Organizational Strategic Management: Woolworths Analysis Report

This report provides a comprehensive analysis of Woolworths' strategic management, examining its performance in the Australian market. It begins with an executive summary and table of contents, followed by an introduction outlining the company's history and current challenges. The report then delves into macro-environmental factors using PESTLE analysis, followed by an industry analysis that includes the industry life cycle and Porter's 5 Forces. Company analysis is conducted using the VRIO framework, with a focus on competitor analysis and strategy analysis. The report concludes with recommendations for improving Woolworths' industrial dominance in the Australian and global markets. The analysis considers political, economic, social, technological, legal, and environmental factors, as well as competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entry. The report aims to compare Woolworths' strategic management with contemporary business strategies and offers a concise conclusion summarizing the key findings and recommendations.

Student’s Last Name 1
Organizational Strategic Management: Woolworths
By (Name)
Course
Professor
Unit
Date

Student’s Last Name 2
Executive Summary
This paper attempts to match Woolworths's strategic management plans with conventional
business practices and theories. The paper delves into a comprehensive analysis of
Woolworths's performance in the Australian market. In this paper macro and micro
environments influencing the strategic management of Woolworths are keenly identified and
analysed. Analytical frameworks such as the PESTLE, industry life cycle, Porters 5 forces,
and VROI are efficiently employed to discuss the distinct environments surrounding the retail
industry. In this research paper, industry analysis, company analysis, competitor analysis,
competitor analysis, and strategy analysis are comprehensively discussed. The paper
concludes by offering effective recommendations to improve Woolworth's industrial
dominance in the Australian and global markets.

Student’s Last Name 3
Table of Contents
Contents
Executive Summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Macro-environmental Analysis..............................................................................................................4
PESTLE Analysis..............................................................................................................................4
Industry Analysis...................................................................................................................................5
Life Cycle Stage of the Industry........................................................................................................5
Porter’s 5 Forces................................................................................................................................5
Company Analysis................................................................................................................................6
VRIO Framework..............................................................................................................................7
Competitor Analysis..............................................................................................................................7
Strategy Analysis...................................................................................................................................7
Recommendations and Conclusion........................................................................................................7
References List......................................................................................................................................9

Student’s Last Name 4
Introduction
Since its conception in 1924, Woolworths has been among the favourite supermarkets
and retail shops serving customers in Australia, the British, and the US. The supermarket
store has significantly grown throughout time, opening many branches throughout the world.
In Australia, the company is ranked among the largest companies, employing tens of
thousands of Australian citizens directly. The Woolworths Group Limited is listed as ASX:
WOW in the Australian Security Exchange. However, in the recent past, the Australian retail
and supermarket industry has been undergoing a series of unprecedented changes, thus
posing problems and issues in Woolworths strategic management plans. Due to the
advancement of technology in the retail sector, for instance, Woolworths has been forced to
quickly abandon its traditional strategic management practices and adapt to unfamiliar new
ones. Moreover, the increasing demand for quality services by the Australian retail customers
has made it very difficult for the retail firm to quickly align with customer expectations.
Some of the strategic issues exposed by the swift and unpredictable movement of
Woolworths range from poor management, technology problems, poor customer handling,
and the rapidly evolving retail sector. This paper attempts to analyse the macro and micro
environments that pose strategic problems to Woolworths. The PESTEL macro-environment
model is supplemented by other industrial analysis models such as the life-cycle stages model
and the Porters 5 forces model. The paper also delves into company analysis, competitor
analysis, and strategy analysis to investigate the Woolworths micro-environment. The main
objective of this paper is to analyse and examine the strategic management of Woolworths
and compare it with the contemporary business strategies. A concise conclusion functions to
summarize the discussion discussed in the paper.
Macro-environmental Analysis
Macro-environmental factors majorly contribute to the success or failure of a
company. Considering that macro-environmental factors change and impact companies and
their industries, the decisions made by the company's management are largely influenced.
According to Banahene, et al. (2016, pp. 633), successful strategists and managers must align
with economic and international macro-environmental factors. A PESTEL analysis helps
business managers and relevant stakeholders to account for macro-environmental factors
because it investigates the political, economic, social, technological, environmental and legal
factors that may influence a company or its industry.
PESTLE Analysis
Political factors: The strategic management of Woolworths must be influenced and
impacted by political decisions. Furthermore, considering that Woolworths has many
branches located in other countries in different areas of the world, international politics is a
fundamental consideration when making strategic management decisions. The global supply
chains of large retail and wholesale companies are highly influenced by the political
conditions and relationships between nations (Eckhardt and Poletti 2016, pp.1543). For
instance, the strategic management decisions made by Woolworth’s management are greatly
influenced by political factors in Australia and around the world.
Economic Factors: Considering that Woolworths is a for-profit enterprise, the
economic conditions surrounding their premises are major factors to consider. Economic
factors are very instrumental in determining the success or failure of a company.
Woolworths, therefore, has to consider the inflation rates, tax rates, interest rates, growth
rates, and employment in Australia (Chaklader and Gulati, 2015, pp.326). These factors will
enable the company to ascertain how much their customers are willing to consume.

