Strategic Management Analysis and Strategies for Woolworths

This report offers a comprehensive strategic management analysis of Woolworths, a leading Australian company. It explores key concepts such as the Ansoff matrix, business model canvas, PEST analysis, and Porter's five forces to evaluate Woolworths' strategic choices. The report examines how the company utilizes market penetration, product development, market development, and diversification strategies to achieve competitive advantage and maximize profits. It delves into the impact of technological changes, legislation, and economic trends on Woolworths' operations. Furthermore, the report provides detailed recommendations for enhancing sales, profitability, and overall business performance, emphasizing the importance of innovation and customer-centric approaches. This analysis aims to provide insights into strategic decision-making and leadership within the context of a major retail organization.

STRATEGIC
MANAGEMENT

Table of Contents
STRATEGIC MANAGEMENT...................................................................................................1
EXECUTIVE SUMMARY...............................................................................................................3
INTRODUCTION.............................................................................................................................3
AIM...................................................................................................................................................3
MAIN BODY ...................................................................................................................................4
RECOMMENDATION.....................................................................................................................7
CONCLUSION.................................................................................................................................8
REFERENCES..................................................................................................................................8
Books and Journal.........................................................................................................................8
Online............................................................................................................................................8

EXECUTIVE SUMMARY
Strategies plays a very important role in making the business successful. The company
uses various models to implement strategies in the organization. Woolworths can use different
strategies to have competitive advantage and to maximize its sales and profit. The first model
discusses in the report is ans off matrix which provides four business alternatives to help the
company in formulating strategies. The four quadrant of ans off matrix shows diversification,
product development, market development and market penetration under which Woolworths uses
diversification strategy to increase the profits of the company. The next model which is discussed
in the report is business model canvas which is a graphical representation of different variables
that show organization values. It is used by the company as a strategy tool for improving
performance. It consists of many aspects which is mentioned in detail. The other model used by
company for external analysis is porter's five force model as well as pest analysis which is
important for company to consider when expanding its operations. The report then describes
recommendations that company can implement in the company to achieve overall objectives of
the company which are maximizing sales, profit, cost efficiency and economies of scale.
INTRODUCTION
Strategic management is the concept based on identification and evaluation of the
strategies related to which several decisions are taken by the managers to achieve business goals,
improve performance and get competitive advantage (Lasserre,2017). To have a better
understanding of strategic management, the report will take Woolworth limited to understand how
this company can manage its strategy. Woolworth is the second largest company in Australia in
terms of revenue that deals in supermarket, petrol, liquor, hotels, finance etc. The report will
include swot analysis along with pest, porter's five force model to do external and internal
analysis of the company. It will take ans off matrix into the consideration to see what strategy
does the company choose to improve its performance. Furthermore, it will focus on using business
model canvas to analyses the situation of existing business. At last it will include change
management along with the style of leadership that the organization implement on its employees.
AIM
The aim of the report is to increase knowledge and of the students about strategic
management and its related activities to develop leadership and decision making skills.

MAIN BODY
Strategic management means bunch of decisions that are taken by manager of the
company which decides result of performance of the company. It is about formulating new
strategies in the company to have competitive advantage over other firms. It includes vision,
mission and strategic intent of the company to make sure that employees are aware of the
framework of the company in which they are working and how they can contribute in improving
performance.
Woolworth is the largest supermarket chain in Australia which started operating in fresh food
stores with advances in refrigeration technology and transport and storage. Later it expanded its
operations in several sectors like insurance, fuel, liquor etc.
The strategies that can influence the organization and can be understood by the following
models :
The three major strategic influences that impacts the results generated from the organization.
These influences include the technological changes, changes in the laws and legislation and the
changing economic trends across the globe affects the outcomes of the Woolworth. Technological
advancements such as artificial intelligence influences the strategy of the organization to a larger
extent as it calls for adopting and developing the strategies in accordance with the technology.
Changes in the laws and the legislation must be implemented by the Woolworth for surviving in
the competitive world. Changes such as increase in the wage rate and the banned on the fast food
restaurant may affect the functioning and the operations of the company. With the changes in the
laws and rules an entity has to build the strategies that meets with the changing trends. These
changes may lead to delay in achievement of the goal or reaching the aim not as per the strategies.
Changes in the environmental condition such as in rainy season the food items becomes soggy
which leads to adverse effect on the operations of the Woolworth as it deals in fresh food items.
At this time the corporate has to make its strategies so well by which any changes or the
uncertainties can be met effectively and efficiently.
Economic trends relates with the changes in the interest rates, currency exchange rate and the
income of the customers also influences the strategy of the Woolworth. Decrease in the disposable
income of the customers results in declining the purchasing power of the customers which in turn
affects sales and the profitability of the company. Depression in the economy might affect the
stability of the firm and the market value of the Woolworth negatively. By this the long term

