HI5019: Strategic IS - Woolworths Case Study (Semester 1)

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HI5019 Strategic Information System
INDIVIDUAL ASSIGNMENT
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Table of Contents
Introduction......................................................................................................................................3
PART 1............................................................................................................................................4
1. Business background...............................................................................................................4
2. What industry is it?..................................................................................................................4
3. General environment analysis..................................................................................................5
4. The industry environment........................................................................................................6
5. Competitive environment........................................................................................................7
6. Opportunities and threats.........................................................................................................7
PART 2............................................................................................................................................9
7. The firm’s resources, tangible and intangible..........................................................................9
8. Capabilities identification........................................................................................................9
9. Core competency analysis.....................................................................................................10
10. Propose a suitable information system solution that meets the chosen company needs.....11
11. Evaluate the proposed system and provide your recommendations....................................11
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Introduction
The report will provide with a structured overview of the external and internal analysis of the
business of Woolworths Supermarkets. It is the largest supermarket chain in Australia and has
diversified the business operations in different sectors of the globe. The report will perform an
internal and external analysis of the business in order to collect the required business details and
information. The internal analysis will provide with opportunities to study the strengths and
limitations of the business in the form of core competencies and capabilities. The external
analysis will provide with a dynamic understanding of the business environment the business is
operated through. The external analysis will study for PESTEL and Porters Five Factor Analysis
for Woolworths Supermarkets.
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PART 1
1. Business background
Woolworths Supermarkets is an Australian supermarket chain which is recognised as one of the
dominant players in the Australian supermarket industry. The business is Australia’s largest
supermarket chain and has currently 995 operating stores all over Australia. The business of
Woolworths Supermarkets is trusted by the consumers where both traditional and online
shopping facilities are available with the consumers. The business of Woolworths Supermarkets
provides with products ranging fruits and vegetables, dairy and bakery, meats and seafood,
drinks and liquor, health and beauty, household and beauty.
2. What industry is it?
The industry to which Woolworths Supermarkets belongs to is Supermarket and Grocery Retail
Industry of Australia. The supermarket industry of Australia is dynamic and operates with wide
scaled diversified organisations providing with different products and services. The Australian
Grocery and Supermarket industry is dynamic and is observing higher rates of international trade
and commerce attracting native and regional consumers (Wu, et. al., 2015).The Australian
Supermarket industry is engaged into multiple rapid developments and has aided in the growth
for Australian economy. The industry has observed development due to various reforms and
transformations.
(Source: Retail Food Sector Report, 2017)
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3. General environment analysis
The General Environment analysis includes for executing a PESTEL analysis will create the
opportunities to study the external environment in which the organisation is functioning. The
PESTEL Analysis for Woolworths Supermarkets is as follows:
Political: The political environment in which Woolworths Supermarkets is working is
favourable towards the expansion and growth targets of the organisation. The ruling party in the
government has brought in significant rebates and taxation policies that will aid the business in
to internationalize and develop beyond boundaries.
Economic: The economic conditions and circumstances in Australia are stable and subject to
effective management of trade and services. The GDP is growing at a required rate and the
international trade is increasing for the economy (The Balance, 2017). Woolworths has
identified increased disposable income with the consumers which have aided to increase sales
and revenues.
Social: The social factor is determinant for social acceptance towards the organisation, its
products, and services. As Woolworths deals with the local producers and farmers to procure the
required vegetables, fruits, diary, and the meat supplies social acceptance towards the business
are high. The consumers have maintained their preferences for Woolworths Supermarkets with
increased competition whether in Brick or Mortar or the online shopping services.
Technological: The technological aspect has altered the business models and procurements for
Woolworths Supermarkets. The business has introduced online services as a major technological
change in business scenarios. The business has also integrated aspects of Point of Purchase and
self-checkout systems etc. (Richards, et. al., 2012).
Environmental: The environmental factor that relates to the business are global warming,
carbon foot printing, and ethical resourcing. The business is strategically working towards
integrating sustainability by the means of carbon emission tracking, reducing the supply chains,
ethical resourcing and social sustainability in the business processes and decisions.
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Legal: The legal domain is where business is subjected to various legal boundaries and systems.
