MGT604 Strategic Management: Contemporary Analysis of Woolworths

This report provides a comprehensive analysis of Woolworths' strategic management, examining its core competencies and the challenges it faces in the Australian supermarket industry. It begins with an executive summary outlining the report's objectives, which include identifying contemporary challenges, analyzing Woolworths' strategies, and recommending improvements. The report delves into external and internal analyses using PESTLE and VRIO frameworks, respectively, to assess the impact of political, economic, social, technological, legal, and environmental factors, as well as internal resources and capabilities. It explores Woolworths' pricing, mobile money app, and innovation strategies, evaluating their strategic implications. The report identifies direct competitors like Aldi and Coles and discusses technological challenges, supplier and customer bargaining power, and the threat of new entrants. It concludes with recommendations for Woolworths to enhance its competitive advantage and customer satisfaction, emphasizing the importance of value-for-money strategies and effective staff management.

RUNNING HEAD: Contemporary Analysis and strategic Management
Contemporary Analysis and
Strategic Management

Contemporary Analysis and strategic Management
Executive Summary
This report is a detailed discussion about the core competencies and challenges faced by the
Woolworths in the present scenario to apply and operate different needed strategies. This
report will discuss the challenges prevailing in the current market segment for Woolworths
and tis report identify the different strategies applied by the management of Woolworths
supermarket. This report includes detailed external and internal analysis for the better
understanding about the effects of the internal and external factors at the production and
functions of the management and customer services. This report provides the suitable strategy
for the management of the better customer services with the management of strong level of
competition for its competitors. The main motive of Woolworth is to deliver fresh food for
people needs to follow the right pricing so it can reach the customers effectively.
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Contemporary Analysis and strategic Management
Table of Contents
Introduction...........................................................................................................................................3
Aim........................................................................................................................................................3
Contemporary challenges at Woolworths..............................................................................................3
Direct competitors challenges............................................................................................................3
Technological challenges...................................................................................................................4
Bargaining power of suppliers and customers...................................................................................4
Fear of new entering competitors......................................................................................................4
Strategies at Woolworths.......................................................................................................................5
The pricing strategy (Business strategy)............................................................................................5
Mobile money app strategy (Operational strategy)............................................................................5
Innovations and diversification strategy (Transformational strategy)................................................6
Strategic implication analysis................................................................................................................6
PESTLE analysis...............................................................................................................................6
VRIO framework analysis.................................................................................................................7
Suitable strategy for the Woolworth......................................................................................................9
Recommendations...............................................................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................12
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Contemporary Analysis and strategic Management
Introduction
This report is based on the research on the core competencies and chosen strategies to
maintain the competition and management in Supermarket industries in Australia.
Woolworth’s supermarket that is a well-known supplier and retailing chain holds
approximately 70% to 80% of Australian market and also enjoys duopoly in the Australian
market suppliers (Woolworths.com.au, 2018). Woolworth is busy in the selling of the
groceries, daily households ‘items, fruits, veggies, meat, items of stationaries and DVDs
including books and magazines as well. Woolworth is selling these items from the 1924 with
the famous slogan “The Fresh Food People” and it aim to deliver natural, healthy and fresh
food to its customer (Woolworthslimited.com.au, 2016). This report is analysis of the
challenges faced by the Woolworth and the strategies for their management.
Aim
The aim of this report is to identify the major issues faced by the Woolworths supermarket
externally as contemporary issues with the help of PESTEL analysis and internally with
VRIO framework analysis. Aim of this report is to give suitable suggestions and
recommendations to the Woolworths supermarket to develop its strategic management in the
competitive market. Important feature of this report is to identify the strong strategy for the
effective development of Woolworths with the management of service quality with the
competitor’s management (Woolworthsgroup.com.au., 2018).
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Contemporary Analysis and strategic Management
Contemporary challenges at Woolworths
Direct competitors challenges
Woolworth faces high level challenges from its direct and strong competitors they are mainly
Aldi and Coles. They both are using their innovative strategy to reduce the position of
Woolworths in the Australian market and among the customers. They are using price cutting
strategy to attract the customer with high quality products at low price. These two main
competitors are very advanced and give challenges to Woolworths at the price level at the
quality of the goods delivered (Economou, 2012).
Technological challenges
Woolworths provide easy online shopping facility to its customers; at their online platform
they provide the detailed information relevant to the product’s price, quality, delivery,
discount and many more. Changing technology adapted by the competitors create problems
for the Woolworths supermarket (Woolworthslimited.com.au, 2016).
