MGMT20132: Detailed Business Model Report for Woolworths - Innovation

This report provides a detailed analysis of the Woolworths business model, examining its various components and strategic aspects. The report begins with an introduction and a business model description, outlining the key elements such as partners, key activities, value proposition, customer relationships, customers, key resources, channels, costs, and revenue streams. It then delves into the value proposition development, highlighting the company's commitment to providing trusted brands and competitive pricing. The report further explores business operations development, emphasizing supply chain management, brand reputation, location, and top management. It also analyzes the supply chain development, financial value capture, and competitive advantages, including pricing strategies and differentiation. The report also examines the strategic fit, identifying assumptions, uncertainties, and proposing a phased development plan. Furthermore, it discusses the selection of innovation tools and techniques, including disruptive innovation, and provides a candid self-analysis. The report concludes with recommendations based on the findings.

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Management 1
Contents
Introduction......................................................................................................................................2
Business model description.............................................................................................................2
Value proposition development.......................................................................................................3
Business operations development....................................................................................................3
Supply chain development...............................................................................................................4
Financial value capture....................................................................................................................4
Competitive advantage....................................................................................................................4
Strategic fit.......................................................................................................................................5
Identification and assessment of assumptions and uncertainties.....................................................5
Phased development plan to address uncertainties..........................................................................6
Selection of innovation tools and techniques..................................................................................6
Candid and critical self-analysis......................................................................................................7
Conclusion and recommendation....................................................................................................7
References........................................................................................................................................8
Appendices....................................................................................................................................10

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Introduction
The objective of this report is to guide the reader with the detail of the business model of
the Australian organization Woolworths. The business model helps an organization to analyse
the strategies implemented by the organization and analyse the opportunities with the help of
which they can increase their competence in the external atmosphere. The report makes use of
several models to evaluate the efficiency of business functions of the company. Identification of
supply chain, operations, and value chain etc. activities of the organization will help the
management to increase its efficiency in the external international environment.
Business model description
A business model is a proposal for the organization to make appropriate profits in the
environment. This segment identified the products and services that the organization sell, target
environment and the anticipated expenditures as well. The business of model of the company
Woolworths consist of nine segments that are partners, key activities, value proposition,
customer relationship, customers, key resources, channels, costs and lastly revenue. Key partners
of the company are its investors, franchisees, subsidiaries, associates, suppliers. These are the
major people with whom the business interact and initiate services in the environment (Dudin,
Kucuri, Fedorova, Dzusova, & Namitulina, 2015).
Further, the key activities of the business involves direct sale of the goods,
merchandising, updating the products, supply chain management, direct purchasing of goods,
refreshing stores, inventory management and customer services. The major aim of the retail
organization is to increase the sales in the market and increasing satisfaction of the customers, all
the other activities of the company are secondary. The company is largest organization in
Australia that has effective stores and logistics resources in the environment that helps the
business in increasing its competence (Joyce, & Paquin, 2016). The company has differentiated
brand and efficient resource and development department. Employees of the organization are its
biggest assets that help in increasing its recognition in the environment. Value proposition of the
company is that it serves trustable goods to the customers at best prices in the market. The
organization is known for maintaining its relationship with the team and customers. The

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customers have rated the organization first in terms of team culture. The customer segment of the
company involves price sensitive customer, small business and households. Supermarkets,
mobile apps, five and dime store, cards, website and virtual stores are the channels of
Woolworths. The costing of the business is divided into segments like purchases, logistics, taxes,
maintenance, salaries, assets, marketing, rent and license. Revenue stream of the company are
online sales, offline sales, poker machine and hotel business (Knox, 2015).
Value proposition development
The value proposition of the company is made up of several recognized and trusted
brands present in the international market. The organization serves goods of identifiable and
reliable brands in the environment that increases level of satisfaction of customers. Further, the
business also provides several discounts and coupons to the customers. The company is also one
of the largest hotel and gaming poker machine operator present in Australia. Availability of
goods at right is what increases value proposition of company in the external international
market. The company is also present in petrol, general merchandizing and liquor industry that
improve its market capitalization in Australian environment (Methner, Hamann, & Nilsson,
2015).
Business operations development
The resources and capabilities of the company involve four major factors that help in
initiating sales in the external environment. Highly effective supply chain management, brand
reputation, location and effective top management of the company are the four aspects off
resource and capabilities analysis of the company. The supply chain activities of the company
involves sufficient use of technology, appropriate relationship, control on system and lastly
distribution expertise. Brand reputation involve strong branding advertising strategies, longevity,
enhancing customer experience and strict quality process (Bailey, 2017). Thirdly, location aspect
involves the leasing agreement of the company with strategic location selection according to
favourable laws. Lastly, effective too management involves experienced managers who help the
organization in enhancing productivity and make effective decisions as well. The managers have

