Strategic Management of Woolworths: Three Approaches Analysis Report

This report provides a comprehensive analysis of Woolworths' strategic management, examining the applicability of Resource Based View (RBV), Market Based View, and Industrial/Organization (I/O) theory. The report begins with an executive summary and an introduction that outlines the significance of different strategic approaches in gaining and sustaining market dominance. It then delves into each approach, discussing their suggested benefits, implementation issues, and limitations within the context of Woolworths. The RBV section includes a VRIN analysis of Woolworths, evaluating its brand reputation, local sourcing, online presence, and customer loyalty to determine competitive advantages and areas for improvement, particularly in supplier relationship management and online sales. The Market Based View section assesses Woolworths' position in the evolving retail landscape, transitioning from a duopoly to an oligopoly with the rise of Aldi, and analyzes the implications of increased industry competition, bargaining power, and the need for innovation. The I/O view explores industry forces and Woolworths' focus on fresh food and customer experience. The report concludes with strategic recommendations, such as offering 24/7 service for specialized products to reduce food waste and enhancing online presence, based on the analysis of the three strategic management approaches. The report highlights the importance of adapting strategies to maintain and enhance Woolworths' competitive position in the dynamic retail market.

Running head: STRATEGIC MANAGEMENT OF WOOLWORTHS
Three Different Approaches to Strategic Management in the context of Woolworths
Name of the student:
Name of the university:
Author note:

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Executive Summary
The aim of this report was to identify the applicability of three different approaches to strategic
management in Woolworths. As found in the study, there are traces of application of RBV,
Market Based View and I/O Theory in the company. The report based on its analysis of the
company recommends Woolworths a few strategies to do better with RBV and other strategic
approaches. One of the recommendations as mentioned in the conclusion section of this report is
to offer 24/7 service for special products like fresh sushi bars. The findings of the report claims
this service as useful in reducing the food waste.

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Table of Contents
Introduction......................................................................................................................................3
Three Different Approaches to Strategic Management...................................................................3
Resource Based View (RBV)......................................................................................................3
Market Based View.....................................................................................................................6
Industrial/Organisation (I/O) View..............................................................................................9
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................13

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Introduction
Few strategy management approaches are generally used by firms to gain the dominant
control of the market and produce unfavourable business conditions for the new entrants.
Resource based view (RBV), market based view and industrial/organisation (I/O) view are
amongst these approaches. The significance of adopting these views and potential challenges to
be faced when applied to the real-world scenario will be the report discussion topic. The
discussion will be conducted in the context of Woolworths, the chosen case organisation for this
report.
Three Different Approaches to Strategic Management
Gaining a foothold in the market is important; however, sustaining it is even more
important. A position can be sustained only if a business has access to and control of resources
needed to acquire a sustained competitive advantage. This section will discuss such resources
particularly in context to Woolworths.
Resource Based View (RBV)
 Suggested Benefits
RBV can be beneficial in assessing internal organisational resources and identifying the areas of
improvement. Such assessments should happen regularly prior to the launch of a project to know
whether a business can handle it. Resource based view (RBV) of an organization can be best
obtained from conducting a VRIN analysis of the firm. A VRIN analysis evaluates organisational

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resources in a given company. The information thus obtained can be used while making business
decisions.
 Implementation Issues
Aregular check for the available internal resources can be essentialto identify the needs to add
more to the resources to sustain the factors of competency. Factors of competency can be
different for different organisations. Excellent service quality can be a factor of advantage for a
firm whereas cheapest offers can be for the other (Arli et al., 2013). RBV says that a firm should
not lose its competitive advantage, rather boost it up by acquiring more relevant resources. Firm
that attains competency through its excellent service would always want it deliver value for
them. In pursuit of excellence in service, they may go for a new technology and so. However, a
poor understanding of the technology by their customer may certainly affect the implementation
(Arli et al., 2013).
 Limitations
In RBV analysis of a firm, empirical data concerning several organisational activities are not
considered. Hence, the resultant value of the analysis will lack the appropriateness. RBV does
not consider the demand side into its study. Hence, more exercises to be put on using relevant
tools and knowing the demand side of each organisational factor.
 The Success of the Approach
The aim of this section is to assess Woolworths’ strategic approach to resource based view and
the challenges faced in doing so. The evaluation will need certain informationto assess the
competency of Woolworths for a given factor. A VRIN analysis of the company will let to know

