Woolworths Business Strategy Analysis: Competitive Threats

This report provides a comprehensive business strategy analysis of Woolworths, focusing on the competitive threats posed by Amazon. The study identifies key challenges faced by Woolworths, including social media ineptitude and poor customer loyalty, and evaluates the strategies adopted by Amazon to gain a competitive advantage in the retail market. The report delves into the issues of Woolworths' marketing strategies, pricing, and staff training, and suggests specific solutions to overcome these challenges, such as improved public relations management, enhanced customer service, and better integration of supply and distribution systems. Furthermore, the implementation of these solutions is explained using Lewin's model of change management. The report concludes by emphasizing how the implementation of these solutions can help Woolworths regain its market position and enhance its competitive edge in the dynamic retail industry.

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BUSINESS STRATEGY ANALYSIS OF WOOLWORTHS
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1BUSINESS STRATEGY ANALYSIS OF WOOLWORTHS
Executive Summary
The significant objective of the study is to analyze the various factors that provide a threat of
competition to Woolworths from Amazon. Among the various identifiable challenges, the
aspects of social media ineptitude and poor customer loyalty have been evaluated.
Additionally, solutions have been provided as to how these challenges can be overcome by
the company. The implementation process of the solutions have also been explained using
Lewin’s model of change management. In conclusion, it is mentioned how the
implementation of these solutions can aid the company to regain its position in the market.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Overview of the Company.....................................................................................................3
Strategies Adopted by Competitor – Amazon.......................................................................4
Issues faced by Woolworths...................................................................................................5
 Social media ineptitude...............................................................................................6
 Poor consumer loyalty.................................................................................................7
Solutions.................................................................................................................................8
Implementation of solutions...................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

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Introduction
Globalization has had an exponential impact on global business organizations,
including those in the retail sector. The effect of globalization on the retail sector involves
transformations and developments in global sourcing, procurement, manufacturing and
logistics (Gregory 2015). Due to the massive scope of the sector, the retail industry is viewed
as highly competitive. The presence of globally recognized organizations in the industry such
as Amazon, Woolworths, Walmart, Ebay etc. are increasing the competition among each
other thereby transforming the scope of the market and the consumption patterns of the
customers (Sims 2018). In this aspect, Amazon has strategized various means to gain a
competitive advantage in the market, through product diversification and competitive pricing,
which in turn has attracted the maximum customer base and their loyalty (Haucap and
Heimeshoff 2014). For this reason, the organizations like Woolworths have faced severe
threats of competitive rivalry that can be tackled with the help of certain strategies. The report
will further discuss the problems faced by Woolworths in terms of competition from
Amazon, and how they might be overcome. These problems may be recognized as social
media ineptitude and poor consumer loyalty.
Discussion
Overview of the Company
Woolworths Supermarkets is a chain of grocery stores and supermarkets in Australia,
which was established in the year 1924. The supermarket chain additionally provides retail
services through the sale of a variety of products such as health, beauty and household
products, groceries, magazines, electronics stationery items, pet and baby products
(Woolworthsgroup.com.au 2019). The company also operates through online mediums in the
form of their official shopping website, thereby providing the products to their customers at

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their doorstep. The unique selling point of the company is the provision of high quality
products to the customers at reasonable prices. The products sold by the company cater to the
needs of the customers belonging from the upper middle class households and the working
populations (Knox 2015). Due to the massive extent of growth in the retail sector,
Woolworths faces severe competition from organizations like eBay, Ikea, Walmart and most
importantly Amazon.
Strategies Adopted by Competitor – Amazon
Amazon Inc. is a multinational technology based company based in the US focusing
on several aspects including e-commerce (Aboutamazon.com 2019). Amazon is one of the
most renowned brands in the retail sector as they have strategized efficient means to cater to
the tastes, preferences and requirements of its target customers. Such strategies can be
identified to be the following:
 Adopting competitive pricing strategies by offering the products to the customers at
prices lower than those offered by the supermarket chains (Supermarketnews.com
2019).
 Diversifying the range of products available on the website so that the needs of larger
number of customers are met.
 Utilization of a highly integrated distribution and supply chain that enables easy
delivery systems to the customers within short periods of time.
 Availability of perishable products like grocery items that are supplied to the
customers within the stipulated time, along with the maintenance of its quality
(Marketingmag.com 2019).
 Availability of household staples, thereby overpowering the provisions of the
supermarket chains exponentially.