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good consumer knowledge in the environment and high environmental awareness as well
(Govender, 2017).
Supply chain development
The company has 6000 suppliers in 3200 locations across Australia as well as New
Zealand. The business implemented the supply chain management by creating a platform to
manage the suppliers and orders coming with the business, financing, B2B sales and other
services as well. The company has streamlined the supply chain management so as to eliminate
complexities from the environment serve people in a better way. Woolworths also utilized the
platform of Tradstone to manage the services of supply chain in the business environment
(Mortimer, 2016).
The company focus on implementing strategies to cut cost and time so as to rise the
pleasure of the consumers. The company has also integrated the food and non-food supply chain
so as to expand the scope of business and upsurge the level of profitability as well. The supply
chain management activities of the business are differential in the environment. These strategies
of the company helps the management to make use of both online and offline capabilities to
increase the product and service delivery in the market. These strategies of business implement
on time delivery of goods and services at low cost as well (Rezazadeh, & Carvalho, 2018).
Financial value capture
The company has segregated its scope of business in different segments that helps them
to attain revenue in the external environment. These diverse segments assist the organization
Woolworths to attain revenue in the environment. Different sectors in which Woolworths is
working are retail supermarket, liquor, hotel and gambling, petrol, clothes merchandising. All
these sectors combine together to provide revenue to the company. Most profitable sector of the
company is retail that helps the business in managing high degree of profits in the market.
Further, it should be noted that the brand image of the organization also helps the business in
increasing the revenue as the customer gets attracted due to goodwill of the company (Mulhearn,
& Vane, 2015).

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Competitive advantage
Pricing strategy is one of the most crucial factors that help the organization to attain
competitive advantage in the target market. The company provide goods and services to people
at economic price range that can be easily affordable by all level of people living in Australia.
Further, the company has also attained a differentiated position in the Australian environment
that helps the company to attract more competitors. The customers have attained belief on the
products and services of the company due to which customers prefer purchasing goods from
Woolworths only. The brand is recognized in the market in such a way that it serves valuable
products to the customers in the environment and provides value for money to the customers in
the environment. Thus, in this way quality services and economic pricing of goods has helped
the organization to attain competitive advantage in the target market (Padin, et. al., 2016). With
the use of innovation model, the business can eventually growth while keeping all the other
factors into consideration. This model will provide sustainability to the company while keeping
in mind the competitive advantage, profitability and risk matrix as well (Appendices 1).
Strategic fit
It refers to the degree at which the association matches with its resources and capabilities
in the business environment. It is important for the organization to implement the strategies in
such a way that the business attains competence in the market. Competence is achieved when the
resources and capabilities of the company match with the strategies in the organizational
environment. So, it should be noted that organization should implement strategies after
considering the resources and capabilities of business (Parkinson, 2018). Woolworths has
attained strategic fit as it makes complete use of its resource and capabilities to attain upper hand
in the market. The USP of the business is developed because the company has utilized its
resources efficiently in the market. Further, strategic fit is important because it helps the business
in planning and implementing strategies in the environment. Balance between the responsiveness
and efficiency aids the business in effectively meeting the demand of the customers (Lüdeke-
Freund, Massa, Bocken, Brent, & Musango, 2016).

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Identification and assessment of assumptions and uncertainties
Every market is uncertain as any time changes occurring in the external environment can
affect the growth and profitability of internal business environment. The company Woolworths
also face the threat of uncertainty in the business environment because the industry in which the
company is present keeps on fluctuating on a regular basis. Also, there is high degree of
competition in the market due to which the degree of threat for the company increases (Morelli,
2018).
Phased development plan to address uncertainties
The company can manage uncertainty in the environment by increasing their focus on
research and development segment in the external environment. In this way, the organization
would be able to attain detail about the upcoming trends in the external retail sector. Further, the
company should attain the trust of the lower level employees in the market. Lower level
employees are the people in business who manage the uncertainties and issues occurring with the
organization. So, this process will help the business in managing the issues coming to the
business. Thus, it should be noted that market research and training the employees would
successfully help the organization to manage uncertain conditions in the business environment
(Spillan, & Ling, 2015).
Selection of innovation tools and techniques
The company should make use of disruptive innovation to increase efficiency of the
functions of the company in the external environment. The business should effectively make use
of disruptive innovation technique in the environment to modify the activities of the business.
Disruptive innovation refers to the innovation technique that creates a new market and value
network for the business. According to this process, the business focuses on disrupting the
existing market to increase its value in the environment (Morioka, Evans, & de Carvalho, 2016).
Further, the company should adequately make use of new and hi-tech technology to reach to its
customers in the business environment. In this way, the company would connect to customers
and deliver them services on time. The company should also provide technology to its employees
and should train them appropriately to make use of innovation in the environment. Thus, in this