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about such pieces of information. Hence, below is a table showing VRIN analysis of
Woolworths:
Woolworths V (Valuable) R (Rare) I (Inimitable) N(Non-Substitutable) Competitive
Advantage
Brand Reputation √ √ √ √ Sustained
Local Sourcing √ × × √ Competitive
Parity
Online Presence √ × √ √ Temporary
Competitive
Advantage
Customer Loyalty √ √ √ √ Sustained
Table 1: VRIN Analysis of Woolworths
Above is a table showing VRIN analysis of Woolworths. It indicates that Woolworths
enjoys a sustained competitive advantage for its brand reputation and customer loyalty.
However, customers would stay loyal with the companytill the timetheir needs and emerging
demands are met. A capability boost is what required to effectively manage the supply chains
and therefore, keep fulfilling the needs of its loyal customers.There is a long-term need for
saving on cost and utilising the savings for creating the value for its loyal customers.
As per VRIN analysis of Woolworths shown above, there are still few areas where more
can be done than existing. According to a few reports, supplies are happier working with Aldi

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than other industry giants. Aldi makes the payment in fractions; however, never misses on a
commitment (Methner, Hamann and Nilsson 2015). Woolworths must decide how they can
improve on supplier relationship management; however, they should also pay a serious concern
to the payment of dues.
Woolworths as revealed in the VRIN analysis does not have a sustained competency in
distributing products through online sales. Reports suggest that Coles is doing extremely well
with its online sales service. With Amazon now has entered the country, the battle for online
sales will become fierce (King and Thobela 2014). Woolworths’ loyal customers would be happy
if its official website provides easy search option for their desired content. Their shopping
experience on the website will also become richer. Moreover, the website could emerge a
potential revenue stream for Woolworths.
Market Based View
 Pros
Market based view provides better insights of the market nature and sources of market power for
a firm. These understandings are needed to realise where a brand stands in comparison with the
other market powers. Moreover, these can be used in devising new strategies and attaining
desired benefits in many ways. The performance will be excellent for a firm existing in a
‘Monopoly’ market. However, the performance can only be sustained if the market offers more
barriers to the new entrants, and the existing company has higher bargaining power with respect
to consumers and suppliers. Moreover, the performance will be shared betweenthe firms existing
in the ‘Duopoly’ or ‘Oligopoly’ markets (King and Thobela 2014). For example, Woolworths

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and Coles enjoyed many benefits of a ‘Duopoly’ market in the past. However, the benefits got
reduced and were shared between the giants after Aldi became a huge retail face in Australia
(King and Thobela 2014).
 Issues Concerning Operation
Market-based view of strategy can be a time consuming process. Hence, it would be less helpful
in making real-time decisions. Apart from being a time consuming process, it also does not
explainthe competitive advantage for a firm appropriately. In market-based view of strategy,
external factors are only studied skipping the internal organisational areas that significantly
impact the quality of service (Hubbard Rice and Galvin 2014).
 Approach Limitations
It cannot be used to analyse the internal factors of a firm essential for assessing the quality level
of the service. A good business performance requires good strategies.Moreover, good strategies
need adequate understanding of organisational resource capabilities. Internal capabilities despite
being a vital part of strategy making is overlooked by market-based view of strategy (Hubbard
Rice and Galvin 2014).
 The Accomplishment
Woolworths had a longstanding duopoly with Coles. The competition was intense between these
two majors. The intensity of the competition was manageable during those times for several
reasons. Retailers had strong negotiation power over their suppliers. It helped both Woolworths
and Coles in managing their expenditures effectively. The savings were used for other purposes
to boost up the customer base. Woolworths particularly could show a great use of loyalty

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schemes such as Woolworths rewards and credit card to boost up its base of loyal customers
(Hubbard Rice and Galvin 2014).
All these did not stay the same as used to be when Aldi was recognised as the emerging
power of Australian grocery and general merchandise sector. As per a report, Aldi will soon
catch up with Coles and Woolworths in terms of market shares
(https://www.smh.com.au/business/companies/duopoly-no-longer-aldi-could-be-as-big-as-coles-
and-woolies-by-2030-20190806-p52eh4.html).With this big change in the Australian retail
sector, the market will no longer be recognised as the duopoly of Woolworths and Coles. Instead,
it will become an “Oligopoly” with three retailers claiming the lion’s shares of shoppers
(Kasanagottu and Bhattacharya 2014). An oligopoly market will produce new business
circumstances for Woolworths. These are as listed below (Kasanagottu and Bhattacharya 2014):
 High Entry Barriers: An entrance to the industry will be difficult for new entrants.
There will be intense battle between Woolworths, Coles and Aldifor market shares. There
is no denying to this fact that Woolworths will be under pressure for making shopping a
delightful and an attractive event for its customer. Competitive pricing for products
should definitely be a preferred strategy apart from putting increased focus on product
and service innovation. Automation in stores for few manageable in-house jobs should
prove a good initiative for Woolworths.
 Weak Bargaining Power of Supplier: There are many suppliers fulfilling the supply
needs of major retail players. Due to lack of differentiation in suppliers for product
quality they possess limited bargaining capacity (Rothaermel 2016).
 Strong Bargaining Power of Buyer: There will be huge influence of buyer on
Woolworths’ business level strategies. It is no wonder that there could be few changes

