Woolworths: Evaluating Innovation Strategies, Threats & Opportunities

This report provides a detailed analysis of Woolworths' innovation strategies, examining both the threats and opportunities the company faces in the retail sector. It utilizes SWOT and PESTEL analyses to assess the external environment and identify key challenges such as competition and government intervention. The report evaluates Woolworths' current innovation strategy, referencing benchmarks like the Orange Index, and employs BCG and McKinsey GE frameworks to understand the company's market position and potential for growth. Furthermore, it explores a specific innovation opportunity using the MACS framework. Ultimately, the report offers recommendations for Woolworths to navigate the evolving market landscape and maintain its competitive edge, offering insights into how the company can leverage innovation to address societal trends and consumer demands.

RUNNING HEAD: INNOVATION THREAT AND OPPORTUNITIES 1
INNOVATION THREAT AND OPPORTUNITIES
Student Name
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INNOVATION THREAT AND OPPORTUNITIES 2
Table of Contents
Introduction................................................................................................................................3
Threats evident from industry analysis and PESTEL analysis..................................................3
Identify and evaluate its current innovation strategy.................................................................6
BCG and McKinsey GE frameworks.........................................................................................7
Evaluate one innovation opportunity the company is currently pursuing..................................9
MACS framework......................................................................................................................9
Recommendation......................................................................................................................10
Conclusion................................................................................................................................10
Reference..................................................................................................................................12

INNOVATION THREAT AND OPPORTUNITIES 3
Introduction
The report will discuss in detail about the various innovation exercise conducted by the
company called Woolworths. The company constantly conduct an in-store agile innovation
exercise not just to find some neat technological answers so that shopping experience of the
customer can be improved, it also taught old-school followers of retailing a new and effective
innovation methods and went some way in the direction where it embeds the concept of
business mindset comfortably with number of constructive level failures (Bailey and
Alexander, 2017). The company has always approached the process of in-store innovation in
a different manner these days. This supermarket giant in the recent time conducts an exercise
where it established an innovation lab in one of the superstores where it was considered free
to test the solution in the form of technological while dealing with challenges and providing
improvements to the procedure in the actual shopping culture. Different exercise has further
lasted in just a week, at the same time where the team can test so many ideas where some of
which had not been thought up right before commencing it.
Threats evident from industry analysis and PESTEL analysis
To understand the threat evident of Woolworths from industry analysis will be discussed
below through SWOT analysis: -
1. Strengths: the biggest Woolworths’s strength is that it is the market leader of the
Australian retail sector and the leadership status further increases the capacity of the
organization is based on exploitation of the market potential via its strong sources
with the kind of technological resources along with human resources as well as ideal
presence across the sector (Bitzer and Hamann, 2015). The intelligent application of

INNOVATION THREAT AND OPPORTUNITIES 4
the resources is mainly influenced by the external culture situations which are
important to minimise the carbon footprint in addition to find cost-effective methods
of decreasing the packaging and accomplishing nil food wastage by the year 2015.
2. Weakness: the weakness of the company Woolworths in its development strategy is
mainly the influence of the external environment situation which impacts the capacity
while dominating the retail market of Australia. For example, the government of
Australia has also limited the movement of the company while keeping high prices for
the products in association with Coles which shows the major weakness to the
organization while supporting the higher development stages (Black and Lite, 2015).
3. Opportunities: the retail sector across the country Australia shows good development
potential and the elements like computerisation, advances in the process of supply
chains and lifestyle changes in customers that have all impacted the ability of retailers
and giving ideal opportunities to grow. The company is also positively looking at
embracing the option via adopting the strategy of so many options in retailing just to
cope up with the transitioning needs of the consumers.
4. Threats: the threats of the company’s retail industry that are basically from high
competition stage in the sector with the company mainly competing with Coles. In
addition, the intervention of the government is another important factor that impacts
the development of the company in specific within the retailing of Australia (Dekker
et al., 2017).
Another important analytics tool which assesses the external sector environment situation
which impacts the performance of the industry. The PESTEL analytical technique for
assessing the retail sector performance is conducted as follows:
1. Political: the political situation impacts the retail sector in Austral and the overall
performance of the company at a great level. For instance, the Federal Government in