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way the business should use innovative tools in the business environment (Umar, Sasongko, and
Aguzman 2018).
Candid and critical self-analysis
Reflecting my personal experience while working with the organization Woolworths, it
should be noted that the company is extensive and perform all functions on large scale. Thus,
initially it was difficult in analysing the right type of services implemented by the organization
and operation development strategies prevailing in the environment. Further, formation of the
report helped me in analysing the ways in which management should implement strategies to
increase the profitability of large scale by managing its functions accordingly. Additionally, I
believe that keeping the actions simple and linear can help the organization to eliminate several
complexities occurring with the organization. I believe that the supply chain integration is the
most crucial aspect of the business that helps the management in increasing the satisfaction of
the customers as holds the power to reduce the costing and delivery time as well.
Conclusion and recommendation
Thus, in the limelight of above mentioned events, it should be noted that the above mentioned
highlighted details about the company Woolworths and its business functions in the external
international market. The report highlighted business model of the company, its value
proposition, and supply chain management etc. aspects of the business. The report evaluates the
features of the company and strategies implemented by it to attain competitive advantage in the
external environment. Further, it should be recommended to the company Woolworths that they
should focus on expanding the scope of business in international market as well. The outlets of
the company are mainly restricted in Australia and New Zealand, so the business expansion
strategy will help the organization to increase market capitalization while expanding sales as
well.

Management 8
References
Bailey, M. (2017). Absorptive capacity, international business knowledge transfer, and local
adaptation: establishing discount department stores in Australia. Australian Economic
History Review, 57(2), 194-216.
Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The innovative
business model canvas in the system of effective budgeting. Asian Social Science, 11(7),
290-296.
Govender, S. (2017). How social media can be used to engage and interact with consumers in
the retail industry: an analysis on Woolworths' online strategies (Doctoral dissertation,
The IIE).
Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design
more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.
Knox, M. (2015). Supermarket monsters: The price of Coles and Woolworths' dominance (Vol.
6). Black Inc..
Lüdeke-Freund, F., Massa, L., Bocken, N., Brent, A., & Musango, J. (2016). Business models
for shared value. Network for Business Sustainability: South Africa.
Methner, N., Hamann, R., & Nilsson, W. (2015). The evolution of a sustainability leader: The
development of strategic and boundary spanning organizational innovation capabilities in
Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104).
Springer, Cham.
Morelli, C. J. (2018). Business Strategy, Economic Crisis and the Theory of the Firm. In Post-
Crash Economics (pp. 47-67). Palgrave Macmillan, Cham.
Morioka, S. N., Evans, S., & de Carvalho, M. M. (2016). Sustainable business model innovation:
Exploring evidences in sustainability reporting. Procedia CIRP, 40, 659-667.

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Mortimer, G. (2016). Woolies private label strategy will play directly into the hands of Aldi. The
Conversation, (30).
Mulhearn, C., & Vane, H. (2015). Economics for business. Macmillan International Higher
Education.
Padin, C., Ferro, C., Wagner, B., Valera, J. C. S., Høgevold, N. M., & Svensson, G. (2016).
Validating a triple bottom line construct and reasons for implementing sustainable
business practices in companies and their business networks. Corporate Governance: The
international journal of business in society, 16(5), 849-865.
Parkinson, M. M. (2018). Case Study 4: Woolworths Group plc. In Corporate Governance in
Transition (pp. 203-221). Palgrave Macmillan, Cham.
Rezazadeh, A., & Carvalho, A. (2018). A value-based approach to business model innovation:
Defining the elements of the concept. NIPE Working Paper, (NIPE WP 12/2018), 1-40.
Spillan, J. E., & Ling, H. G. (2015). Woolworths: An Adizes Corporate Lifecycle Perspective.
In Business History Conference. Business and Economic History On-line: Papers
Presented at the BHC Annual Meeting (Vol. 13, p. 1). Business History Conference.
Umar, A., Sasongko, A.H. and Aguzman, G., 2018. Business model canvas as a solution for
competing strategy of small business in Indonesia. International Journal of
Entrepreneurship.

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Appendices
Appendices 1
There are three segments of an innovation model that are sustainability, offering and
monetization. Sustainability aspect looks for attaining advantage while maintaining other
sustainable benefits for the organization as well. The offering aspect analyse the market
attractiveness and USP of the business and the monetization aspect evaluates the profitability
model and revenue growth for the business using this type of innovation.