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applied to shopping at stores. A more use of automation such as in the form of a self-
checkout could be introduced to offer hassle-free checkouts to people. The use of private-
label products can also scale up depending on the demand for cheaper products.
 Increased Industry Competition: The rivalry is intense now with Aldi doing the actual
damage. Aldi’s ability to offer cheapest products, and ensure praiseworthy profit margin
for the company and its shareholders is hard to match. Fighting for prices can be difficult
for Woolworths considering its huge product portfolio and the associated costs to manage
the stocks (Rothaermel 2016). It makes sense that Woolworths focus more on enriching
consumers’ experience of shopping rather than going for price-based battleship. Indeed, a
price-based war may affect the profitability in long-term.
Industrial/Organisation (I/O) View
 Advantages
I/O view informs on industry forces, which certainly affect a business. Industry forces can be
stronger, moderate and weaker based on which industry attractiveness for a business is
identified. An industry will be considered less attractive or unattractive for doing a business if it
offers stronger industry forces to it. Industry forces include but not limited to bargaining power
of customer and the supplier (David and David 2016).
 Problems with regards to Application
I/O theory scans the external environment, and is entirely focused on exploring industry
opportunities and the threats. However, exploring new opportunities and mitigating threats
depend more on how a firm respond to these from internally. A firm possessing the appropriate

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mix of resources should be able to take the advantage of opportunities and mitigate the threats.
On the other hand, lack of adequate resources may lead to inappropriate utilization of industry
opportunities (David and David 2016). Hence, an application of I/O theory will also require the
management to spend time on assessing their organisational resources.
 I/O Boundaries
I/O theory informs on industry forces; however, does not take into account the resource
capabilities of a firm. In this way, it does not show the overall path that leads to success.
 An Analysis of I/O View concerning Woolworths
Woolworths does make intensive spending on its “Fresh Food People”. It has been campaigning
for, and offering fresh groceries and quality products to customer for years now. The campaigns
spans across range of electronic media and advertisement channels such as online, print, street,
radio, YouTube pre-rolls and transit media. Woolworths has been working closely and whole
heartedly with the suppliers, growers and staff to bring fresh and contemporary products to
customers. They have remained the same in terms of performing these practices for over 25 years
(https://mumbrella.com.au/woolworths-brings-back-fresh-food-people-positioning-brand-
campaign-leo-burnett-243805?
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STRATEGIC MANAGEMENT OF WOOLWORTHS
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The “Fresh Food People” campaigns and practices were in response to ever rising desire for
fresh groceries and foods in the public and intensive coverage of the same over different media
channels. It was a necessity for Woolworths to meet the green and fresh needs of consumers, and
therefore, look different from other retailers. Woolworths took it as the advantage to attract more
people and therefore, boost the sales and acquire more shares of the market (Ansoff et al., 2018).
However, the ability to work more effectively with the growers, suppliers and employees
indicate their great use of organisational resources. This is where Woolworths’ work practices
show a disagreement to I/O theory.
Conclusion
Therefore, the findings of the report show the application of “Resource-Based View”,
“Market-Based View” and “Industrial/Organisation (I/O) View” in Woolworths. However,
Woolworths can do better with these theories than they currently do. A better utilisation of
organisational resources is recommended. All they need is to spend more resources on staff
training to teach them how to interact more professionally with consumers. Woolworths should
invest more in ‘Data Analytics’ and make the special services such as fresh sushi bars, bake etc.
available for the entire day and week. Data analytics will be helpful in utilising correct set of
customer data in real-time to make effective decisions. The entire day availability of special
services will help in minimising the food waste that results significantly from inappropriate