Woolworths IT Strategy: Analysis of Key Decisions and Impacts

This report provides a comprehensive analysis of Woolworths' strategic decisions regarding its IT infrastructure. It begins by outlining key events, such as employee layoffs and asset write-downs, and then examines the company's strategic situation using Porter's Five Forces model, highlighting the competitive pressures and challenges Woolworths faces in the retail market. The report explores the pros and cons of Woolworths' strategic decisions, offering both short-term and long-term perspectives. It also delves into the role of IT in large retail organizations and the importance of investing in IT infrastructure, as well as the information systems Woolworths should implement. Furthermore, the report analyzes the impact of previous IT decisions, identifies key stakeholders, and outlines functional requirements for systems like SAP and Transaction Processing Systems (TPS), concluding with recommendations for future IT investments.

Subject Name Student Name Student ID
Ans1. Woolworths will let go 500 of its employees across its supply chain and support office and
also write down millions of dollars in IT assets (Coyne, 2016).
Ans2. Woolworths was struggling with supplier relationships during the most recent quarter
because of problems with the performance of the re-stocking and inventory systems
(Woolworths Group).
Ans3. The reasons that led Woolworths to take such strategic decisions were the combined
impairment of assets from the upcoming closure of its Hume Distribution Centre and the $80
million that it would bear pertaining to the impairment of unspecified IT assets (Woolworths
Group).
Ans4. The strategic situation of Woolworths as per the Porter’s 5 forces model is as follows:
a) Bargaining Power of Suppliers – Woolworths is a major player in the retail and online
retail industry of Australia and has an abundance of suppliers. Therefore the dependence
of Woolworths as a big organization in retail business is low on suppliers and there is a
weak bargaining power of suppliers. This is a healthy situation for the company.
b) Bargaining Power of Customers – In the highly competitive online retail market of
Australia, the consumers have plethora of choices. Woolworths thus must be able to offer
its products at prices lower than the competitor’s.
c) Threat of new entrants – There is a considerably low threat of possible new entrants in
this industry in Australia, since the big players such as Woolworths and Coles have solid
grip on the retail market. Thus, any new entrant would find it very difficult to grow with
its’ limited investment and resources.
d) Threat of substitutes - Woolworths faces severe competition from competitors such as
Dick Smith and it must come up with fresh and innovative tactics to attract customers and
retain its market reputation.
e) Competitive rivalry – Due to the presence of a lot of competitors such as Myer and Coles,
the retail market remains highly concentrated. The company must constantly devise new
policies and methods to stay ahead in the competition.
The balance of Power in the highly concentrated online retail business in Australia is apparently
against Woolworths (Ryan, 2017). Therefore, the company should strive to improve its IT/IS
competency to overcome the key challenges and propel its growth.
Ans5. Pros -
Short Term:
1. It would enable Woolworths to perform cost-cutting effectively (Business review
weekly).
2. It would help Woolworths to make better strategic decisions for its new IT policies.
3. It would help Woolworths to formulate strong IT policies since the taking over of new
CEO Mr. Banducci.
4. The new strategic decisions would enable for better investment avenues.
Long Term:
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Subject Name Student Name Student ID
5. The new strategic decisions would enable for greater devotion to financial and human
resources.
6. The strategies would enable Woolworths for venturing into new and better opportunities
pertaining to marketing and operational fronts.
7. Such new strategies would open new paths for maintaining the sustenance and longevity
of the business.
8. Such new strategies would enable the organization to maintain a valuable and strong
position in the current market scenario and also stay ahead of its competitors.
Cons –
Short Term:
1. The new strategic decisions would make the process of strategic management more
complex since they ask for considerable time for proper implementation.
2. The management of Woolworths would have an uphill task in preparing, researching and
informing all the employees about the new decisions.
3. There would be issues pertaining to greater attrition in the organization.
Long Term:
4. Moreover, the new strategies would be difficult to implement since it needs proper two-
way communication amongst management and employees.
5. The new strategic decisions would not be instigated in an effective way since no one
from the management could be held accountable.
6. The lack of proper instigation of new strategies could have detrimental effects in the long
run on the overall performance of the organization (Eames, 2015).
Ans6. In my personal opinion, Information Technology or IT has a big role to play in
organizations such as Woolworths that are big names in the retail business. This is due to the fact
that most of such big retail players have totally independent and computerized operations,
marketing, human resource, finance and other departments. In the light of recent issues that the
company had faced pertaining to failure in its IT competency, such as in its replenishment and
inventory systems the role of IT as a performance enhancement tool has significantly increased.
