Strategic Analysis of Woolworths: PESTEL and Five Forces

This report presents a strategic management analysis of Woolworths Supermarkets, an Australian grocery chain. The analysis begins with an overview of Woolworths, including its history, operations, and market position. A PESTEL analysis is then conducted, examining the political, economic, social, environmental, legal, and technological factors influencing the company's performance. The report further applies Porter's Five Forces model to assess the competitive landscape, evaluating the threat of substitutes, the threat of new entrants, the bargaining power of buyers and suppliers, and the intensity of competitive rivalry. The conclusion summarizes the key findings from both analyses, highlighting the external factors affecting Woolworths and its competitive position within the retail industry. The report references several academic sources to support its findings.

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

1STRATEGIC MANAGEMENT
Table of Contents
POST 1.......................................................................................................................................2
Overview of Woolworths.......................................................................................................2
PESTEL Analysis...................................................................................................................2
Conclusion..............................................................................................................................3
POST 2.......................................................................................................................................4
Introduction on Porter’s Five Forces Model..........................................................................4
Application of Five Forces Model.........................................................................................4
Conclusion..............................................................................................................................5
References..................................................................................................................................6

2STRATEGIC MANAGEMENT
POST 1
Overview of Woolworths
Woolworths Supermarkets is one of the Australian supermarket/grocery store chains
which is being owned by Woolworths Group. It was incorporated in the year 1924 and
headquartered at New South Wales, Australia. The various kinds of products as well as
services which are being sold by Woolworths include the health and beauty related products,
stationary items along with vegetables, meat along with packaged food items
(Woolworths.com.au, 2019). The company has been situated in more than 995 locations and
employees working at Woolworths is 115000. In addition, revenue which has been generated
by Woolworths Company is 5,672.6 crores AUD till the year 2018 which has helped them in
improving growth appropriately. The major markets of Woolworths include the different
working individuals and other housemakers which makes their lives easy.
PESTEL Analysis
Political Factors- The different revenues and profitability of Australian retail industry
are affected by the policies of the government. These regulations affect the retail companies
such as Woolworths along with buying habits of consumers (Zott & Amit, 2013). There are
different antitrust issues present in the sector along with breaches of data which are causing
government to look in how the data is stored and it affects the different retail companies such
as Woolworths.
Economic Factors- The different features such as recession and high rate of
unemployment are creating strong impact on Woolworths. The conditions of companies have
declined due to the global financial crisis and it is causing huge issues in financial aspects of
the business of retail companies (Vogel & Güttel, 2013).

3STRATEGIC MANAGEMENT
Social Factors- The preferences of the consumers are the central element affecting
the retail companies. In the present scenario, the life style of consumers is changing and, in
such scenario, the retail companies are introducing the different kinds of products which are
fat free to attract more customers and meeting their expectations (Heding, Knudtzen &
Bjerre, 2015).
Environmental Factors- The retail industry in Australia are investing the resources
on minimizing carbon footprint of companies along with reducing wastage of the natural
resources such as water. In such scenario, Woolworths have been using the various types of
recycling activities which has enhanced the growth prospects of company.
Legal Factors- There are different policies related to taxation regarding recruitment
along with employee management regulations which has enhanced the effectiveness of the
company in a positive manner (Galliers & Leidner, 2014).
Technological Factors- In case of the technological aspects, there are different forms
of technology which is enhancing the shopping experience of the customers. Like the point of
sales system and usage of iPads to register for fast and easy to use as to improve the overall
growth of the company (David & David, 2013).
Conclusion
Therefore, from the overall macro-environmental analysis of Woolworths through
PESTEL analysis, it can be concluded that there are different negative aspects such as the
different taxation laws and environmental rules and regulations which are required to be
followed by the retail companies such as Woolworths in maintaining their status in the future
and gain competitiveness in the market. There are different social issues such as stratus of the
individuals which can be influencing the prospects related to growth negatively.

