Woolworths: Strategic Management in Australian Organic Food Market

This report provides a strategic analysis of Woolworths' response to the growing demand for organic food in Australia. It begins by identifying key strategic influences within the Australian retail sector, including consumer preference for organic and cost-effective products. The report then examines Woolworths' current strategies and recommends product diversification to incorporate organic food, the implementation of a cost leadership strategy, and the establishment of direct relationships with Australian farmers. The discussion highlights the need for Woolworths to adapt its product, supply chain, and pricing strategies to meet evolving consumer demands. The conclusion emphasizes the importance of these strategic adjustments for Woolworths to achieve sustainable competitive advantage, focusing on offering high-quality organic products at competitive prices. The report also touches on implications for Woolworths' strategic goals, emphasizing the need for short-term gains and long-term market sustainability.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
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EXECUTIVE SUMMARY
The purpose of this report is to identify the strategic course of action that Woolworths need to
follow in the face of the increasing demand for organic food in the nation of Australia. The
report begins by highlighting the three important strategic influences apparent within the
Australian retail sector, that is, the increasing tendency of the customers to consume organic food
products, the focus of the customers on the food products which do not use any form of
chemicals and also the focus of the customers on the products which are cost effective. Thus, in
order to integrate these strategic influences Woolworths needs to undertake product
diversification so as to incorporate organic food products within its product portfolio, use cost
leadership strategy and use multiple suppliers so as to procure organic food products which are
completely natural. Lastly, the report concludes by recommending the usage of the product
diversification strategy and the establishment of direct relation with the farmers of Australia so
as to procure fresh organic vegetables and crops directly from them.

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Aim............................................................................................................................................3
3.0 Discussion..................................................................................................................................4
4.0 Conclusion.................................................................................................................................8
5.0 Recommendations......................................................................................................................8
References......................................................................................................................................10

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1.0 Introduction
As stated by Hill (2017) strategic management is a very complex process and the
corporations are required to take into consideration various factors for the formulation of the
strategies that they would follow or for devising the strategic direction of their corporation.
David and David (2016) are of the viewpoint that the corporations while keeping into perspective
their own organizational goals or objectives also need to collect the required data which in turn
would highlight the needs, demands or for that matter the requirements of the target market they
focus on. This is important since research research works have shown that the corporations
which formulate their strategies taking into consideration the needs of the target market or the
market influences and also their own goals or objectives have a higher chance of gaining success
in comparison to the corporations which do not take into account this particular measure (Ethiraj
t al., 2018). For instance, within the nation of Australia it is seen that the demand for organic
food had increased in an exponential manner and the customers are increasingly resorting to the
purchase of the same which in turn had made it important for the different departmental stores as
well as the supermarkets of the concerned nation to offer them (Golijan & Popović, 2016). This
in turn had necessitated a change in the product related strategies which are being followed by
the corporations related to the retail sector of Australia. It is in the backdrop of these aspects that
the report tries to analyze the strategic course of action that Woolworths need to follow in the
face of the increasing demand for organic food in the nation of Australia.
2.0 Aim
The aim of this report is to identify the strategic course of action that Woolworths need to
follow in the face of the increasing demand for organic food in the nation of Australia.

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3.0 Discussion
O’Mahony and Lobo (2017) are of the viewpoint that the consumption of organic food
within the nation of Australia had increased exponentially in the face of the large number of
health issues related to the excessive consumption of junk food that the people of Australia are
suffering from. As per the official report of Ausfoodnews.com.au (2020), the consumption of
organic food within the nation of Australia had increased by more than 88% since the year 2012
and not only the different restaurants but also the supermarkets or the department stores of the
concerned nation are also reaping the benefits of this emerging trend. On the other hand, the
report of Ibisworld.com (2020) states that in the face of the ever-increasing demand for organic
food products in the nation of Australia it is seen that the organic sector of the concerned nation
presently has a value of more than $2.4 billion. Naturallygood.com.au (2020) states that the
organic component of the supermarkets in Australia has increased by 13% or roughly around 1.1
billion dollars and is expected to grow even further in the coming years on the score of the ever-
increasing demand for the same. More importantly, the customers are increasing purchasing the
kind of food products which are fresh and prepared without the usage of any artificial chemicals
as well as taste enhancers (Schäufele & Hamm, 2018). This is important since over the years it
had been seen the grocery section of the different retail stores of Australia over the years had
offered frozen food products and also the ones which take the help of artificial enhancers
(Golijan & Popović, 2016). In addition to these two trends, it is seen that the customers have also
become price conscious and thereby they are opting for the purchase of the food products which
are cost effective (Lewis & Phillipov, 2016). These in short are the three most important trends
seen within the retail sector of Australia.