Bargaining power of suppliers and customers
Suppliers are important key to operate a selling business. Woolworth has a large number of
domestic and international suppliers therefor management faces many issues regarding the
price reduction demands from the suppliers. Customers have strong bargaining power
because they have many choices to purchase their products from the market (Ariyawardana,
2017).
Fear of new entering competitors
Sector of grocery and households selling is very popular and mature to invest hence new
entrants with great deals and offers for customer is a big challenge for the existing
supermarkets like Woolworths. Woolworth needs to manage the preexisting competitors with
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Contemporary Analysis and strategic Management
the new entering competitors with an effective strategic planning and management (Arli,
2013).
Strategies at Woolworths
Success and growth of Woolworths Supermarket is based on their strategy to build better
understanding with the suppliers and the customer both. Supermarket chain supply
management focus to use proper strategies. Strategies help the business to attain the targets
and objectives with in fixed time duration and perform the best in the industry (Prajogo,
2016).
Basically Woolworth follows numerous strategies to function its operation properly in the
challenging and dynamic market and it tries to adopt the changes with the implementation of
new strategies to keep on the highest place in the competitors. Some selected and effective
strategies of Woolworths are as follows;
The pricing strategy (Business strategy)
Woolworths manage selling groceries and households to the large population residing in the
Australia and New Zealand and they increase continuously (Beaton-Wells, 2017). Hence
Woolworth adapts the pricing strategy with the help of the business experts and planners to
create new innovation and changes to attract large number of new buyers and managing the
trust of the preexisting customers. It focuses to deliver its product on the price that cannot be
followed by its competitors easily (group, 2019).
Mobile money app strategy (Operational strategy)
Woolworths supermarket use the technology in a very innovative way to operate its online
shopping website to make the buyer easy access on the purchasing (Zurzolo, 2013).
Woolworths has selected some of its customers belonging from the corporate sector that are
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Contemporary Analysis and strategic Management
very regular in buying the products by using their Mobile money app strategy and digital
screen strategy. This is an operational strategy applied by Woolworth’s management to
facilitate the customers to track their gift balance and buy the product online with the facility
of delivery at home (MITCHELL, 2019).
Innovations and diversification strategy (Transformational strategy)
Management of an organization needs to analyze the present opportunities in the competitive
market and adapt a strategic change in the strategic management (Botwinick, 2017). This
adaptive strategy is the transformational strategy naming credit card strategy and online
shopping facility that facilitates its customer to track their ordered product live on the phone
app and give pay back facility to the user and discount coupons on their next purchase
(MITCHELL, 2019).
Strategic implication analysis
Strategic management manages the functions of an organization both internally as well as in
external environment. To analyze the effects and implications of these strategies on the
Woolworth marketing and operation PESTLE analysis and VRIO analysis is suitable
(NightOwl, 2016).
PESTLE analysis
This analysis helps the managers to analyze the external affecting factors of the organization
that are very significant for the operations of an organization. Woolworth strategic managers
use the PESTLE analysis technique to identify the potential opportunities and threats
available in the external environment (Perera, 2017).
 Political- Political actions and situations are very significant role players to affect the
Australian retailing organizations and the performance standards of Woolworth
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Contemporary Analysis and strategic Management
organization. For example a competition policy was introduced by Federation
government of Australia preventing the independent supermarket to reduce the
competition in market (Chan, 2012).
 Economic factors – Any minor or major changes in the economic conditions of the
country affect the business drastically. Drops in the economy of Australia affect the
business operations at Woolworth on extreme level (Chapman, 2014).
 Social- An organization dealing in the retailing of the product has a special place in
the society and it is also affected by the actions of the society at broad level.
Woolworth needs to operate its functions focusing the development of the society and
community with the target to achieve sustainable development of the society.
 Technological- Technology is very changing and dynamic concept Woolworth is very
cautious to operate its functions with the cooperation of the dynamic technology. It
facilitates its customers and buyer to order the wanted product online and deliver the
product to the doorway of the buyer. These need a very dynamic and technologically
expert staff and management.
 Legal- Woolworth operates its services in different countries other than Australia
hence affected by the laws and regulations of the operating country. Any kind of
amendment in the legal framework affects the business operations of the existing
industries in the nation. Woolworth follows the strict rules and guidelines of the
country to operate the all functions legally (Gupte, 2014).