INNOVATION THREAT AND OPPORTUNITIES 5
the country has most recently launched a policy based on competition which saves
major independent players like Woolworths and Coles in diminishing competition.
The rise in market dominance of such important retailers has further resulted in small
retailers that are struggling to work in the industry.
2. Economic: reduction in the economic market situation across the country has further
impacted the performance of Woolworths majorly, as there has been a decrease in the
economic activity in the market of the countries like Australia and New Zealand.
Beside any form of decline, the indicators in economic space like fluctuation in the
exchange rates of currency and further weakening the dollar of Australia that has
adversely impacted the international retail operations of the company (Flax et al.,
2016).
3. Social: the social elements are also impacting the retail industry in Australia in the
way that the company is functioning across the country must accomplish high societal
as well as community growth since the recent social trends within consumers implies
that people prefer high socially accountable companies and by undertaking society
initiative, the retailers like the company develop important impact on the consumers.
4. Technological: the role of technological elements impacts the retail sector and the
company specifically important as this can be recognized from the fact that the
company has considered the application of the technology of refrigeration so that
different perishable products can be saved for a long period of time (Foulds, 2017).
5. Environmental: these factors are also impacting the performance of the company and
the whole retail industry especially across the country Australia. Any form of analysis
further implies that the company specifically impacting the environmental elements in
the sense that the company petrol and winemaking organizations that are posing some

INNOVATION THREAT AND OPPORTUNITIES 6
adverse threats on the work performed on environmental situation and thus impacted
the revenue performance in the business area of the organization.
6. Legal: the legal elements in the kind of carbon tax as executed across the country has
also impacted the retail sector and specifically Woolworths. As a part of the
assessment of Woolworth shows that the regulation adopted by Australian
Competition and Consumer Commission that have impacted the operations of the
organization across the economy. In addition, the need to work in a right manner has
also impacted the performance of the company as it needs to adopt fair policy while
performing the business operations (Hall, 2015).
The overall analysis of the external market condition in respect to the retail industry of
Australia and specifically in connection to the company that has resulted in recognising that
the strategy of the company and its operations is highly impacted by many external industry
situations. In turn, they impacted the strategy of the company specifically performing some
successful activities of the current business functions. The external environment situation has
impacted the need to work innovation to meet the ever-changing societal trends within
consumers.
Identify and evaluate its current innovation strategy
The company Woolworths has time and again has proven itself as a brand that can constantly
reinvent itself just to keep the pact with domestic as well as global customers trends. In the
current time, as per most popular benchmark like Orange index to calculate the high level of
service delivery among all the players in the specific sector, permitting the organization to
assess the own service-based delivery which is completely against the competitors (Jie et al.,
2015).

INNOVATION THREAT AND OPPORTUNITIES 7
In the changing time where economy, technology and retail space competitor insight are
crucial to the baseline. The company in the recent time has not just won the section of Food
Retail Awards but was the complete winner where they completely outperform the
competition in its own sector and across all the private sector-based consumer service sector
customer industries. The company’s food business has always maintained its authority on
food credential by continuously striving to provide consumer best, convenient, innovative
and high-quality products. The vision of the company is having choices for the consumer
from the world of food via having a mindset of the supermarket but the soul of the deli. The
company is on the path to becoming the largest food business which is also trying to make
the difference ethically by maintaining the leadership status in fresh products, quality and
innovation while also making sure competitive level priced products that deliver value to the
consumers (Luiz, 2016).
BCG and McKinsey GE frameworks
The analysis of the company can be done via BCG growth boxes. In 1960, the company was
its peak and they were considered as the lead company that have massive chains of stores in
the retail sector. The company also finished century and proved to be the star of the sector.
The business growth and market rate graph were also on its peak in 1990 since the market
share was large and the stars of the past were not entered the cash cows phase in addition to
the company also have the high revenue cycle (Methner et al., 2015). The marketplace for the
company was indefinite with no kind of competitors in the sector. however, in the present
time, the company is slowly becoming a problem child since there is some negative
development and their shops are closing leaving so many people unemployed. The company
is also developing many new answers and have come into the business with some strategies
like to open some shops with so many ideas and they have gone into the space of