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According to Sultan, Wong and Sigala (2018), the important issue arises since the
majority of the corporations are still not taking the help of this particular trend for the
modification of their product portfolio which in turn had substantially narrowed down the
prospects of their business. For instance, the product portfolio of Woolworths related to the
grocery section offers frozen meat, frozen sandwiches, vegetables and others
(Woolworthsgroup.com.au, 2020). However, at the same time it seen that the corporation takes
the help of mid-premium pricing policy, the food products offered by it are frozen and also take
the help of artificial taste enhancers. This in turn had made many customers to switch over to the
rivals of Woolworths which are presently offering cost effective fresh organic food products to
them which in turn had adversely affected both the sales volume of the corporation under
discussion here and also its profitability as well. Thus, it becomes important for the concerned
corporation to integrate these trends or for that matter the strategic influences within the
strategies which are being presently used by it for the purpose of attaining the desired level of
growth as well as profitability.
The three strategic influences or for that matter the emerging trends seen within the retail
sector of the nation of Australia has important implications for the strategic formulation process
undertaken by the corporations like Woolworths. An analysis of the three strategic influences
under discussion here reveals that they belong to the category of the product strategy which is
followed by Woolworths, supplier strategy and also its price strategy as well. In this relation, it
needs to be said that Woolworths over the years had relied on offering the best quality products
to its customers and the selection of the products is generally being done by the corporation on
the basis of the demand shown by the customers as well as the ability of its suppliers to deliver
the same to it (Ibisworld.com, 2020). Furthermore, the corporation under discussion here over

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the years had followed the mid-premium policy so as to effectively focus on the attribute of
quality while ensuring the fact that the price which is being charged by it is very reasonable and
competitive in nature as well. However, unlike the earlier times presently it is seen that the
customers have large number of choices or options available related to one single product which
in turn had substantially enhanced their brand switch tendencies since they take into account the
attributes of price, quality, nature or the kind of products or services and others for the purchase
of the products (Lasserre, 2017). In this relation, it needs to be said that it is important for the
corporation Woolworths to effectively influence the buying behavior of the customers since its
sales volume and thereby its profitability is directly related to this. In the light of these aspects, it
becomes important for the corporation Woolworths to modify the product strategy, supply chain
strategy and the pricing strategy which it had been following over the years.
Woolworths need to take the help of the cost leadership strategy for the purpose of
integrating the strategic influence related to the aspect of cost. Newburry, Deephouse and
Gardberg (2019) are of the viewpoint that the adequate usage of the cost leadership strategy
helps the corporations to offer the best possible quality of products or services at affordable
prices in comparison to the ones offered by their rivals. Thus, it is likely that through the usage
of this particular strategy the corporation under discussion here would be able to effectively
integrate the strategic influence related to the price of the products offered by it. On the other
hand, the strategic influence related to the integration of fresh organic products within the
product portfolio of the corporation Woolworths can be overcome by the corporation through the
modification of the product and the supply chain strategies which are being presently followed
by the concerned corporation. For instance, the corporation has the opportunity to take the help
of the product diversification strategy which in turn would help it to diversify its product

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portfolio and thereby integrate the different organic food products as per the demands of its
customers within the products offered by it. More importantly, the corporation also needs to take
the help of multiple suppliers particularly the kind of suppliers who would help the corporation
to procure fresh organic food products in synchronicity with the demands shown by the
customers for the same. Furthermore, the corporation can also establish direct relationship with
the local farmers who cultivate organic vegetables without the usage of artificial chemicals,
fertilizers, pesticides, growth enhancers and others. This in turn would enable the corporation to
procure fresh organic products and thereby integrate the strategic influences under discussion
here.
The above mentioned strategic course of action that the corporation Woolworths intends
to follow makes it important to modify its strategic goals or objectives. For instance, the strategic
goal of the corporation under discussion here should be to offer the best quality organic food
products which had been produced without the usage of artificial chemicals at the lowest
possible prices. However, at the same time it needs to be said that the strategic course of action
and also the strategic goals that the concerned corporation had formulated is likely to have
important implications for it. In this relation, it needs to be said that in the short term period this
is likely to help the corporation to overcome the low sales volume, intense competition, low
profitability and others that it is presently experiencing within the retail sector of Australia. On
the other hand, in the long term basis this is likely to help the corporation to attain competitive
advantage as well as sustainability by earning the satisfaction and the loyalty of the customers
which in turn would help it to overcome business competition while being able to achieve its
business objectives.