Now, companies such as Woolworths must do whatever they can to up their highly sophisticated
IT structure especially its inventory systems and Data Centre.
No, it’s not true that the new management underestimates the role of IT in Woolworths because
the new CEO Mr. Banducci has cleared the path for the implementation of the new SAP software
that has already started to give positive results.
Ans7. Yes, I completely agree with this decision of the new management to invest heavily in IT
infrastructure. This is because big players in the retail business such as Woolworths need as
much technical support and assistance from IT as they can to be able to survive and flourish in
the market. IT is a vital and inseparable component of every business whether it is big or small
and irrespective of its core domain. As we know that there have been several companies, that in
the past despite having excellent technical know-how and resources were lagging behind only
due to outdated IT infrastructure. For example, ANZ bank saw a splurge in customer attraction
and retention after properly implementing IT.
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Subject Name Student Name Student ID
Ans8. If had been the CIO of Woolworths, I would be also prepared to invest a similar amount of
money in IT development due to the fact that a hefty amount of revenues were lost by the
company because of software and Data Centre issues.
8.1 In the recent past, organizations such as ANZ bank did undergo a complete overhaul by
employing new IT procedures.
8.2 It would not be difficult to convince the management for making an investment in IT
since the company was incurring losses in the recent past.
8.3 I would put together more facts and figures and try to convince the top management to
make this investment.
Ans9. The major Information Systems which Woolworths should have are SAP and Transaction
Processing Systems. The SAP processing system would enable the desired ramifications of the
entire organization and Transaction Processing Systems would improve the in-store capacities of
the company.
Ans10. Woolworths decided to slash down some projects in its IT such as investments made in
building digital platforms and delay in rollout of SAP systems. The impact of this was that the
company lost a significant amount of sales revenues and also market share. Woolworths can get
out of this trouble only via implementation of solid IT practices and adopting key IS processes
such as SAP and TPS (Woolworths Limited).
Ans11. The stakeholders for SAP would be the top and mid-level management of Woolworths,
the Managing Directors, shareholders and the employees.
The stakeholders for TPS would be the junior and middle-level staff, top management and
Managing Directors.
Ans12. Functional requirements for SAP: –
1. All departments must be provided with the required software and
2. All staff members of concerned departments must be given technical expertise to utilize
the new systems
3. The new systems should be made available at all offices and outlets within a month.
Functional requirements for TPS: -
1. All outlets should be provided with the new systems within suitable timeframe.
2. All ground-level staff and customer care executives should be trained to utilize systems.
3. The new systems must have the capacity to accept and manage thousands of orders at a
time including online orders.
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Subject Name Student Name Student ID
References
Business review weekly (2008) Business Review Weekly: BRW, Volume 24 Issues 26-29. The
University of California.
Coyne, A. (2016) Woolworths writes down millions in IT assets. IT news. Retrieved from
https://www.itnews.com.au/news/woolworths-writes-down-millions-in-it-assets-431300?
eid=3&edate=20160725&utm_source=20160725_PM&utm_medium=newsletter&utm_campaig
n=daily_newsletter on 24 August 2017.
Eames, J. (2015) The Flying kangaroo: Great untold stories of Qantas, the heroic, the hilarious,
and the sometimes just plain strange. Allen & Unwin, Crows Nest, NSW.
Ryan P. (2017) Woolworths CEO Brad Banducci aware of Amazon retail threat. ABC. Retrieved
online from http://www.abc.net.au/news/2017-08-23/woolworths-ceo-aware-of-amazon-retail-
threat/8835810 on 24 August 2017.
Woolworths Group. (2017) Brad Banducci – Managing Director and Chief Executive Officer.
Retrieved from https://www.itnews.com.au/news/woolworths-writes-down-millions-in-it-assets-
431300?
eid=3&edate=20160725&utm_source=20160725_PM&utm_medium=newsletter&utm_campaig
n=daily_newsletter on 24 August 2017.
Woolworths Group. (2017) Find your perfect job. Retrieved online from
https://www.wowcareers.com.au/ on 24 August 2017.
Woolworths Limited (2016) Brad Banducci appointed as Woolworths CEO. Retrieved online
from http://www.asx.com.au/asxpdf/20160226/pdf/435cz2qjrpr876.pdf on 24 August 24, 2017.
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