ business
operations.
Rivalry of industry competitors- Reports have claimed that Woolworths has been experiencing
threats from new entrants to Australian retail markets such as Aldi, Costco and other organic
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food businesses due to competitive product price offering and product range. Such rivalry among
Woolworths and its competitors has been measured to be severe and high.
Threats of New Entrants- Level of threat of new entrants have been measured to be
considerably low and tend to remain unchanged. However, a deceptive collaboration of domestic
zoning regulations and leasing agreements with proprietors has led to an artificial deficiency of
grocery store websites. These factors have been critically intensified by favored treatment for
Woolworths by proprietors owing to their major pulling power in relation to customer
bottleneck.
SWOT Analysis
Strengths
Robust attention on Australian food and liquor business upsurging Woolworths’ top line
growth- Woolworths has been maintaining robust emphasis on Australian food and alcohol
business by introducing new harvests and launching new supplies and initiating marketing
operations. As per FY2017, Woolworths has opened around 11 meat serveries offering specialty
fresh meat slices in addition to high-quality advice. Furthermore, the company has launched
around and 91 new bakeries with an aim of expanding its series in artisan style breads, patisserie
besides exceptional cakes (Devin and Richards 2018). Moreover, Woolworths has strengthened
its specials initiative specially aimed for families with offers such as ‘buy one get one free’, half
price specials in addition to ‘Big Family Special’. Such a strategy has facilitated Woolworths to
elevate its comparable store sales by more than 3.7% in FY2017 on annual basis.
Well-organized supply chain management- Woolworths has changed its retail supply chain
management through the execution of several systems comprising of StockSmart, which is
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known as distribution centre forecast regulated replenishment along with depository management
and transport administration. Additionally, Woolworths has been actively relocating intellectual
possessions across the Woolworths Group. Meanwhile, as per reports, Woolworths has
collaborated with Hoxton Park distribution centre that is known as collective service model for
BIG W, Dick Smith as well as Home Improvement. Additionally, Woolworths has aimed to
extend its international sourcing and worldwide logistics proficiencies.
As a result, Woolworths’ well-organized business procedures have empowered it to
reinforce its effectiveness. It has been measured as key advantage for the company in the current
economic disorders when revenue development cannot be expected.
Wide-ranging private label portfolio offering- Customers in recent times has been inclining
towards purchasing from private label brands as they cost less in comparison to national brands
and generally seek for greater assessment. This approach has been witnessed in Australia with
customers increasing their store collection. According to Jie and Gengatharen (2019)J,
Woolworths has an recognized existence in the private label market and has been reflecting
strong collection of private label selections to upsurge its incomes and productivity.
Weaknesses
Major Dependence on Australian Retail Sector- Woolworths shows major dependence on its
local market in Australia for majority of its incomes. In FY2015, Woolworths attained market
share in New Zealand and generated around 12.9% of its total profits from NZ during the year.
According to Grimmer (2018), such dependence on local market tends to show an implication of
being exposed to country-specific developments. Reports of Knox (2015) have claimed that
Woolworths may be significantly affected by the governmental or national fluctuations which
would arise because of the environmental deliberation in Australia.
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Opportunities
Cumulative emphasis on retail data as well as big data analytics- Recent reports have
revealed that Woolworths has been accentuating on strategies by taking clients’ insights which
shows tendency to reinforce its local supermarket business. Suriadi et al. (2017) have cited data
from FY2015, which claim that Woolworths has acquired around 50% share in Quantium, which
is known as Australia’s data driven strategy commerce with capacities in retail data as well as
big data analytics. Furthermore, the company has aimed to upsurge its client analytics team size
and will implement Quantium’s data, media as well as software facilities in order to increase its
“Everyday Rewards’ data for successfully delivering comprehensions and improved judgments
across pricing, vacillating and advertisings.
Introducing new home improvement stores in Australia- Recent reports have revealed that
Woolworths in collaboration with Lowes, recognized as a US-based home improvement retailer
have introduced around 45 stores in Australia within 2 years, further reflecting a venture of over
A$1.5 billion (Grimmer 2018). Recently, Masters has declared its plan of launching around 11
stores in South Australia by 2024. However, Masters Store at Brighton aims to supply range of
leading brands appliances, paints and garden range services. In the view of Grimmer (2018), new
home improvement stores probably will facilitate Woolworths in supporting its commerce in
Australia.