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Due to such factors, Amazon has been providing stiff competition to organizations like
Woolworths, who in turn are required to strategize efficient means in order to be able to
maintain their position in the Australian market.
Issues faced by Woolworths
Woolworths in spite of being one of the major supermarket chains in Australia, faces
several challenges in terms of the competition present in the retail sector. Such competition
can be evaluated through an analysis of the various factors operative in the retail market such
as the preferences of the customers, the bargaining power of the suppliers, the pricing
strategies of the competitors, and marketing strategies used by the organizations in the
industry to attract the interest of the customers (Arup, Beaton-Wells and Paul-Taylor 2017).
Additionally, Woolworths is required to examine the external competitive environment of the
retail industry so that it may be able to strategize efficient means of gaining a loyal customer
base and thereby obtain a competitive advantage in the market. The various issues faced by
the company can be described to be the poor marketing strategies adopted by the
organization, which fails to attract the customers. In addition to this, the poor performance of
the organization with respect its pricing strategies has made the shareholders face challenges.
Moreover, the staff is also not trained adequately to cater to the needs and requirements of the
customers, who find it difficult to access the company website which lacks user friendliness
(Kona and Weideman 2014). The company also has to strengthen its communication with the
distributors and the suppliers so that the products offered by it can reach out to the customers
within short periods of time. Overall, it can be said that the company faces a poor reputation
in terms of its brand identity due to the lack of customer satisfaction (Duong 2016). The two
major issues that will be discussed further can be identified to be the following:

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 Social media ineptitude
In the age of globalization, social media plays an important role in determining the
extent to which the products and services offered by a business organization can reach out
to its target audience. In the retail industry, the social media acts as an essential tool for
the organizations to communicate with its customers efficiently. Such advantages of
social media in the retail industry could be identified as the creation of a means of direct
contact where the customers can communicate with the merchants directly through
official pages. Furthermore, the promotional activities of the organization can be
advertised on social media like Facebook, Instagram, Twitter and the like in order to
reach out to the customers who are active users of these applications (He et al. 2015).
Retail giants like Amazon makes efficient use of the social media platforms for the
promotion of their brand as well as several offers provided to the customers like sales and
discounts. The success of the company owes itself to the engagement of customers it has
established with the help of several social media platforms such as Facebook and Twitter.
Such customer engagement has been established in the form of reviews of the products
and services that are provided by Amazon to its customers. Every product available on
the Amazon shopping website is rated with stars, which further aids the customers to
choose on the basis of quality of the products (Bao and Chang 2014). The company also
engages in direct interactions with customers through comments on their official pages on
Twitter and Amazon.
However, on the other hand Woolworths lacks in the usage of such interactive
platforms to remain aware about the needs and requirements of the customers.
Woolworths operates through an official Facebook page, which has almost 800,000
followers (Rajeck 2019). However, the promotional shared by the company are mostly
generic and lack interactions with the customers unlike Amazon. Moreover, the Instagram

