International Business Across Borders: A Woolworth's Case Study Report

This report provides an in-depth analysis of Woolworth's international business operations, focusing on key aspects such as foreign entry strategies, competitive dynamics, organizational structure, knowledge management, and innovation. The report explores various market entry strategies like direct exporting, franchising, joint ventures, and partnering, evaluating their suitability for Woolworth. It utilizes Porter's Five Forces model to assess the competitive landscape, examining competition, new entrants, supplier and buyer power, and the threat of substitutes. The organizational structure of Woolworth is analyzed, highlighting its functional structure and its implications for departmental competence and employee productivity. The report also discusses the importance of knowledge management and innovation in international business, emphasizing their role in achieving organizational objectives and maintaining a competitive edge. The study concludes with a summary of key findings and recommendations for Woolworth's international expansion.

International Business Across Borders

Executive Summary
The study is based on international business across borders. In order to understand the
concept of international business Woolworth an Australia based company has been taken in
study. It will discuss about the various facts which company should consider while doing
business internationally.

Table of Contents
INTRODUCTION...........................................................................................................................4
Foreign entry strategy: ...............................................................................................................4
Competitive Dynamics: ..............................................................................................................5
Organisational structure .............................................................................................................7
Knowledge management.............................................................................................................9
Innovation.................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
International business can be defined as a trade of goods, services, capital, technology or
knowledge across national borders or at transnational level. Or it can be defined in simple words
as, cross border transaction of various goods and services. In order to understand the concept
clearly Woolworth will be taken in the study which needs to enter in new market. Woolworth is
a supermarket which is a grocery chain owned by Woolworth group. The company was founded
in year 1924. The Woolworth accounts for about 80% of Australian market (Maduenyi and et.al.,
2015). The report will highlight what are the strategies which companies use in order to enter in
other markets. It will also highlight competitive dynamics as well as organisational structure.
The report will also cover knowledge management as well as importance of innovation.
Foreign entry strategy:
There are number of ways through which Woolworth can enter into foreign market.
There are no one such entry strategy which can be proved as best among all. Entry strategies
totally depend on the type of market company wants to enter. Therefore some of the foreign
entry market strategies has been discussed below:
Direct exporting: Direct exporting can be defined as a strategy in which company direct sells its
product in the market which company wants to enter. Sometimes the companies after its
successful establishment in the market hires agents or distributors which acts as a face of
company and helps company to remain updated with the market (Shafie and et.al., 2018).
Woolworth can also perform direct exporting by selling its product directly in the market.
As this strategy will help Woolworth to have greater knowledge of its target market as the
company will have direct contact with the users and retailers. Also Woolworth will have direct or
full control over its product the company can decide the price at which product is sold in a
market and can determine the sales as per trend prevailing in market.
Franchising: Franchising can be defined as a process of giving the legal authority to others to
sell the products at companies name (Parker, Carey and Scrinis, 2018). Franchising is good for
the business who have a repeatable business model which can be easily transferred to other
market.
Woolworth can use franchising as it will help company to increase its brand name and get
easy access to the foreign market without much difficulty. Franchising will also help company to

reduce risk. As franchisee will be responsible for all responsibilities regarding the investment
which is to be done in the franchise operation.
Joint ventures: Joint ventures can be defined as ventures which occurs between two businesses
which are settled in two different countries. The two companies involve themselves in joint
venture in order to form third independently managed company.
Woolworth can do joint ventures with other company who is in the same business or in
different. As it will enable company to share technologies. Also joint ventures will help company
to reduce political friction which will result in easy entry in new market.
Partnering: Partnering can be defined as a necessity to enter in new foreign market (Keller,
Pham and Warren, 2017). It will be beneficial in a case where a company wants to enter in a
market whose cultural and tradition is totally different from a market in which company is
currently operation as it will give a local market knowledges, will help to understand about the
potential customers and make contacts.
Woolworth can use this strategy in order to enter in new market. The company can do
partnering with the local company in which Woolworth want to enter as it help company to
understand the market clearly and make its strategies accordingly for product, target customers
etc. it will help company to reduce costs and delivery system also the company will have easy
access to professional skills and competencies.
The above mentioned are some international strategies which will help Woolworth to
enter easily in foreign market (Bailey, 2017). The company can enter in the market as per the
situation of market and deciding strategies accordingly.
Competitive Dynamics:
Competitive dynamics can be defined as a combination of action and reaction by a firm
which operates in a competitive environment. Porter five forces model can be used as it will help
to analyse five competitive forces which are common in every industry and it will also help
companies as well as industries to determine their strength and weakness.
Porter's five forces model:
1. Competition in the industry(High): The number of competitors present in a market. The
larger the number of competitors present in a market, the lesser power a company enjoys
(Mathooko and Ogutu, 2015). The large number of competitors in market the large
number of rivalry exist.