benefits and the survival of the Woolworth gets affected as these external factors such as PEST
and the porters five models are directly linked with the long range strategic planning of the firm.
These factors affect the firm in both ways negatively and positively.
Ansoff matrix
It provides four business alternatives to help the company in formulating strategies.
Woolworth limited follow ans off matrix with their existing market and product range as they
penetrate their market (Percy, 2016). The company has huge product range and their market share
is also high therefore market penetration for existing market is not a problem for Woolworth
(Chernev, 2018). B box deals with product development which is also very efficiently followed by
Woolworth, whenever the company finds new opportunities it formulates the strategy to launch
new product like insurance, liquor etc. The other box is market development which is also good in
case of Woolworth as it has tapped emerging markets and has captured market outside the
Australia in countries like US etc. New market development helps the company in grabbing the
opportunities and to have competitive advantage. In case of diversification, Woolworth considers
to be a giant as it has range of diversified products which are fuel, finance, supermarket etc.
Woolworth has timed its strategy at the right time to adopt diversification to sustain in the market.
It led to revenue generation, improved performances for the company. The company always
analyze and use effective strategy plans and get competitive advantage over its competencies.
A
Market penetration
B
Product development
C
Market development
D
Diversification
As form the above model Woolworths uses strategy of diversification as it has expanded
its operations in number of sectors whether it is finance, insurance, liquor, food and beverages etc.
with the help of diversification it had captured large market share, can easily enter into new
markets and cam maximize the sales and profitability of the company (James, 2016). In case of

loss in one sector ,the other can be beneficial for the company which can mange the profit of the
company.
Business model canvas
BMC model is a graphical representation of different variables that show organization
values. It is used by the company as a strategy tool for improving performance. The elements that
are included in model are :
Key partners – The company need to have efficient alliance with its partners which will
help it in fighting with the competition by combining specialization and knowledge.
Key activities – Woolworth need to have good knowledge of the core activities of the
company to develop good relationship with its customers which help the company in quick
decision making and to ave competitive advantage over others (James, 2016).
Key resources - Woolworth need to take care of its resources as without resources the
company cannot perform. It needs to manage its physical, human, intellectual well as financial
resources to improve company's performance.
Value proportions – It means to understand the value of customers and provide them with
best services. Woolworth need to focus on its distinct traits like quantity, price, speed of delivery
etc to distinguish itself from the competitor which leads to increase in status of brand, customer
satisfaction and experience.
Customer segments – The company needs to segment customers according to their
requirements which will help the company in contribute to a good value proportion.
Customer relationships – The company needs to focus on maintaining good relationships
with customers as the broader the base of customer, better the revenue of company.
Cost structure- Woolworth need to know its cost structure which will help the company in
achieving economies of scale and advantages of profit.
PEST analysis
Political factor – Woolworths is a retail company which is satisfies the needs of its
customers through different outlets. The political environment of the country affects the working
of this company (Rothaermel, 2015). This may include mandatory employee benefits, wage
legislation, high taxation rates, industry safety regulations in food and staples industry which can
be a barrier to the company.

