Business Management and Strategic Analysis: Woolworths Report

This report provides a comprehensive strategic capability analysis of Woolworths, incorporating insights from previous assignments. It utilizes the VRIO framework to assess Woolworths' resources, identifying strengths such as its distribution network, financial resources, employees, and patents, which contribute to its competitive advantage. The analysis also acknowledges weaknesses, including the cost structure and lack of research and development. The report proposes a strategic initiative focused on product and service innovation and development, aligning with opportunities like significant growth and addressing threats such as increasing raw material costs and competition. It outlines a strategy implementation plan, including a balanced scorecard and strategy map, designed to achieve and sustain a competitive advantage for Woolworths. The report concludes with recommendations for the company's strategic direction and future development.

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Business Management and strategic management

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Business Management and strategic management 1
Executive summary
The report will consider the strategic capability analysis for which the resources of the
organization will be assessed through VRIO strategic framework to assess which of the resources
of the organization can lead to competitive advantage for the firm. From the previous
assignment analysis it can be found that the technological environment and environmental
factors could provide opportunity to the company. Moreover the opportunities identified were
significant growth, implementation of carbon taxation, strategic acquisitions.
From the resources that have analysed in the previous section it can be said that the key strength
found for Woolworth that have reflected a sustainable competitive advantage for the company
are distribution network, financial resource, employees of the company and patents that the
company acquired. The key opportunities and found for the Woolworth through which
Woolworth would turn out the competitive disadvantage into competitive advantage. One of the
strategic initiatives that are recommended to Woolworth is product and service innovation and
development. It has been identified that one of the threats for the company is lack of research and
development due to which the company has not been able to innovate to larger extent while
offering products to the customers.

Business Management and strategic management 2
Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
VRIO analysis..................................................................................................................................4
Financial resource........................................................................................................................5
Human resource...........................................................................................................................5
Food products..............................................................................................................................5
Patents..........................................................................................................................................6
Cost structure...............................................................................................................................6
Distribution network....................................................................................................................6
Research and development..........................................................................................................7
Swot analysis...................................................................................................................................7
Generic business strategy................................................................................................................8
Proposal strategic initiative............................................................................................................11
Product innovation and development........................................................................................11
Service innovation and development.........................................................................................12
Suitability of your strategic initiative............................................................................................13
Strategy implementation plan........................................................................................................14
Balanced scorecard........................................................................................................................16
Strategy map..................................................................................................................................20
Conclusion.....................................................................................................................................22
References......................................................................................................................................24

Business Management and strategic management 3
Introduction
The external and internal environments are most relevant aspect for an organization to consider
while assessing the strategy of a company. The report will consider the strategic capability
analysis for which the resources of the organization will be assessed through VRIO strategic
framework to assess which of the resources of the organization can lead to competitive
advantage for the firm. From the report the key strength, weakness, opportunities, and threats
from the resources identified for the Woolworth will be conducted in the report further. After
analysing the resources and external environment of Woolworths the current business strategy
will be analysed on the basis of porters generic business strategy (woolworths, 2019). From
analysing the internal environment of Woolworth a strategic initiative will be proposed which
will be suitable for the organisation and the environment, for which the strategy implementation
plan will be prepared while scheduling the activities that need to be a team to implement that
plan through Gantt chart. Another strategic framework is like a balanced scorecard and strategy
map will be prepared for Woolworth in order to analyse the strategy proposed and to be
implemented for the company (woolworthsgroup, 2018).
Woolworth is one of the popular Australian retail chain companies which initiated while
providing affordable groceries to the residents of Australia, which has expanded the business
internationally in various regions. From the previous assignment analysis it can be found that the
technological environment and environmental factors could provide an opportunity to the
company. Moreover the opportunities identified were significant growth, implementation of
carbon taxation, strategic acquisitions (woolworths.co.za, 2018). However the threats identified
were increasing raw material, rivalry among major retailers and very buyer purchasing
behaviour. Moreover the industry was analysed with the help of porters five forces model which
reflected that the threat of new entrants and rivalry among the competitors are the key threat for
Woolworth in near future which must be considered while preparing strategy implementation
plan in the report further (woolworthsgroup, 2016).

Business Management and strategic management 4
VRIO analysis
The resources of an organisation can be competencies for that company as it can turn into a
sustainable competitive advantage for an organisation. In order to assist the strategic capabilities
of Woolworths VRIO analysis will be considered (Chatzoglou & Chatzoudes, 2018). The four
major criteria on which the resources will be analysed into new valuable that reflect the value of
the resourceful an organisation, imitable which reflects the degree to which competitor can
imitate that resources, rare which reflect the rareness of the resource for an organisation. Fourth
criteria include organisational capability that will reflect the capability of an organisation to turn
raw material into an asset or optimum utilization of the resources available (Choi & Park, 2016).
The resources of Woolworth to be analysed include
Resources Valuable Rare Non Imitable Organizationa
l capability
Competitive
advantage
Financial
resource
Y Y Y Y Sustainable
competitive
advantage
Human
resource
Y N N Y Temporary
competitive
advantage
Food
products
Y N N N Temporary
competitive
advantage
Patents Y Y Y Y Sustainable
competitive
advantage
Cost
structure
N N N N Competitive
disadvantage
Distribution
network
Y Y Y Y Sustainable
competitive