Woolworth operates in Food & Staples retailing industry which has very competitive structure.
Thus presence of large companies creates a huge competition for a company.
In order to survive in this competitive era company should try to build sustainable differentiation
and can also collaborate with its competitors to capture large market.
2. New entrants in industry(High): The entry of new entrants in market with new
innovations and strategies creates an impact on the existing companies in a market.
Similarly emergence of new entrants is also putting pressure on Woolworth. The
emergence of new entrants in a food and staples retail industries has been lead pressure
on Woolworth limited to adapt the low pricing strategy, provide new products as well as
reduce cost of products (Chen and Miller, 2015).
Therefore company can try to innovate new products which make it different from others.
Secondly Woolworth should spend or invest money in research and development so that
company can clearly understand trends in market and make strategies accordingly.
3. Buying power of suppliers(Low): If there are small suppliers of a market then it is likely
that they will enjoy an advantage and holds power on rates or prices at which the
products or services are made available.
While if we talk of food and staples retailing industry, there are large number of suppliers in an
industry. Suppliers who are in dominant position in market can decrease margins which will
result profit for Woolworth. Suppliers make use of their negotiating skills in order to charge high
rates for the products which affects the profitability of a company. But as there are numerous
suppliers in food and staples retail industry therefore, bargaining power of suppliers is low.
The Woolworth Limited should build efficient supply chain and should maintain good
relationship with its suppliers. Should try to build relationship with dedicated suppliers
whose business totally depend upon the company.
4. Buying power of customers(Low): Buyers have a tendency to get the best in low or
minimum rates which creates pressure on companies to use the low pricing strategies or
set prices as per the customer requirements.
As the bargaining power of customers is low, reason behind this is the company has large
customer base. Therefore if any one customer stop shopping from Woolworth it will not create a
huge impact on profitability of company.

The company should rapidly innovate new products and should provide discounts and offerings
which will help company to maintain its customer as well as attract new customers.
5. Threat of substitute products(High): If the substitute of a product which company is
offering is present in a market than it pose threat for a company. While if products and
services of company is unique than there is low chances for such type of threats.
A perfect example of this can be Google drive and Dropbox they both are close substitutes as
they both are storage hardware drives. There are many such supermarkets in Australia such as 2
Coles, Aldi, IGA etc., which sells same products as that of Woolworth. Thus creating a threat for
company.
To lower the threat by substitute product company should try to focus on providing quality of
service rather than on the buying of customers.
By analysing the competition in the market and about various competitive forces company can
easily identify the complete picture of competition in Food & Staples retailing industry (Porter's
Five Forces of Competitive position, 2019).
Organisational structure
Organisational structure can be defined as a system which shows how different activities
are directed so that goal of the organisation can be achieved. The activities can be role, rules and
responsibilities. Organisational structure also tells about the way in which information flows to
the next level in a company. Almost every type of business organisation have some kind of
organisational structure for example some may have flat organisational structure, or heavily
organisational structure etc.
A formal organisational structure provides an idea to employees about whom they have
to report. It will also help in improve in efficiency and provide clarity to peoples at different
levels. Basically there are four types of organisational structure:
Functional structure: Functional structure is also known as bureaucratic organisational
structure. In such type of companies different levels or departments are differentiated as per the
specialization. Most of the organisation mainly small and medium sized organisation follow
functional structure. For example different department on the basis of specialization are
marketing, operations and sales.
Divisional or multi-divisional structure: The team is made for different activities such as
products, subsidiaries and projects. In such type of structure there is one parent company which

has number of different divisions and which operates separate business. The parent company
holds the responsibility for their subdivisions.
Such type of structure allows business to be more flexible as workers in multi-divisional
structure have greater control over the project.
Flat organisational structure: this type of structure give its employees a lot of autonomy. In
such type of organisational structure there are few or no level of management. The employees
take part in decision-making process.
The main advantage of having such type of business is that this method removes excess layers of
management as well as improve coordination and speed communication among employees.
Matrix structure: This structure is least used in business. An employee working in such type of
company may have to hold responsibilities of various departments.
However if we look at the organisational structure of Woolworth. The company has a
functional organisation structure (Woolworths group, 2019). The functional organisation
structure within the organisation help company to ensure dependable level of departmental
Illustration 1: Organisational Structure
Source: Organisational Structure, 2019