Student’s Last Name 5
Social Factors: Social, moral and cultural factors are very instrumental in the study of
the prospective customers’ consumption behaviour. Social factors influence strategic
managers to ensure that the products in Woolworths align with the Australian way of life.
Deviating from conventional norms would lead to higher costs due to low demand socially
undesirable products.
Technological Factors: In the retail sector, the adaption to effective technological
practices have greatly contributed to the efficiency celebrated by some of the retail
companies. The use of computers, credit cards, mobile money, and automated self-service
machines have greatly changed the retail sector (McWilliams, Anitsal and Anitsal, 2016,
pp.79). Companies like Woolworths need to quickly adapt to these changes.
Legal Factors: The legal requirements by regulatory and law enforcement bodies
carry a lot of weight in the retail sector. The legal environment determines how a company
should operate in a certain environment and context. Strategic management and decision
making must abide by the conditions outlaid by the legal environment.
Environmental Factors: Woolworths need to showcase efforts towards protecting the
Australian environment. The company's actions and activities must not threaten their
surrounding environment (Rastogi and Trivedi, 2016, pp.386). The company should comply
with the guidelines given by regulatory bodies concerning the issue of climatic change.
Environmental factors, moreover, determine the goods and services a company can offer.
Industry Analysis
Industry Analysis enables the relevant stakeholder to analyse and determine the
industry position of an industry. In industry analysis, the life cycle of the industry and the
Porters 5 forces are mainly analysed. The position of the industry is normally examining by
using the two analytical models.
Life Cycle Stage of the Industry
Castro, et al. (2015, pp. 460) assert that an industry's life cycle is an extension of a
product's life cycle. In the past century, the Australian retail business has been growing at an
exponential rate. The life cycle of an industry comprises five distinct stages namely: start-up,
growth, shakeout, maturity and decline (Gulec and Karacaer 2017, pp. 230). According to the
scholars, the industry grows and a relatively slow pace in its start-up. In its growth stage, the
industry grows at an exceedingly fast rate. The rate, however, starts decreasing during the
shakeout stage and flattens during the maturity stage. In the declining stage, the returns in the
industry start decreasing. Although many marketing and management proponents may
propose that the Australian retail market is in its shakeout stage, the growth rates of the retail
industry are still at the peak of its growth stage. Due to the increased consumption behaviour
of Australian citizens and the unending opportunities brought by technological advancement,
the retail industry is likely to continue growing at exponential rates in the future.
Porter’s 5 Forces
The Porters 5 forces model is normally used by firms to measure the likelihood to
venture into a profitable industry. The model fundamentally analyses concepts such as
competitive rivalry, supplier power, and buyer power, the threat of substitution and threat of
new entry. The five forces are discussed below:
Competitive Rivalry: This force attempts to examine the competitors' strength against
a firm's ability in the industry. The force enables firms and companies to evaluate themselves
before venturing the industry (Barghouthi, 2017, pp.27). The number of competitive firms in

