Strategic Management Report: Woolworths' Challenges and Solutions

This report offers a comprehensive strategic analysis of Woolworths Supermarkets, a prominent player in the Australian retail market. It delves into the company's internal factors, such as competition from both brick-and-mortar and online retailers, buyer and supplier dynamics, and challenges related to local sourcing and sustainable supply chains. The report also examines external factors influencing Woolworths, including the fluctuating global economy, technological advancements, and the impact of technology on the retail industry, including data technology and supply chain management. The major challenges faced by Woolworths, particularly product quality concerns, are highlighted, and the report proposes the implementation of Total Quality Management (TQM) as a strategic approach to address these challenges. The report emphasizes the importance of TQM in enhancing operational efficiency, maintaining product standards, and gaining a competitive edge in the market. References from academic journals support the analysis, providing a robust foundation for the report's findings and recommendations.

STRATEGIC
MANAGEMENT

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Executive Summary
This report illustrates the fact that competition in the industry is high and at the same time
suppliers is increasing their cost while consumers want products at lower rate. Higher use of
technology and slow rate growth rate of the world’s economic environment is creating a
difficult external environment for the company. Woolworths is facing the product quality
challenges which it can remove through implementation of Total Quality Management.

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Content
s
Background of the firm..........................................................................................................................2
Internal factors affecting the firm..........................................................................................................2
External factors affecting the firm.........................................................................................................3
Major challenges faced by firm.............................................................................................................3
Approach to confront this challenge......................................................................................................4
References.............................................................................................................................................4

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Background of the firm
Woolworths Supermarkets is supermarket/grocery store from Australia founded back in the
year 1924 and has control over larger part of the Australian retail market with more than 1000
stores all over Australia and they have Woolworth online as their digital platform to sell their
products (Dwivedi, Merrilees, Miller and Herington, 2012).
Internal factors affecting the firm
Among the different internal factors, the ones that are having highest of impact on the
Woolworths business are:
 Competitors: There are companies from different parts of the world working in
Australia in the retail sector. This has enhanced the competition to highest of levels.
Companies like Coles have got the support of the bigger firms like Wesfarmers which
enhances their overall resources and are making it difficult for the competitors like
Woolworth to compete. There is also increase in the online competitors who are
making the competition tougher as they can address larger set of customers within
Australia (Keith, 2012). People are also trying to buy from the online stores rather
than going to brick and mortar set up for making the purchase. This is again limiting
the growth of Woolworths as they have their major business through the brick and
mortar set-up and they are still developing their online platforms for making the sales
(Vartanian and Sokol, 2012). In the coming days companies like Amazon will take
over the market especially the niche market such as the lower pricing market.
 Buyers and Suppliers: Local sourcing strategy increases the manager count and
increased pressure on purchasing local produced goods. There is increase in the prices
of the raw-materials from the side of the suppliers. This increase in the pricing of the
consumer goods within the firm is a challenge for the company as it reduces the profit
margins of the firm which again is a challenge for the company (Knox, 2015).
Sustainable supply chain and products that are sustainable is also a challenge for the
companies like Woolworths. Buyers are also looking for the companies that can
provide products at lowest of prices. The decreasing gap between the supplier’s rate
and pricing demand of the people has an impact on the way an organisation is dealing
with its buyers and suppliers.

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External factors affecting the firm
Among different factors two external factors that have most significant impact on the
business of Woolworths are:
 Economy: The economy of the world is changing where a downfall is noticed in it
and it has impact on the operations of the firm especially in terms of the fact that it
has impact on the profit and growth of the firm. The purchasing power of people is
decreasing and the unemployment rate is going higher and higher hence Woolworth
will have to make sure that it has a business model that can attract people for having
higher sales (MacMahon, Smith and Lawrence, 2015). Australia is a market where the
cost of operations is on the higher side especially when it comes to employee’s
salaries. This is forcing companies to change their strategies related to financial
management and hence they are moving towards the cost cutting strategies such as
outsourcing the secondary jobs. International suppliers have been hard-hit by the
already existing downfall in the world economy and the trade war between China and
United States.
 Technology: In the retail industry, technologies are playing a major role. The firms
that are able to utilise more technology in their business has more chances to gain
sustainable advantage over the rivals. The technologies such as data technology will
have more impact on the retail industry in the years to come. This is because the
companies that will be able to better personalised marketing will be able to achieve
success and can generate higher sales (Mehta, et al. 2012). Technologies related to
supply chain management and procurement will help the firm in reducing the
challenges related to cost management and it also helps in increasing the lifetime of
the inventory. In the marketing and sales, this technology plays a most critical role as
it allow companies to reach directly to the consumers and if the company is able to
identify the most suitable customer to which they can market their products.
Major challenges faced by firm
The major challenges that are confronting Woolworth’s strategies are deleverage in the
Australian market, a lower Australian Dollar, product quality are some of the major
challenges faced by the organisation. In this the biggest challenge that is faced by the
company is the product quality. This is because it will have direct impact on the consumer
perception and consumer satisfaction. In the competitive environment this challenge can have

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higher impact on the success of the business. Product quality can also lead to sustainability
challenges as it might lead to image failure which has a significant impact on the marketing
and sales of the firm (Pash, 2016). Decrease in product quality will have impact on the loyal
customer base that any firm has.
Approach to confront this challenge
This challenge by the firm can be tackled with the help of quality management approaches
such as Total Quality Management. With implementation of TQM they need to focus on the
areas such as more use of technology especially the data technology. TQM will also ensure
that all the operations are done according to the world standards. Implementation of TQM in
the areas like supply chain management, inventory management, and procurement can help
the company in gaining competitive advantage over the rivals.

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References
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship
equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing
and Consumer Services, 19(5), pp.526-536.
Keith, S., 2012. Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal
of Regional Food Studies, 2, pp.47-81.
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths'
dominance (Vol. 6). Black Inc..
MacMahon, A., Smith, K. and Lawrence, G., 2015. Connecting resilience, food security and
climate change: lessons from flooding in Queensland, Australia. Journal of Environmental
Studies and Sciences, 5(3), pp.378-391.
Mehta, K., Phillips, C., Ward, P., Coveney, J., Handsley, E. and Carter, P., 2012. Marketing
foods to children through product packaging: prolific, unhealthy and misleading. Public
Health Nutrition, 15(9), pp.1763-1770.
Pash, C., 2016. Aldi opens its battle with Coles and Woolworths in South Australia. Business
Insider Australia, 3.
Vartanian, L. and Sokol, N., 2012. Serving-size information on nutrition labels in
Australia. Australian and New Zealand journal of public health, 36(5), pp.493-494.