Threats
Intense market rivalry in Australian supermarket domain- Woolworths encounters intense
competition in its local market from its major market competitor, Coles, a subsidiary of
Wesfarmers. It has been noted that Woolworths offers similar services as Coles thus raising the
level of competition and challenge of sustaining a competitive advantage. Furthermore,
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Woolworths’ recently introduced ‘More Savings Every Day’ marketing campaign has
experienced severe competition from Coles’ marketing series for example, 'Down Down'
(Karlsson et al. 2018).
Low level of purchaser confidence poses negative impact on Woolworths’ business
operations- Reports of Bepari and Mollik (2016) have revealed that level of consumer
confidence in Australia has been estimated to be around 101.92 from 1974 until 2014. However,
recently, the Australian government has revealed expenditure cuts in addition to new taxes in
2015 federal budget. This has caused severe tensions amongst Australian customers for their
finances, thus dropping from 6.8% to 92.9 in May 2014. Since, Australian consumers have been
focusing mainly on economic consumptions; there would be sinking pressure on their
unrestricted expenditure. Consequently, such a strategy would have an undesirable impact on
Woolworths’ retail business.
Woolworths’ Organizational Structure and Key Stakeholders (Mintzberg theory)
In the era of globalization, organizational structure of major companies has been
undergoing rapid shifts. According to Mintzberg theory, basic roles of manager in an
organization have been categorized into three primary segments namely, interpersonal role,
informational role and decisional (Svensson et al. 2016). As per studies of Hambur and La Cava
(2018), Woolworths’ managers play each of these roles efficiently in order to supervise sales,
consumer and employees. Furthermore, managerial roles of Woolworths under interpersonal role
essentially serve as figure head directing staffs in dealing with stocks or issues with consumers
and provide necessary instruction to its personnel. On the other hand, managers at Woolworths
has shown substantial understanding of informational role where it effectively analyses staffs’
actions and performance by offering continual training for being more effective in managing
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clients (Woolworthsgroup.au 2019). Furthermore, Woolworths’ leaders and managers have been
highly effective with company’s decision roles by updating staffs and managers with newer ideas
to be implemented.
Stakeholder Analysis
You and Barry (2016) by drawing relevance from previous researchers have mentioned
that retailers in recent times have been earnestly undertaking sustainability in their retail setting.
Woolworths’ assurance towards sustainability in the retail setting has been observed as assembly
of sustainability creativities. According to Fels and Lees (2018), Woolworths’ initiated Good
Business Journey strategy primarily incorporates all initiatives as well as sustainability goals for
prospective business operations. According to stakeholder theory, organisations are mandatory to
respond in the welfare of the society where they are executing their operations along with the
greater environment which has been influenced by their business processes. Thus, drawing
relevance to stakeholder theory, Woolworths has been showing utmost commitment towards
responsible retailing along with sustainable development in Australia (Jie and Gengatharen
2019).
Woolworths has been intending to influence sustainability in its process of supply chain
along with its important suppliers. Grimmer (2018) in their studies have mentioned that
Woolworths comprises of protocol besides a sustainability score card which the organization
utilizes in order to evaluate suppliers in relation to their obedience to Woolworths’ sustainability
expectations. These estimates have been recognized by the protocol and contractors have to
accept this code of conduct. Moreover, to efficiently regulate the level of assignation, studies
have used Supplier Engagement Continuum which has been developed by the United Nations
Global Compact. According to Kamal et al. (2015), the continuum has allowed many
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academicians to strategize the commitment between Woolworths and its contractors, and the way
Woolworths could advance in this domain.
According to Karlsson et al. (2018), the Global Impact has been explained as practical
framework in support of development as well as implementation of sustainability policies and
practices. The framework has offered participants with range of work streams, management
theories and tools along with important resources which have been designed in order to support
the progress of sustainable business models as well as markets. Reports of Bepari and Mollik
(2016) have noted that Woolworths has been making operational use of these tools as well as
resources and concurrently amplify its reputation not only in the Australian context, but also in
areas where Woolworths execute its operations globally. By drawing relevance from the
framework it has been noted that from ‘broad engagement’ at the lowermost to ‘deep
engagement’ at the top level with each level has been comprising of practical tools or advice
which organisations which can utilize in order to involve their dealers. Furthermore, preliminary
from the bottom, level one implies that like Woolworths has been establishing prospects to their
supplier vis-à-vis sustainable practices.