Student’s Last Name 6
an industry moreover is an important aspect to evaluate a company's viability in an industry.
Firms find it difficult to venture into industries where large and powerful companies such as
monopolies and oligopolies, are dominant. This is because such companies can decide to
force prices down until the new company runs out of business. Luckily for Woolworths, the
retail business in Australia comprises of supermarkets such as Costco, ALDI, IGA, MetCash,
and Coles. These supermarkets incapacitate the possibility of the retail sector to be run by a
monopolistic or oligopolistic power.
Supplier Power: Considering that many retailers are offering different types of goods
and services, suppliers in the retail range from agricultural producers, manufacturers,
intellectual property distributors, and electronics distributors (Aydin, 2017, pp.382). Due to
their large number, such suppliers can't hike their prices against companies. Woolworths
relies on a range of suppliers, each producing a given good or service.
Buyer Power: The retail industry depends on many prospective buyers that are
influenced by their insatiable demands and consumer behaviours to purchase certain
products. A buyer has insignificant power to determine the prices or the conditions of the
retail industry. However, member firms acknowledge that buyers can unite and corporate for
or against a certain firm, thus determining the success or failure of the particular retail firm
(Adi 2015, pp. 17). When Woolworths was characterized by poor customer service, for
instance, customers had begun to conspire against the retail shop. Xu, et al. (2017, pp. 149)
asserts that in the Australian retail stores, deteriorating poor customer service may threaten
the retail store's financial gains. Woolworths’s strategic management team, thus, should work
to ensure that incidences of poor customer handling are not repeated in the company.
The Threat of Substitution: Due to a large number of retail stores in the Australian
retail industry, customer retention against substitutes is a primary goal in strategic
management. Retailers in Australia serve almost identical goods and services at almost equal
prices. Woolworths's management aim at retaining their customers against substitutes by
developing brand unity to its customers.
The Threat of New Entry: Due to the high capital needed to establish a retail shop in
Australia, the industry enjoys a limited number of retailers. However, the entrant of a new
retailer could threaten the existence of existing retailers in the retail industry. Woolworths's
strategic management should get ready to deal with the competition posed by any potential
new entrant.
Company Analysis
Woolworth's core competencies primarily depend on the company's ability to
establish its brand and position its products in the entire global market. Although Woolworths
started in Australia, the company has invested in setting up other Woolworth’s branches and
franchises throughout all continents. The many franchises are resources that serve to improve
the brand image of the company and attracting new customers. Moreover, the company's
large and culturally diversified human resource team ensures that the operations of the
company run appropriately (Van Dijk, Meyer, Van Engen and Loyd, 2017, pp.523). The
retail company, therefore, can command a diversified customer base in the global market.
The company's globalization approach is likely to play lead the company towards its
objectives to align and abide by the environmental factors described in the PESTLE analysis
framework. Globalization, moreover, will help the company to reduce its costs and increase
its revenues due to the company’s diversified risk portfolio and the venturing into new
unexploited markets.

Student’s Last Name 7
VRIO Framework
Value: Woolworths hires a large, diversified and talented human resource team that
ensures swift and efficient delivery of services to the company’s esteemed customers
(Ariyani and Daryanto, 2018, pp.11).
Rarity: Only a few retail shops in Australia can open as many franchises as
Woolworths.
Imitability: Imitating the retail strategies used by a retail company poses the imitator
to potential risks because his/her company does not understand the many reasons behind the
strategies.
Organization: Woolworth’s strategic management team ensures that the company’s
resources and strategies are organized in a manner that allows and facilitates their
employment when needed.
Competitor Analysis
As aforementioned above, retail shops such as Coles Supermarket, Metcash, Shoprite,
ALDI, IGA, and Costco act as the main competition for Woolworth’s retail stores. Among
the competitors, Coles Supermarket is the main rival. Coles Supermarket was found in 1914,
ten years before the conception of Woolworths. The competitor supermarket, therefore,
enjoys a strong loyal customer base and a recognized brand. Coles Supermarket, like
Woolworths, has many branches and franchises around the world. The two big retailers
challenge each other in stiff competition, each one aiming to acquire and retain customers.
Due to the two companies’ stiff competition and imitative strategies, many scholars tend to
classify Coles and Woolworths as a duopoly (Valayutham 2018, pp. 125). However, Azeem,
et al. (2018, pp. 122) affirms that in terms of market share, Woolworths enjoys a larger
number of customers that Coles Supermarket. In their research, the scholars assert that 49%
of Australian customers aged above 14 years carry Woolworths's loyalty cards as compared
to the 45% held by customers subscribing to Cole Supermarket. These results mean that
Woolworths has already outdone Coles in terms of market share. However, the competition
between the two firms is evident.
Strategy Analysis
Woolworths plans to engage international and global marketing strategies to introduce
their establishments in international foreign markets. This strategy is in line with the
company’s attempt to unlock the benefits derived from globalization. Baker and Friel (2016,
pp. 80) assert that food and beverage retailers around the world have been the leading firms
practising transnational economic globalization. Woolworths’s globalization strategy is
effectively working as evident from the company’s increased sales in foreign markets.
Woolworths’s burgeoning market share can be attributed to the company’s globalization
strategy. Considering that the Australian retail industry is on its growth stage, Woolworths
should be poised to enjoy the potential future benefits.
Recommendations and Conclusion
To conclude, despite the evident growth, Woolworths’s strategic management team
needs to adjust to curb underlying issues. To successfully compete with established brands
such as Coles Supermarket, Woolworths need to ensure that its past customer handling issues
are eliminated. is recommended that the company should aim at improving its customer
handling practices. The retail should ensure that its employees observe conventional ethical
standards when treating esteemed customers. Moreover, embracing technology could serve