Business Management and strategic management 5
advantage
Research
and
development
N N N N Competitive
disadvantage
Financial resource
A financial resource is a first and foremost resource that is highly valuable and has been able to
support investment into external opportunities identified by the company in order to combat
external threats. Since these resources are available with the competitors as well these resources
are not rare as per the VRIO analysis however different sources are not available with all the
companies and are only possessed by small number of companies in retail industry (Huggins &
Thompson, 2015). Similarly the financial resources could be costly to imitate by the competitors
as raising finance through prolonged profits are difficult for new entering companies and
competitors in the industry however this resource is not a major imitable resource (Muller &
Nagle, 2017). In addition, financial resources are optimally organised by Woolworths which
reflect organisation capability criteria is also considered and this resource is found to be
sustained competitive advantage for the company (woolworths, 2019).
Human resource
As per the statistics in 2016 human resource of Woolworths were found to be 1,15,000 people
only in operational department of Woolworth in Australia which reflect that the human resource
teams in the company are very large and strong and create value to the company as highly
trained employees can be a major cause for productive output in an organisation. Moreover the
retention level of the employees in Woolworths is high which a valuable resource is also for the
company. In addition to this human resource are found to be a rare resource for the organisation
as availability of skilled and trained employees or not acknowledged with all the new entering
and competitive companies. However, the human resource is not costly to imitate, which reflect
these criteria to provide temporary competitive advantage for Woolworth (Javed, 2015).
Food products
Food products are procured by the company through local suppliers which reflect it as a valuable
resource, the reason being the company has been invested into grocery and the procurement

Business Management and strategic management 6
products turned out to be highly differentiated from its competitor us. However the evidence
suggests that these resources are not rare as it can be used by Woolworth competitors in the
similar manner that is to procure local food product which can also imitate due to low cost of
imitation. However these are optimally organised by the Woolworth which reflects that local
food products are temporary competitive advantage for Woolworth (Amabile & Rigolizzo,
2015).
Patents
Patents of Woolworths include licenses and help the company to earn licensing revenue which
reflects a valuable resource for the company to trade it products and services without any
interference of competitors which resulted into higher revenue for the company. Since patents
are not available easily, these are rare resource and costly to imitate for the competitors and new
entrant companies. Moreover the organisation was able to organise in order to capture the value
of patents which reflect sustainable competitive advantage for Woolworth and one of the
relevant resources that can change potential of the company and sustain competition of
advantage (Mitchell, 2018).
Cost structure
The cost structure is an identified source of Woolworths that found to be not a valuable resource
for the company and can cause the higher cost to the company and could result in a too
complicated disadvantage for the company. This also reflects that this is not a rare resource and
could turn out to be competitive advantage for the competitors instead of Woolworth which
reflect one of the threats or competitive disadvantage of Woolworths (Andersson, 2016).
Distribution network
The distribution network of Woolworth is found to be valuable resource which has enabled the
company to reach out to large number of customers into various nations and increase the revenue
of the company. The distribution network was also able to make sure that the promotional
activities in which the Woolworth has invested are turned out into sales figure for the company.
Moreover distribution network is found to be a rare resource as this with technology amount of
time and investment by the competitors to introduce a better distribution network which can only
be possessed by some of the large companies or competitors in the retail industry (Dewald &

Business Management and strategic management 7
Osiyevskyy, 2015). In addition to this a better distribution network is very costly to imitate by
the competitor which also reflects that the distribution network of highly organised by
Woolworth and are a major source of sustainable competitive advantage for the company and a
resource that need to be maintained by the company in order to gain and competitive advantage
in long run (Betton, 2017).
Research and development
Research and development is found to be one of the most important resources that a company
require in order to be innovative and increase the production efficiency of the company, which is
not found effective for Woolworth as the research and development is not a valuable resource for
the company and the company has not invested a large amount in this resource which could be
one of the competitive disadvantages for the company as other competitors in retail industry are
working towards innovation through research and development process only (Javed, 2015).
Swot analysis
Strength Weakness
 Distribution network
 Financial resource
 Patents
 Human resource
 Cost structure
 Lack of research and development
 Increased competition that will impact
the imitability of resource
Opportunity Threat
 New product development
 Cost minimization
 Product diversification
 Food products
 Supplier availability
 Increase in cost of raw materials
Strengths
 Distribution network – The value chain reflect effective distribution network, helping in
better supplier relation