4STRATEGIC MANAGEMENT
POST 2
Introduction on Porter’s Five Forces Model
It is defined as the model which helps in identifying along with analyzing the five
competitive forces which helps in shaping the industry along with determining the
weaknesses of the industry along with strengths and it will be suitable for the growth of the
company in contrast to various other companies which are competitors present in the market
(Bauer & Matzler, 2014).
Application of Five Forces Model
Threat of Substitutes
The profitability of the organization suffers when the product starts meeting various
needs of the individuals in diverse manner. It is high as Woolworths have high level of
substitutes as there are indirect competitors which includes specialist stores and it poses
serious threats in future (Alegre, Sengupta & Lapiedra, 2013).
Threat of New Entrants
It is low in nature and is set to remain unaffected for the next few years as well as
Woolworths have made a strong position in the market and it has been helpful for them in
gaining profitability in the market against the other competitors present (AF Ragab & Arisha,
2013). The expertise involved in Woolworths is massive and it is impossible for new entrants
to imitate the same.
Bargaining Power of Buyers
It is low in case of Woolworths and the bargaining power is set to increase in future
and it will allow new competitors present in the market for increasing choice of the

5STRATEGIC MANAGEMENT
customers. In the consequent manner, increasing consumers bargaining power would rise of
price in comparison to websites such as grocery (AF Ragab & Arisha, 2013.
Bargaining Power of Suppliers
It is low in nature wherein Woolworths is controlling more than 80% of the market
share and due to the same, it can be seen that it will be successful for growth of organization
positively. However, in future, there will be moderate level of the power of suppliers, it will
be due to the potential for the larger selection of the intermediaries that can influence the
effectiveness of company.
Competitive Rivalry
It is high in nature in case of the competitive rivalry and there is lack of differentiation
aspect that can affect the growth of Woolworths negatively. Competition is primarily based
on the strategy related to pricing, however the other competitive forces includes the choice of
the product along with location of the store (AF Ragab & Arisha, 2013). These are the two
main drivers that can influence the growth of company negatively that can affect the overall
efficiency negatively and it will be inefficient in nature for managing the overall
effectiveness.
Conclusion
Therefore, it can be concluded that Porter’s Five Forces model analysis is one of the
most important tools which are proved to be suitable for the growth of the different
opportunities. In such scenario, it can be analyzed that there are various types of issues that
can affect growth of organization negatively and positively as well. Lastly, through Porter’s
Five Forces Model, there are various problems which are related to restructuring of the
processes that is affecting growth of organization negatively or positively.

6STRATEGIC MANAGEMENT

7STRATEGIC MANAGEMENT
References
AF Ragab, M., & Arisha, A. (2013). Knowledge management and measurement: a critical
review. Journal of knowledge management, 17(6), 873-901.
Alegre, J., Sengupta, K., & Lapiedra, R. (2013). Knowledge management and innovation
performance in a high-tech SMEs industry. International Small Business
Journal, 31(4), 454-470.
Bauer, F., & Matzler, K. (2014). Antecedents of M&A success: The role of strategic
complementarity, cultural fit, and degree and speed of integration. Strategic
management journal, 35(2), 269-291.
David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A
competitive advantage approach. Pearson.
Galliers, R. D., & Leidner, D. E. (2014). Strategic information management: challenges and
strategies in managing information systems. Routledge.
Heding, T., Knudtzen, C. F., & Bjerre, M. (2015). Brand management: Research, theory and
practice. Routledge.
Vogel, R., & Güttel, W. H. (2013). The dynamic capability view in strategic management: A
bibliometric review. International Journal of Management Reviews, 15(4), 426-446.
Woolworths.com.au (2019) Retrieved from Woolworths Supermarket - Buy Groceries Online
(online) Retrieved from https://www.woolworths.com.au/ [Accessed on 10th August
2019]
Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct
for strategic analysis. Strategic Organization, 11(4), 403-411.

8STRATEGIC MANAGEMENT