Economic factor -The economic factor such as recession, and higher unemployment rate
has a strong effect on financial performance of business entity and can lead to financial decline of
the company (Pestle analysis of Woolworths, 2018). Woolworths faced major financial crises
when it had to shut its operation in UK which lead to unemployment of many people. Australia
retail industry has maintained more stability than in other parts of the world which supported
Woolworth business.
Social factor – Customers are the whole and soul of any business therefore identifying
and fulfilling their needs is the prime responsibility of the business which lead to profit
maximization. Woolworths has recognized the importance of experience of customers as a part of
their sales and profitability. The company to cope up with social trends has launched loyalty
program which has earned the organization set of more than 90,000 members.
Technological factor – New technologies enhances the shopping experience of the
customers which is the focus of area for retail businesses (Wheelen and et.al, 2017.). The
innovation in technology of retail sector is self service checkout which is been adopted by
Woolworths as well but this technology created a negative impact on the business as it was not
acceptable by the customers.
Porter 5 force model
Threat of new entrants– It is high as new entrants brings innovation which can put
pressure on Woolworths limited through reducing cost, lower price strategy etc. The company can
deal with it by innovating new products and services, by gaining economies of scale so that it can
lower down fixed cost per unit.
Bargaining power of supplies – Most of the companies buy their raw materials from
numerous suppliers and suppliers in dominant position can decrease margin of the company. To
cope up with the situation the company need to create efficient supply chain with many suppliers.
Bargaining power of buyers – Buyers can shift very easily therefore retaining them is
quite a task. They want to buy things at cheap rates and this puts pressure on the profitability of
Woolworths (Ansoff and et.al., 2018). By building a large base of customers and by rapidly
innovating products this problem can be solved.
Threat of substitute – The threat of substitute is high if it offers value to the customer in
a uniquely different from present offerings in industry. The Woolworths can overcome from this
by being service oriented rather than product oriented.

Rivalry among competitors – When rivalry increases it drives down the prices and
decrease overall profitability of the company. Woolworths can protect itself from the competitors
by building sustainable differentiation and by collaborating with competitors to increase market
size.
RECOMMENDATION
 The company in order to increase its sales and profit and to have competitive advantage
need to come up with innovative techniques which can increase the value of the company.
 The company need to make the list of resources it will require and in case it does not have
it should know that from where the resources will be arranged.
 The company can replace its accounting system that can handle its accounts payable and
receivable for quick work which can save time and cost of the company.
 After installing innovative technologies in the company, it can train its employees and
company managers should make sure that new training doesn't turn out to be the burden
for the company but instead need to be fun. It can use tablet, smart phone etc to make it
efficient. The company can offer incentives to the employees to keep them motivated.
 The company to launch new product can choose niche market and can introduce the
product their for increasing its sales.
 The company can acquire small company outside the national boundary to expand its
market operations and increase in market share. The expansion of company's product can
help it in achieving economies of scale and can give tough competition to competitors
 With the help of diversification, the company can come to know about new trending
technologies in the market and can gain market share by adopting them.
CONCLUSION
The report concluded various strategies used by the company to survive and sustain in the market.
Any company without making strategy cannot survive in the market. Woolworths is leading
industry of Australia in terms of revenue generation which makes it more important for the
company to understand its competition and to understand its surrounding in which the company is
operating. The efficient can make the business boom whereas inefficient strategy can make it fall
down. The report has analyzed ans off matrix and its implementation in the company to increase
sales and profit of the company. However, it consists of 4 quadrants in which company chose
diversification. Further, it concluded Business model canvas which positively impact the

performance of the company and helps the company in improving it. Later, it showed how
business environment in which company operates affects the company and it decisions. Without
external analysis a company cannot make ant decision and for the purpose the company uses pest
analysis which shows political, social, technological and economic factors affecting business and
other one is porter's 5 force model which depends on industry attractiveness, threat of entrants,
bargaining power of buyer and supplier which gives a clear picture to the coampny that where it
stands.

REFERENCES
Books and Journal
Ansoff, H.I., and et.al., 2018. Implanting strategic management. Springer.
Barca, M., 2017. Economic foundations of strategic management. Routledge.
Chernev, A., 2018. Strategic marketing management. Cerebellum Press.
Evans, N., 2015. Strategic management for tourism, hospitality and events. Routledge.
James, S.D., 2016. Strategic bankruptcy: A stakeholder management perspective. Journal of
Business Research. 69(2). pp.492-499.
Joyce, P., 2015. Strategic management in the public sector. Routledge.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Percy, L., 2016. Strategic advertising management. Oxford University Press.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Siegel, D.S. and Leih, S., 2018. Strategic management theory and universities: An overview of
the Special Issue. Strategic Organization. 16(1). pp.6-11.
Wheelen, T.L., and et.al., 2017. Strategic management and business policy (p. 55). Boston:
pearson.
Online
Pestle analysis of Woolworths, 2018. [Online]. Available through :
<http://fernfortuniversity.com/term-papers/pestel/nyse4/4816-woolworths-limited.php>