The business of Woolworths Supermarkets is regulated and ruled by associations such as
Australian Competition and Consumer Commission.
4. The industry environment
The industry environment for Supermarket and Grocery Retail Industry of Australia can be
measured and accessed with the application of Porter’s Five Factor Analysis as below:
Threat of New Entrants: The supermarket industry of Australia has a high threat of new
entrants entering the industry. With rapid globalisation and easy access to the international
market, several business associations are entering the Australian Supermarket industry such as
Amazon Fresh, ALDI and Kaufland etc. (Tanaka, et. al., 2017).
Threat of Substitutes: The Supermarket industry has a lower threat of substitution as the
industry serves multiple purposes for the consumers. The industry provides with diversified
products and services under one roof from the range of home ware, kitchen supplies, and heath
or beauty care products. The industry also requires huge amounts of capital and funds in order to
function on a larger. Therefore the organisations in this industry have a lower threat of
substitution by any other organisation or industry.
Bargaining Power of Consumers: The bargaining power exercised by consumers is relatively
high in the Australian grocery and supermarket industry. The consumer enjoys a fair share of
power in the market. With multiple options and cut throat competition prevailing in the industry,
the consumer uses their power to bargain in order to avail the benefits of majority (Productivity
Commission Inquiry Report, 2012). The industry is dynamic and observes rapid changes due to
large numbers of organisations, therefore, barging power for consumers in high.
Bargaining Power of Suppliers: The bargaining power of suppliers such as Cadbury, Kellog’s
and Nestle is low in the industry. These suppliers are not available with traders ordering in bulk
such as the Woolworths Supermarket. These suppliers dare not to upset these big traders due to
the power in market and share of consumers these organisations enjoy. Moreover, the fact of in-
house and private labels has restricted the power of suppliers in the Australian Supermarket
industry.
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Intensity of Industry Rivalry: The threat of industry rivalry is very high in the Australian
supermarket industry. The organisations function with cut throat competition in order to increase
the share of market. The combination of large consumer base along with increased pace of
international organisation entering the industry; the organisation exercise cut throat competition
which has resulted in high industry rivalry (Retail Food Sector Report, 2017).
5. Competitive environment
The 7-Eleven Departmental Stores are strategic groups and alliances that provide with great
competition and act as a threat of substitute for Woolworths Supermarkets and its competitors in
the industry. These small departmental are the local departmental stores that provide with
diversified products to the consumers under one roof at affordable and competitive prices. These
departmental stores are smaller in operations as compared to these giants of the supermarket
industry. These stores are located in the central residential areas of the urban localities and
provide with the ease of purchase to the local consumers (Malik, et. al., 2015). The departmental
stores provide with daily essentials and lower categories of products that enable the consumers
to save up costs and finances. These stores follow the strategies of representing consumers with
ease of purchase and resolve the issues of travelling longer distances to buy the daily essentials.
These have the capabilities to attract an increased amount of consumers with the competitive
advantage of shorter distances, reduced costs and time involved in procuring the daily essentials.
6. Opportunities and threats
There are various opportunities and threats that Woolworths Supermarkets possesses. The
opportunities act as a catalyst for the business to prosper and develop the operations for future
possibilities. The threats act as a hindrance in the path of development and prosperity for the
business which must be overcome in order to restructure the business and its operations.
Opportunities
 Market Leadership
 Segment Penetration (McNeill, 2012)
 Social Acceptance
 Loyal Consumer Base
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Threats
 Increased International Competition
 Cut Throat Competition
 Industry rivalry
 Biased Consumer Bifurcation
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PART 2
7. The firm’s resources, tangible and intangible
Tangible Resources are those that the firm can touch, feel and observe. These are the resources
that are acquired by the business in physical form. These include for machinery, inventory,
buildings, lands, cash, marketable securities etc. The tangible resources are essential for the
business and its operations in order to procure to the business needs and requirements. The
tangible assets are physical in form and can be moved from one place to another by the means of
transactions and displacements.
The Intangible Resources are those resources which are not in physical form and cannot be
touched by the business and its managers. The intangible resources possessed by Woolworths
Supermarkets are Goodwill in the market, reputation, intellectual properties, trademarks, and
copyrights etc. (Dwivedi, et. al., 2012). The intangible resources are not visible but contribute
highly towards the business aims and objectives.