competence due to the reason that employees are grouped on the basis of the specialization. The
main advantage of this organisational structure is that head of department whether executive or
team leader have knowledge and many years of experience in this field. As the employees in
Woolworth at top level are efficient which results in better productivity of employees.
As all employees have comes from same background which results in better decision-
making with fewer mistakes. All the employees feel safe and motivated as they know that there
is a high chance of promotion in such type of organisational structure.
Knowledge management
Knowledge management refers to the process of sharing, creating, using and managing
the knowledge and all the information of a company (Webb, 2017). It is the process in which the
organisational objective can be achieved by using the best knowledge available to the company.
Knowledge management is useful in different fields of a company. It is not specific to an
individual field as knowledge is needed in all the fields of a company and company cannot work
if the person who is managing the company does not have proper information. It is mostly used
in fields like information technology, business administration, information system and more.
Many multi-national companies, non-profit organisation have a team made for
knowledge management of their business. Proper knowledge management helps a company in
achieving various targets like improved performance, competitive advantage, innovation and
continuous improvement of the company. Woolworth have also used knowledge management as
their way to their development. Knowledge management system is that system which is used for
applying and using knowledge management principles. Woolworth can use knowledge
management and by doing proper market research it can start another business . The goodwill of
the company is very good and it can benefit the firm. It can start dealing in different products and
in different countries. The company can increase its market share by proper using its knowledge
management team. There are two types of knowledge depending upon transferability that is Tacit
Knowledge and Explicit knowledge.
Tacit knowledge is that types knowledge which is very difficult to transfer from one
person to another. It is very tough to share or write it down. This type of knowledge is gained
from personal experience which is very tough to explain. In any company this knowledge, this
type of knowledge is referred as important because this knowledge can give a company a
competitive advantage over others. If this knowledge is less than the company will not be able to

do any innovation or introduce new products. Woolworth can use this knowledge to introduce
innovation in the market. This type of knowledge is found in stakeholders of company (Kianto,
Vanhala and Heilmann, 2016). It can be in form of beliefs, attitudes or skills, capabilities etc.
Explicit knowledge is that type of knowledge which is easily shareable and can be codified. It
can be taught to others. This knowledge is easy to remember. This type of knowledge can be in
written form or in computer. It is easy to take actions on the basis of explicit knowledge.
Information contained in encyclopedias and textbooks are example of explicit knowledge. Other
examples can be documents, manuals of company, and more.
Innovation
Innovation is very important in any company. It means a new idea or a creative thought
which will help the company in increasing its market share and increasing its profits. Innovation
can be in products as well as business ideas (Berry and Berry, 2018). It is very important for a
company to do innovation time to time so that it can face the competition. Woolworth do many
innovation in products and in different fields. Positive innovation helps a company as its sales
increase and people will buy more of their good. There are different ways to bring innovation in
the company. Sometimes innovations are good for the company and sometimes innovation can
lead top loss for the company. Innovation should be done after proper market analysis so that
chances of incurring loss are reduced. Innovation tool which is used by Woolworth is Innovation
Funnel. It is a type of mechanism in which companies bring new and advanced products. The
main purpose of innovation funnel is to generate maximum ideas for the benefit of the company.
Many ideas are brought and they are converted into few ideas. It creates a funnel like shape and
it is the best way to prioritise ideas and ensuring that the best idea can be used by the company.
Steps in innovation funnel are:
1) The mouth of funnel: The goal of this step is to generate and gather maximum possible
ideas. The more ideas that will come to company and the more solutions can be derived.
Innovative ideas can be taken from competitors, partners, institutes and many more
sources. Market research can be done as it yields valuable information for the benefit of
the company. To efficiently go thorough this funnel, clear objective must be established
before. For getting the ideas the Woolworth might need to go to the stores and see the
actual demand of the products and their needs.

2) Narrowing the funnel: In this phase the ideas created in the first funnel are screened.
The funnel is narrowed and the ideas which are related to the company are chosen. The
idea which attain the goal with maximum benefits and taking least time are selected. It
must be cost efficient too. After selecting the ideas, resources must be used in most
promising and viable opportunities. Resources are very scarce in company so they used
be used wisely and properly. Woolworth uses skilled people to differentiate the good and
bad ideas so that no good idea is removed. The problem can also be faced as the person
on his experience differentiate the idea and some ideas are good but on his side they can
be bad. It depends upon the choices of people and their nature to differentiate a good and
bad idea.
3) Narrowed part of the funnel: This phase is important as in this phase the organisation
decides and sees that ideas are created into the objectives of the company. All the ideas
are properly checked from starting to end. The ideas selected are thoroughly checked
again. If all the things are right and everything goes well then then the new ideas are
launched in the market. The funnel shape is very easy to use in those organisation which
deals in more than one industry. The funnel shape does not help in establishing
requirements for a new product. The organisation must see that the funnel innovation
does not reduce the creativity in the company. It is said because many times the new
ideas are rejected in starting and they does not even meet the criteria. The models
encourages the company to use safe ideas rather than the creative ideas (Yun, 2017).
CONCLUSION
International trade or international business helps companies to increase brand awareness
and increase it operations and presence in other countries. The study helps in understanding what
are the different marketing strategies which companies can use in order to enter in new market.
In order to enter in foreign market or to enter in international trade it is highly require that
organisation should analyse the industry in which the company is operating. Also it is required to
have a knowledgeable management. The company can make use of knowledge which is
available to company it will help company to achieve success and make the company understand
the market in which company wants to enter. The way in which company can enter in new
market or survive in competitive era is using innovative ideas. Using innovative products will
help company to maintain its position in market.

REFERENCES
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Woolworths>

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