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page of Woolworths lacks originality of content as they post the same content as that of
their Facebook page. Such repetitiveness fails to induce the interest of the customers
thereby lacking the impact that is created by the social media marketing of Amazon.
 Poor consumer loyalty
With the ever-growing competition in the retail industry, customer loyalty plays an
important role in determining the level of success in terms of competitive advantage that
can be attained by an organization. Customer loyalty can be gained by the retailers with
the help of provision of high quality of goods at low prices, high quality of customer
service and efficient management skills of the staff. Additionally, the retailer must also
provide incentives to the customer for the purpose of retention of their trust, such
incentives may include seasonal sales and discounts, offers on purchase of certain
products and the like.
Amazon has recorded exponential customer loyalty over the years through their
competitive pricing strategies that allow them to offer products to their customers at
prices much lower than that of the supermarket chains like Woolworths (Al-dweeri et al.
2017). Furthermore, the advertising strategies adopted by the company also enables the
expansion of its customer base. The means of feedback and rating system available on the
online shopping website also adds to the customer loyalty as they can go through the
reviews posted by all the users of the product before purchasing it (Forbes.com 2019).
This helps them in building a level of trust on the services provided by the Company.
Furthermore, the company also has easy return policies in case the customer faces any
problems with the products purchased on their sites.
On the other hand, Woolworths faces poor customer loyalty owing to their pricing
strategies. In this aspect, it is observed that the products and services of the company

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cater to the needs and requirements of the upper middle income groups. Although the
quality of products offered to the customers is good, the staff are not well trained to
address their needs or grievances (Lane 2019). For this purpose, the company suffers
from a lack of customer satisfaction in terms of the service of the employees and staff.
This further hampers the loyalty of the consumers. Furthermore, as discussed earlier,
Woolworths fails to make use pf the social media effectively in order to engage the
customers in their activities or interact with them. Such services provided by the retail
giants like Amazon, makes the customers prefer their brands rather than that of
Woolworths.
Solutions
The following solutions can be provided for the issues identified in the operations of
Woolworths:
 Management of public relations – The Company must make investments in the
development of tools for the efficient management of public relations. For this
purpose, the company may also aim to increase the efficiency and user friendliness of
its website so that the customers can leave feedbacks about the products purchased by
them. Furthermore, the social media applications must be efficiently utilized by the
company so as to address not only the grievances but also the suggestions provided by
the customers regarding their requirements and preferences.
 Improvements in customer service – In order to restore the loyalty of the customers,
the company must engage in the training of the staff and employees so that they can
provide improved quality of services to the customers. This will further help in the
gaining of the trust of the customers. Such services may pertain to return procedures
for products already purchased, delivery related services and provision of adequate
information about the characteristics and features of the products. Furthermore, the

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loyalty of the customers can also be gained by the integration of the supply and
distribution systems, which will reduce the production costs for the company and
thereby enable them to provide attractive discounts and offers to the customers.
Implementation of solutions
1. The implementation process of improving social media activity requires an elaborate
research and survey regarding the expectations of the customers regarding the nature of
content they would want to see on the social media applications ((Theaker 2016).
Additionally, the company could also utilize the expertise of professionals to manage their
social media accounts so that they appeal to the interest of the customers and actively respond
to the public’s opinions and queries.
2. The implementation process of the solutions requires the management of changes. The
process of change management involves the approaches and procedures undertaken by an
organization to implement changes and transformations within its organizational scope. The
model of change management proposed by Lewin can be applied for the training of the staff
to induce improvements in customer services. Lewin’s model of change management
involves a threefold procedure of unfreezing, changing and freezing (Cummings, Bridgman
and Brown 2016). This entails that the employees and staff must be made ready for the new
structure of customer services and made aware about the importance of the training program.
Following this process, the changes in their services need to be implemented. After the
implementation process, based upon the success of such improved services and the feedback
of the customers, these changes need to be made an integral part of the organizational system.
Conclusion
From the above analysis, it can be deduced that the retail industry has a rapidly
developing and transforming market that provides a high threat of competition on the various

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organizations that operate within it. Amazon, for instance, has obtained a significant
competitive advantage in the market due to various factors like efficient marketing strategies,
healthy public relations and competitive pricing. On the other hand, the business activities of
Woolworths have not been so successful due to the competition posed by Amazon. However,
such challenges can be overcome by the company through the implementation of certain
recommended solutions such as management of public relations and improvement in
customer services.

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References
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