8. Capabilities identification
Woolworths Supermarkets is a dynamic and strategic business organisation that provides with
diversified products and services in order to fulfil the needs and requirement of the consumers.
The business is operating in Retail and Online shopping through Brick and Motor model along
with the online services. The capabilities of Woolworths Supermarkets lie in different areas of
World Class Supply Chain, Branding and Marketing, Innovation and Integration, Risk
Management, Risk Identification, Human Resource Management, Inventory Management, and
International Business Management. These are the different business areas where the
management of the Woolworths Supermarket is working as core capabilities (Ellickson, 2016).
The business manages and administrates the business through both the online models and on
store shopping. The business managers are required to regulate and manage the human resources
in order to operate the diversified services and products provided by the business. The
capabilities of Woolworths Supermarkets are also identified in the sector of International
Business Management in order to foster towards growth and opportunities beyond the local and
geographical boundaries.
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9. Core competency analysis
World Class Supply Chain
The world class supply chain of Woolworths Supermarkets enables to create opportunities for
cost and time cutting for both the inbound and outbound logistics and supply of the products.
The business has focused on developing a well-integrated and efficient supply chain in order to
manage the delivery of products made through the online portals in time and without engaging
into unnecessary expenses and costs for the business (Hattersley, et. al., 2013). The supply chain
is managed at both local and regional level to foster for effective administration and integration.
Branding and Marketing
Branding and Marketing are considered as one of the most strategic core competency for the
business. The brand runs under the tagline of the store of “fresh food people”. The market
positioning and integrations undertaken during the holiday seasons have provided with boosted
sales and revenues for the business. The consumers depict a positive experience both pre and
post shopping undertaken in the stores (Malik, et. al., 2015). The products are also procured and
resourced from the traditional and local producers which have aided in building a market
reputation and social acceptance for the business which is a competitive advantage.
Innovation
The core competency of Innovation falls under the category of competitive advantage.
Woolworths Supermarkets is recognised to exercise well-integrated and structured innovative
policies and strategies in order to increase the consumer satisfaction and quality of the business
processes. The business has developed an everyday money credit card in association with HSBC
Bank and Master Card which provides the consumers with different rewards and points that are
applied in every consecutive purchase.
Customer Integration
Woolworths Supermarkets is also recognised for increasing customer integration in order to
facilitate product development and service for the consumers. The business procures feedback
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from the consumers regarding the changes and alterations they feel is required in the services
provided at the stores and at the online portals. Then the business strategically includes these
feedbacks into business strategies and services which aids in development of goal attainment for
increased consumer satisfaction (Retail Food Sector Report, 2017). The business achieves a
competitive advantage through these increased consumer integrations.
10. Propose a suitable information system solution that meets the chosen company needs.
The needs and requirements of Woolworths Supermarkets can be achieved with the integration
of Management Information System into the business processes and activities. The Management
Information System is a computerized and digital system that provides with opportunities to
manage the financial information and database for the organisation. The management
information system is software that produces regular reports and documents that provides with
interpretation of the financial data in a systematic and strategic manner (Laudon and Laudon,
2016). The MIS will aid Woolworths Supermarkets to establish a clear understanding of the
financial information and data. The software will provide managers feedback on the financial
performance of the organisation and their own performance in the decison making systems
regarding different aspects of the business. The system receives data and information from the
systems automatically and interprets for effective decision making.
11. Evaluate the proposed system and provide your recommendations
The Management Information System is an effective system that provides with opportunities to
study and develop the records for the business. The software facilitates in planning and
organising the information in order to produce effective and sound decisions for the business and
its processes. The software also minimizes the information overload from the larger chunks of
data and records into summarized forms and reports (Link, et. al., 2017). The software also
supports decentralization in order to monitor the processes and functions of the business. The
following recommendations have been developed for the Woolworths Supermarkets:
 The business must procure details and information from the consumers in order to
develop strategic policies and reforms.
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 The business must entail thorough study of the data and information in order to develop
correct decisions.
 The top level management must focus on integrating their perspectives and views in a
structured and systematic manner to align with the organisational goals and objectives
(Link, et. al., 2017).
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