Strategy Formulation and Choice of Woolworths Australia
Vision- Woolworths Group Australia constitutes specific mission of delivering optimal
services in convenience, value and quality for its clientele. Company’s official website
mentions that Woolworths has been efficiently functioning towards its vision of assisting
communities and societies where it operates. The company’s “Live Big for Less’ has
been initiated to accentuate effective means of developing its business towards
sustainability.
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Goals- The strategic objective of Woolworth lies on gathering substantial number of
customers across all brands. However, to attain the particular objective, the company has
highlighted its actions on generating sustainable sales momentum on Food along with
developing its beverages varieties for offering substantial value to its clients, thus
reinforcing its portfolio businesses in following strategic goals for delivering effectual
stakeholder value and most importantly in developing as lean retail organization with
end-to-end procedures and systems brilliance.
In the view of Govender (2017), while Woolworths has been encountering elevated
demands and risks on its profit margins as well as precise strategic direction, the
organization has been progressing in guaranteeing effective revenue generation by not
compromising on service value but endorsing innovative ways of accomplishing client
demands and requirements. Considering these factors, Woolworths’ current business
activities have focused on serving as home-grown food retailer which endeavors of
successfully serving its customers in justifiable approach by upholding utmost
transparency with the clientele.
Recommendations
By taking into consideration of company current situations, business operations along
with organizational structure and key stakeholders, few recommendations has been made in
sustenance and analysis of strategies which can be effective for Woolworths’ future business
operations.
While supporting the strategies, it has been noted that Woolworths as an Australian
supermarket giant has been recognized for offering reasonable price to its customers. As the
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Australian retail sector does not show considerable flexibility in support of new entrants, the
industry has not been significantly effective for companies with low profit potential. Considering
the above factor, it can be suggested that Woolworths should aim at framing its tactical aims and
objectives in reliability by aligning with political conditions of Australia (Svensson et al. 2016).
Such a strategy would aid the company to avoid any blunders in prospective business activities.
Woolworths can also acquire improved monitoring systems to triangulate the fallouts at
advanced stages. Furthermore, implementing only one monitoring system for example the
sustainability scorecard has not given considerable results. Numerous monitoring systems have
the capacity to cover additional areas and eventually the effects would be of greater value. Such
method of triangulation would further result in greater efficiency as well as effectual procedures
for Woolworths as well as its suppliers.
In addition to this, Woolworths must focus on modifying its lower pricing policy in order
to successfully compete in the Australian retail sector. In recent times, with changed customer
preferences and willingness of paying more for healthy food products have given rise to number
of organic food retailers (Govender 2017). Thus, Woolworths must upsurge its pricing range
which would eventually accomplish its objective of being first priority for its customers. As a
result, W must be focusing on implementing fair pricing policy would certainly enable the
organization in attaining cost-effective approach as well as authority of fulfilling customers’
demands of lower pricing.
Conclusion
Therefore, from the above discussion it can be concluded that Woolworths must continue
to ripen its strategic alliance between core businesses with diverse array of operations. In
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addition to this, by considering factors mentioned in PESTEL Analysis, Woolworths should
efficiently aim at endorsing continuous innovation and novelty in relation to the inclusion of
strategic efforts. Organisations can reinforce their association with their suppliers by developing
highly advanced communication as well as partnership. Furthermore, collaboration, undeviating
communication in addition to effective communication would develop sustainability
progressions and problem-solving.. Moreover, if supply chain relationships have been dealt with
in accurate manners and efficiently, organisations will be facilitated to reassure suppliers to turn
out to be more sustainable and flourish at it. Moreover, engagement between Woolworths and its
suppliers have been considered as vital determinants of stakeholder association and
collaborations.
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Appendices
Industry Attractiveness and Productivity of Woolworths
Source: Bepari and Mollik (2016)
United Nations Global Compact Supplier Engagement Continuum
Source: Grimmer (2018)
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