Strategic Analysis of Woolworths' Functional Strategies and Efficiency

This report provides a comprehensive strategic analysis of Woolworths, a major supermarket chain in Australia. It delves into various functional strategies, including those related to pricing, range, and technological advancements, to understand how Woolworths achieves superior efficiency and competitive advantage. The report examines external factors through PEST and Porter's Five Forces analyses, highlighting the company's responses to competitive pressures. It also explores Woolworths' material management processes, emphasizing the Just-In-Time inventory system and its role in reducing waste and costs. Furthermore, the report identifies key principles and strategies Woolworths employs to enhance customer satisfaction, drive sales, and maintain a lean retail model. Recommendations are offered to further improve Woolworths' market position, including suggestions for product and service enhancements and improved material management practices.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

1 STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................4
Answer to Question 3......................................................................................................................6
Conclusion.......................................................................................................................................9
Recommendations............................................................................................................................9
References......................................................................................................................................10

2 STRATEGIC MANAGEMENT
Introduction
The report helps in analyzing the different kind of functional strategies that can be used
by the respective company named Woolworths based in Sydney, Australia. The different kind of
analysis is required to be done on the achievement of superior efficiency in comparison to the
competitors. The analysis is required to be done on the material management of the company as
this will help in solving the different kind of processes that is used by them such as Just-In-Time
process. The analysis of the reasons of achieving superior efficiency in terms of different
products and services has to be analyzed effectively.
The main aim and purpose of the report is to understand the different functional strategies
as this will help the respective company named Woolworths in achieving the superior kind of
efficiency in the entire competitive market.
The structure of the report will include analysis of the different functional strategies that
will help in solving the issues and gaining superior efficiency. The processes used by the
company have to be analyzed along with reasons for achieving superior efficiency in terms of
goods and services as well.
Overview of Company
Woolworths is one of the largest supermarket food chains based in Sydney, Australia. It
is the company that has extensive retail kind of interest through New Zealand and Australia.
Woolworths Supermarket was founded in the year 1924 in the month of September. The
supermarket is operating in more than 996 stores across Australia with more than 115000 team

3 STRATEGIC MANAGEMENT
members along with distribution centers. The revenue earned by the respective supermarket is
5900 crores AUD till the year 2017 and they are succeeding in the market as well.
Mission and Vision
The mission of the company is to satisfy the customers as well as the partners with the
unique experience of shopping that offers proper quality and price based on commitment of the
employees.
The vision of the company is to be independent along with innovative in which the
different customers are able to choose from the different wide range of the different goods at
reasonable prices.
Specific Activities
Woolworths is famous for providing different kind of goods and services to their
customers at an affordable rate. The main motive of the supermarket is to gain competitive
advantage in the market by offering wide range of products and services in an effective manner
as this will help in being more innovative in nature as well.
Answer to Question 1
Woolworths is one of the largest supermarket chains that is based in Sydney, Australia
(Woolworths.com.au., 2018). Proper analysis is required to be done in order to understand the
different techniques that will help them in gaining superior efficiency over the other competitors
namely Wesfarmers and ALDI. Proper external analysis is required to be done by Woolworths as
this will help them in providing ideas about the different moves of their competitors and it will
help Woolworths in gaining cost advantage and differentiation advantage as well. Proper PEST

4 STRATEGIC MANAGEMENT
analysis is required to be done by Woolworths as to understand the strategies used by other
competitors (Barney, 2014).
With the help of PEST analysis, Woolworths has implemented three strategies that includes the
following:
Offer: It will help in improving the core kind of offer wherein customers will put
Woolworths first
Growth: It is the second strategy wherein they will innovate different goods and services
as per needs of customers (Cohen & Olsen, 2015)
Efficiency: It helps in creating customer value by organizing for the success and it will be
executing Lean Retail Model
The pricing along with range strategy has to be analyzed effectively wherein they have
implemented the strategy to neutralize the Coles and contain impact of ALDI on sales of
Political
There is huge political pressure against
the duopolistic nature in the entire retail
market
Economic
it is easing the different regulations in
retail way of paving new other entrants
Social
Poor kind of relationships with suppliers
and this is leading to business change
Techologic
al
Implementing SAP merchandising
system to improve the efficiency

5 STRATEGIC MANAGEMENT
Woolworths. Furthermore, the lean retail model has been used to drive the three-year plans of
growth wherein it has helped them in delivering $500 million of the cost reduction across the FY
2015-2016. With the help of the lean retail mode and pricing and range strategy, it has helped
Woolworths in gaining superior competitive advantage in an effectual manner.
Porter’s Five forces model analysis can be done by Woolworths as to tackle the situation
as this will help them in understanding their scope and gain competitive advantage.
 Bargaining Power of suppliers wherein Woolworths need to build efficient supply chain
management with help of multiple suppliers (Steinbach, 2017) Bargaining Power of Buyers wherein they need to build large base of customers and this
will help them in gaining superior competitive advantage Rivalry among existing competitors wherein Woolworths need to build differentiation
strategy with sustainable differentiation (Slack, 2015) Threat from new entrants wherein Woolworths need to innovate new products as this
will help them in gaining more customers (Morschett, Schramm-Klein & Zentes, 2015) Threat from substitute products wherein Woolworths has to be service oriented than
product oriented
Answer to Question 2
Woolworths maintain material management by analyzing the different kind of processes
that include the following:
 Proper and accurate identification of materials that has been stored in their supermarket
as this will help in receiving the receipt of the incoming goods (Bettis, 2016)