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4.0 Conclusion
To conclude, the ever-increasing demand for organic food products within the nation of
Australia had made it imperative for the retail corporations to make changes in the product
strategy, cost strategy and also the supply chain strategy which are being followed by them. For
instance, the above discussion makes it clear that Woolworths in order to accommodate the ever-
increasing demand for organic food products, the desire of the consumers to consume the
products which do not use artificial chemicals and also their focus on cost needs to make changes
within its product, supply chain and cost strategies. This can be done by the concerned
corporation through the usage of cost leadership strategy, the usage of product differentiation
strategy for the integration of organic food products within its portfolio and the usage of multiple
suppliers as well as the establishment of direct relation with the farmers so as to procure fresh
organic food products which had been prepared without the usage of chemicals.
5.0 Recommendations
Some of the most important measures that the corporation Woolworths needs to follow
for effectively utilizing the strategic influences discussed in this paper are listed below-
 Woolworths over the years had failed to capitalize on the increasing demand for organic
food products because of its supply chain issues. However, the corporation can overcome
this difficulty through the establishment of direct contact with the different farmers of
Australia. More importantly, the corporation needs to look for the kind of farmers who do
not take the help of help of any pesticides, fertilizers, chemical growth enhancers and
others for the cultivation of vegetables, crops and others. This in turn would enable the

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corporation to ensure that the organic food products offered by it are fresh and
completely nature as per the demand of the customers.
 The corporation needs to reduce the amount of inorganic food products procured by it
from its suppliers and integrate organic food products within the product portfolio offered
by it to the customers. This can be done by the corporation through the effective usage of
the product diversification strategy. This is likely to help the corporation under discussion
here to positively influence the buying behavior of the customers and thereby enhance its
sales volume as well as its profitability.

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References
Ausfoodnews.com.au, (2020). Australia’s appetite for organic foods at record levels. Retrieved 8
April 2020, from https://www.ausfoodnews.com.au/2014/12/10/australias-appetite-for-
organic-foods-at-record-levels.html
David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach,
concepts and cases. Pearson–Prentice Hall.
Ethiraj, S. K., Gambardella, A., & Helfat, C. E. (2018). Theory in strategic
management. Strategic Management Journal, 39(6), 1529-1529.
Golijan, J., & Popović, A. (2016, November). Basic characteristics of the organic agriculture
market. In Fifth International Conference Competitiveness Of Agro-Food And
Environmental Economy (pp. 10-11).
Hill, T. (2017). Manufacturing strategy: the strategic management of the manufacturing
function. Macmillan International Higher Education.
Ibisworld.com, (2020). Consumers Are Increasingly Favouring Organic Foods | IBISWorld
Industry Insider. Retrieved 8 April 2020, from https://www.ibisworld.com/industry-
insider/industry-insights/organic-farming-has-benefited-from-a-shift-in-consumer-
preferences/
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.

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Lewis, T., & Phillipov, M. (2016). A pinch of ethics and a soupçon of home cooking: Soft-
selling supermarkets on food television. In Food, Media and Contemporary Culture (pp.
105-124). Palgrave Macmillan, London.
Naturallygood.com.au, (2020). Australians are Hungry for Organic Food and Drink - Naturally
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strategic management. Global Aspects of Reputation and Strategic Management, 1-20.
O’Mahony, B., & Lobo, A. (2017). The organic industry in Australia: Current and future
trends. Land Use Policy, 66, 331-339.
Schäufele, I., & Hamm, U. (2018). Wine consumers’ reaction to prices, organic production and
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Sultan, P., Wong, H. Y., & Sigala, M. (2018). Segmenting the Australian organic food consumer
market. Asia Pacific Journal of Marketing and Logistics.
Woolworthsgroup.com.au, (2020). Woolworths Group: Quality Brands and Trusted Retailing.
Retrieved 8 April 2020, from https://www.woolworthsgroup.com.au/