Business Management and strategic management 8
 Financial resource – Strong financial resource help the company to increase investment
opportunity
 Patents - These are rare resource and costly to imitate for the competitors and new entrant
companies
 Human resource – Strong human resource has improved the operating opportunity, and
better organizational performance.
Weakness
 Cost structure – The cost structure of the company is not supporting the cost leadership
strategy of company
 Lack of research and development – The investment in Research and development is low,
which decrease the innovation level.
 Increased competition – This has impacted the imitability of resource
Opportunity
 New product development – This will include increase in innovative products and
services through store offering
 Cost minimization – This will help the company to support cost leadership strategy
 Product diversification – This may include investing in new product rage and
diversification.
Threat
 Food products - Food products are procured by the company through local suppliers
which are not rare as it can be used by Woolworth competitors.
 Supplier availability - The Company deal in grocery, where supplier availability at all the
international location is major threat to conduct effective business.
 Increase in cost of raw materials - The raw material cost will directly affect the cost of
production for the company, decreasing the profit margin for the company.
From the resources that have analysed in the previous section it can be said that the key strength
found for Woolworth that have reflected a sustainable competitive advantage for the company is
distribution network, financial resource, employees of the company and patents that the company

Business Management and strategic management 9
acquired. However there have been some weaknesses identified like cost structure as the cost
structure was found to be competitive to disadvantage for the company and lack of research and
development investment was also identified which resulted in a lack of innovation among
Woolworths (Asfaw et al., 2015).
Therefore the key opportunities and found for the Woolworth through which Woolworth would
turn out the competitive disadvantage into a competitive advantage. This includes investment in
research and development in order to search for new product development or innovation through
the services and cost minimization activities in order to structure the costs better and gain
advantage through that organisational capability (Baker & Bowen, 2015) (Liedtka, 2018).
Generic business strategy
Woolworth’s generic business strategy type that has been implementing can be analysed through
the stated strategy statement of the company. The company has built this strategy on the major
six strategic focuses that the company is willing to drive and which will set the business while
delivering in future that will return to sustainable value and long-term profitable growth for the
stakeholders of the business (woolworthsgroup, 2018). The six strategy focuses include
Build stronger
Considering this strategy the company is focusing over the increase in customer relationship as
the evidence suggests that the data drive and customer insight of the company are key to business
decisions by the company as Woolworth have become customer obsessed company. Therefore in
order to enhance the customer retention and customer loyalty the company is looking forward to
achieving this strategy with leading the market in customer loyalty isn’t spending by the
customer increase in detention and membership of the customers (woolworthsholdings, 2019).
Towards connected retail
Another focus of the company considering its strategy is offering services relevant to digital,
engaging and inspiring journey through the in-store experience and digital experience that will
also help the staff of the Woolworths to deliver a brand aligned and consistent customer
experience while also collecting their customers from installing to digital at home (Puck &

Business Management and strategic management 10
Mudambi, 2016). What is the company is looking forward to both be ideal customer experience
by services, format on channel. Moreover the company has been working towards driving online
see you and continue to develop the digital channels with increasing mobile application shopping
experience for the customers (Nyberg et al., 2016).
Be a leading fashion
Another strategy that has been followed by the company and is working to watch the strategy of
being differentiated as the company work towards the quality fashion that the customers must be
looking for in order to have a clear segmentation, innovation, quality ranges and design lead.
Moreover, the company is working towards different shaping the product that we need in the
industry considering the sustainability, quality and innovation (Bailey, 2018).
Becoming a big food business
Another strategy that has been identified is the food business of Woolworths for which the focus
is to provide best quality food products and great value to those goods through flavours freshness
and innovation (Bombiak, 2018).
Driving synergies
Another strategy that has been identified for Woolworth is driving through synergies that are
working towards integration in the business operations across the organisation which will drive
the efficiencies of the company and maintaining the focus on group profitability, cost control and
adding significance to the operations (Bruns, 2013).
Embedded good business journey
The strategy of the company is working towards a good business journey which will make a
difference for community, people and environment of the organisation. The company
encompasses the problems that will matter for a consistent approach and to be stakeholders in
order to maintain sustainability across the value chain of Woolworths (Weisberg, 2006).
From examining current strategies and strategy statement of the company have been using it can
be said that Woolworth has been working towards the cost leadership strategy as per the Michael
porter’s generics strategy grid. As per this strategy, the company is gaining competitive

Business Management and strategic management 11
advantage through targeting a broad market considering costs as the key aspect and keeping costs
and prices of the products are the minimum range in order to attract more customers (Solman,
2017). There are four alternative strategies as per this model, which work towards either the
broad market target or the focused narrow market. Moreover, another factor considering the
generic strategy is focus of the company towards cost or differentiation of the product and
services. The four possible strategies include differentiation focus, cost leadership, cost focus,
and differentiation leadership (Tidd & Bessant, 2013).
However, it has been identified that the company has also integrated the differentiation
leadership strategy in order to game competitive advantage. One of the key issues identified
while analysing the strategy of the company is that the competitors of the company like Aldi and
coles have found to be adopting similar generic strategy that is of cost leadership and since the
company is working towards differentiation and product quality as well the cost leadership
strategy found to be depleted (Tukker & Charter, 2017).
Figure 1: (Source: (Aksoy, 2018)