Student’s Last Name 8
the retail company greatly in the future by reducing costs and increasing efficiency.
Moreover, the company should embrace technology by incorporating automated self-service
touch-screens in their stores. This would reduce human errors. Moreover, in the future, the
company should invest in machine learning and artificial intelligence. The use of automated
programs and robots may be a solution to reduce the large labour costs incurred by the
company. The company should be ready to exploit the potential growth of the retail industry,
both globally and locally.

Student’s Last Name 9
References List
Adi, B., 2015. An evaluation of the Nigerian telecommunication industry competitiveness:
application of porter’s five forces model. World, 5(3), pp.15-36.
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO
Framework: Development of Scale for Resource and Capabilities Organization (Case Study:
XYZ Company Animal Feed Business Unit). Asian Business Research Journal, 3, pp.9-14.
AYDIN, O.T., 2017. Assessing the environmental conditions of higher education: in a
theoretical approach using porter’s five forces model. Journal of Higher Education and
Science, 7(2), pp.378-391.
Azeem, M.M., Baker, D., Villano, R.A., Mounter, S. and Griffith, G., 2018. Food shoppers’
share of wallet: A small city case in a changing competitive environment. Journal of
Retailing and Consumer Services, 43, pp.119-130.
Baker, P. and Friel, S., 2016. Food systems transformations, ultra-processed food markets
and the nutrition transition in Asia. Globalization and health, 12(1), p.80.
Banahene, S., Ahudey, E. and Mensah, C., 2016. Analysis of Macro Environment for
Strategy Implementation: What is important to Handicraft Export Organisations in
Ghana?. International Journal of Business Management and Economic Research, 7(3),
pp.632-642.
Barghouthi, O.A., 2017. Analysis of Competitive Advantage of the Basic Industries in
Palestine Based on the Porter’s Diamond Model. International Journal of Marketing
Research Innovation, 1(1), pp.25-39.
Castro, P., Tascón, M.T. and Amor-Tapia, B., 2015. Dynamic analysis of the capital structure
in technological firms based on their life cycle stages. Spanish Journal of Finance and
Accounting/Revista Española de Financiación y Contabilidad, 44(4), pp.458-486.
Chaklader, B. and Gulati, P.A., 2015. A study of corporate environmental disclosure
practices of companies doing business in India. Global Business Review, 16(2), pp.321-335.
Eckhardt, J. and Poletti, A., 2016. The politics of global value chains: import-dependent firms
and EU–Asia trade agreements. Journal of European Public Policy, 23(10), pp.1543-1562.
Gulec, O.F. and Karacaer, S., 2017. Corporate life cycle methods in emerging markets:
Evidence from Turkey. Journal of Economics Finance and Accounting, 4(3), pp.224-236.
McWilliams, A., Anitsal, I. and Anitsal, M.M., 2016. Customer versus employee perceptions:
a review of self-service technology options as illustrated in self-checkouts in US retail
industry. Academy of marketing studies journal, 20(1), p.79.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering and
Technology (IRJET), 3(1), pp.384-388.
Van Dijk, H., Meyer, B., Van Engen, M. and Loyd, D.L., 2017. Microdynamics in diverse
teams: A review and integration of the diversity and stereotyping literatures. Academy of
Management Annals, 11(1), pp.517-557.
Velayutham, S., 2015. 8 National champions in a global arena. Globalization and
Transnational Capitalism in Asia and Oceania, p.125.

Student’s Last Name 10
Xu, J., Gao, X. and Hammond, J., 2017. E-tailing in Australia: A preliminary analysis of
David Jones. The International Technology Management Review, 6(4), pp.149-157.