 Environmental- Woolworth deals in the selling of the groceries and petrol to the
customers hence it is affected by the changes in the environment at minor level. It
tries to operate the functions without putting any major effects on the environment
and try to develop the environment with the sustainable development and policies for
the management of the wastage and reuse cycle (Jie, 2012).
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Contemporary Analysis and strategic Management
VRIO framework analysis
VRIO framework is a tool considered to help the industries and business to discover the
internal challenges and threats to the competencies and the available resources. This is a tool
used to protect the resources and give them long term stability in the competitive market.
VRIO is collection of four queries that are related to the protection of capabilities. In this
VIRO of Woolworth the questions are:
Value- Does Woolworth offers the services adding some values to the buyer?
Rarity- Does Woolworth provides something rare that is not easily available in the market?
Imitability- Is it impossible to find the substitute of the services provided by the Woolworth
supermarket?
Organization- Does the management of the Woolworth is managed in a structured
organizational structure to capitalize the capabilities and resources?
Woolworth V
Value
R
Rarity
I
Imitability
O
Organization
Competitive
advantages
Brand/Reputation Yes Yes Yes Yes Constant
Customer
facilities
Yes No No Yes Moderately
competitive
Online Presence Yes No Yes Yes Short-term
competitive
benefits
Marketing Yes Yes No Yes Constant and
competitive
Customer Yes Yes Yes Yes Constant
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Contemporary Analysis and strategic Management
value/loyalty
VRIO Framework analysis of capabilities and resources
Woolworth is considered as the best retailing and supplying chain of Australia operating
since 1924 with 961 supermarkets worldwide have a deep customer belief and reputation. It
is a very reliable and trusted brand of Australia has the core competitors naming Aldi and
Coles needs to capitalize the sufficient resources and capabilities to reduce the competition
level (Knott, 2015).
Suitable strategy for the Woolworth
Woolworth is facing many challenges in the present scenario in form of the strong
competitors and threat of the newly entering competitors. Due to the increased competition of
in the market Woolworths is on risk to lose its regular customers and its brand value. Hence
Woolworths can use the pricing and value for money strategy (Bailey M. , 2017). To survive
in the highly competitive market Woolworths needs to focus on the delivery of the quality
food service in the minimum money to tide the customer’s trust in the organization. The
perception of the value for money is mandatory for beating the competition with the
customer’s satisfaction in the present market scenario. Woolworth use social media platform
to promote the brand and name of its organization, in its promotional strategy it use many
online social platforms like Facebook, Twitter, Instgram and Sanpchat to keep in the direct
touch of the buyer (Bailey J. P., 2015).
The pricing strategy can result in the increased demand in the market for the products of the
Woolworth. Woolworth’s key strategies are completely focused on the customer satisfaction
and happiness. Hence all the functions of the Woolworth are customer focused the price
reduction to the right product will give rise to the customer trusts and satisfaction and this
will lead a tough competition to its strong competitors (Budisantoso, 2013).
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Contemporary Analysis and strategic Management
Recommendations
 Woolworth can focus the staff and the staff management with the customer and
employees strong understanding by giving them proper training to understand the
diverse nature of a customer in different time.
 Online shopping site can put the proper information in the QR code of the product
hence the buyer feel easy to compare the price and quality of the products with the
other competitor’s price and qualities.
 Fruits and veggies in Australia became very costly due to their esthetical
imperfections they are not allowed to sell in the market. Woolworth can use these
fruits to sell them to the buyers that are not very rich to purchase the fruits or veggies
from the supermarket.
 The managing directors of the Woolworths need to pay attention on the strategies that
can help in the reduction of its operation costs.
 Management should use transparency in the communication means so it can easily
deliver the desired task to the employees to get the effective results.
 The management can make contract with the suppliers at a large number to reduce the
threat to face the dominative nature of the suppliers.
Conclusion
This report concludes the effects of the core competencies on the operation and management
at Woolworths. This report concludes the use different strategies at the Woolworths
supermarket. Woolworth face main challenges to its rivalry and competitive organizations
hence this report suggests the best supportive strategy to the Woolworths with the
identification of the effective strategies used by the Woolworths management. External and
internal analysis of this report concludes the effects of the different factors on the operations
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Contemporary Analysis and strategic Management
and management of Woolworths. The price reduction and promotional strategy is very useful
for Woolworths to manage the competitive forces in the environment. This report concludes
the given recommendations are effectively useful for Woolworths to manage the customer’s
satisfaction and happiness to them with the delivery of the right service at reasonable price.
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