INNOVATION THREAT AND OPPORTUNITIES 8
administration with again launching the company in online space with new product lines
which meet the consumer requirement and one can comfortably access the market (Patroni et
al., 2016).
McKinsey GE frameworks
This is a nine-box matrix which provides a systematic approach for the decentralized
companies to decide where one can invest right. Despite depending on every business units
and its projections of many upcoming potential, the organization can also judge a unit by two
elements that will decide whether it is going to do good in near future and the overall
attractiveness of the crucial sector and the unit's competitive level strength within the sector
(Morioka et al., 2016).
The business units placement as a part of the matrix gives a map which is based on analytics
for properly managing them. The units discussed are diagonal where a company like
Woolworths can pursue a different set of strategies for growth and investment and can come
along with the diagonal can be those candidates for selected investment, those below diagonal
can be sold best, further liquidated or run mainly on cash (Rajabian Tabesh et al., 2016). The
sorting units here are based on three sections that are an important initiating point for the
overall analysis, however, judgement is needed to weight the trade-offs as involved. For

INNOVATION THREAT AND OPPORTUNITIES 9
instance, a strong unit is also based on the weak section which is in a very diverse case than
any weak unit in an immensely attractive sector.
The analysis on Woolworths is based on several portfolio models consisting MACS and other
portfolio initiatives. The categories for the assessment sector attracts and comes with a
competitive level strength which has grown in a more sophisticated manner. Till this date,
companies like Woolworths with a formal way of handling to model the business is based on
a nine-box matrix or some other descendant (Recker, 2016).
Evaluate one innovation opportunity the company is currently pursuing
MACS framework
The framework is called as Market Activated Corporate Strategy Framework which was
developed in the year 1980s. However, it has not seen any growth or development at once
and there are many predecessors to the current framework. There was a time when BCG
Growth-Share Matrix showed the market development rate as well as the relative share of the
market and as per this level, the business units were distinguished into four sections

INNOVATION THREAT AND OPPORTUNITIES 10
(Rosemann, 2016). It was utilised usually however over a period it is discussed more
comprehensively and were designed, to remove the weaknesses as shown in BCG matrix, like
the fact that is also focused on two elements completely ignoring many others that have an
immense impact on revenue (Recker et al., 2016).
Recommendation
Following are the set of recommendations: -
1. Less self-served checkouts: for every consumer who say no to the usage of self-serve
checkouts there is another approach where they like it. Customers trends show that
they don't like automatic register because the machines are unable to pack the goods
for them (Smart, 2016).
2. The concept of ‘All Aussie Aisle': this concept can suffer because there are not many
products. The company must find resources to determine all forms of products.
Woolworths must also have aisles for the products of the company which can reduce
the overall profit margins by some percentage (Thomas and Plowman, 2016).
3. Customer services: it is one of the most important factors and the company must
believe that the customer is always right. However, many consumers also say the
company doesn't cur in this process and there are incidences of rude staff answering
the complaints of the customer (von Briel and Recker, 2017).
Conclusion
As discussed, the company is on the path to innovation, however, there are many challenges
which the company needs to overcome. The important thing is they must continue to focus on
innovation which will enable constant advances with ranges and the technology in the
process, a decrease in sugar and salt-based products and the introducing innovation via

INNOVATION THREAT AND OPPORTUNITIES 11
cooking methods and many first to market products (Westland, 2016). The company is
constantly taking new steps like Good Business Journey which focus on making a crucial
difference as its key area of sustainability covering energy, sustainable farming, ethical
activities in the form of sourcing and many more.

INNOVATION THREAT AND OPPORTUNITIES 12
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