6 STRATEGIC MANAGEMENT
 Proper inspection of the receipts has to be done wherein this will help the company in
understanding the defective materials present in the stock
 Proper storage and preservation is required to be done by Woolworths as this will help
the company in controlling the inventory
 Issue by FIFO method is essential as this will help in easy stock taking and this will help
the company in performing control of inventory
Woolworths Supermarket has maintained the material management in the above manner
as this has helped in understanding the handling the materials in an effectual manner.
Woolworths has applied the Just-In-Time process as most effective in nature wherein it is the
strategy that is employed by the different companies as to employ more efficiency and decrease
the wastage of goods by receiving such goods when they are required in the process of
production. This kind of strategy helps in reducing the cost of inventory as well and this requires
the producers to analyze the demand in an accurate manner.
Woolworths has applied the Just-In-Time inventory management system wherein they
receive the different kind of dairy and other products that can be damaged in a short span of
time. With the help of this strategy, Woolworths has been able to decrease the wastage of goods
and it has helped them in gaining more profit as the inventory costs has been reduced as well. A
separate department has been created by the supermarket wherein they inform the higher
officials when there is requirement of such products and they are sold on daily basis as well. This
kind of strategy has helped Woolworths in avoiding the wastage and this is also known as Toyota
Production System (Rothaermel, 2015).

7 STRATEGIC MANAGEMENT
Figure 1: Just-In-Time Model
(Source: Ginter, Duncan & Swayne, 2018)
From the above diagram, it can be analyzed that the respective strategy is flexible and
reliable for the supermarket as this will help in small lot delivery of the different parts with the
philosophy of Just-In-Time and this has helped the entire company in gaining competitive
advantage in comparison to the other companies in the competitive market. Woolworths has tried
to gain huge profit along with revenue with the respective philosophy wherein they have reduced
the inventory cost (Johnson, 2016).
Answer to Question 3
Woolworths achieve superior quality of different products and services in the competitive
market by implementation of different kind of strategies. Woolworths need to analyze the
principles that have to be achieved by them as to gain more competitive advantage and attract

8 STRATEGIC MANAGEMENT
more customers in the competitive market as well. The five principles that has been analyzed by
Woolworths are as follows:
 Building customer along with store led team and culture
 Proper generation of sustainable sales momentum (Hill, Jones & Schilling, 2014)
 Becoming the lean retailer through the help of end to end process along with systems
excellence
 Empowering the portfolio business as to pursue the different strategies as to deliver
shareholder value
 Evolving the business of drinks as to provide more convenience and value to the
customers
It has been seen that there are different competitors in the market of Woolworths wherein they
apply different kind of strategies that helps them in gaining more competitive advantage.
Furthermore, Woolworths has applied the different strategies that include:
 Woolworths has tried to improve the range and pricing strategy that has helped them in
measuring the sales of Woolworths in an effectual manner. Proper measurement is
required to be done by Woolworths in lowering the pricing strategy and greater usage of
technology as this is an innovative process to make the shopping of the customers more
easy
 Proper refurbishments along with new stores are the other strategy that has been used by
Woolworths wherein it has helped the company in gaining competitive advantage.
Woolworths has tried in implementing the different technological advancements in their
strategy such as opening new stores in different locations along with introduction of the

9 STRATEGIC MANAGEMENT
new products has helped the company in attracting customers in comparison to the other
competitors in the market
 Delivering the new products as well as services to the customers in the market as this has
helped the company wherein they have introduced FoodCo wherein it has developed food
products for the new born babies along with the expecting mothers as well. These kind of
product categories has helped the company in gaining competitive advantage in
comparison to other competitors
 The online delivery strategy of Woolworths has helped them in gaining competitive
advantage in the entire market in Australia as this is the only company in the market that
has started delivering different products through online medium and this has helped in
easing the difficulties of the customers in the market as well
 The people and performance are the other strategies adopted by Woolworths wherein
their main motive is the first preference is provided to the customers in the market as they
are the assets of the company and they are required to provide importance as well

10 STRATEGIC MANAGEMENT
Conclusion
Therefore, it can be concluded that Woolworths has tried to gain competitive and superior
advantage in the entire market against the different competitors with the help of analysis of
external factors. The PEST and Porter’s five forces analysis has been done as this has helped the
company in tackling the situations. The Just-In-Time approach has been adopted by the company
as this helped in analyzing their competitive advantage position.
Recommendations
Therefore, it can be recommended that the respective company Woolworths need to
improve their products and services in comparison to competitors wherein they have to introduce
products and services for the old age individuals. The respective company needs to understand
the material management concept as this will help them in gaining more competitive advantage.

11 STRATEGIC MANAGEMENT
References
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher ed.
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable
cumulative knowledge in strategic management. Strategic Management Journal, 37(2),
257-261.
Cohen, J. F., & Olsen, K. (2015). Knowledge management capabilities and firm performance: A
test of universalistic, contingency and complementarity perspectives. Expert Systems with
Applications, 42(3), 1178-1188.
Ginter, P. M., Duncan, J., & Swayne, L. E. (2018). The Strategic Management of Healthcare
Organizations. John Wiley & Sons.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Johnson, G. (2016). Exploring strategy: text and cases. Pearson Education.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management (pp.
978-3658078836). Springer.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.
Steinbach, A. L., Holcomb, T. R., Holmes, R. M., Devers, C. E., & Cannella, A. A. (2017). Top
management team incentive heterogeneity, strategic investment behavior, and