Strategic Management: Woolworths Supermarkets' Challenges & Options

This case study provides a strategic analysis of Woolworths Supermarkets, focusing on two key strategic issues: higher product prices compared to competitors and slow growth in the liquor and food business. To address the higher product prices, the study suggests two options: offering discounted pricing and weekly offers alongside the existing pricing strategy, or adopting a price skimming strategy. For the slow growth in the liquor and food business, the study recommends implementing democratic leadership to involve team members in decision-making and focusing on promotion and advertising of these specific business segments. The analysis concludes that adopting democratic leadership and offering strategic discounts are the best strategic choices for Woolworths to enhance its decision-making process, improve business operations, and increase customer base in the competitive Australian retail industry. Desklib provides access to similar solved assignments and past papers for students.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management: Woolworths
Supermarkets

STRATEGIC MANAGEMENT 2
Company Description
Woolworths Limited is an Australia based organization that operates its business operations
retail and supermarkets industry. The organization is operating its business with huge retail
interest across the Australia and New Zealand. In Australian market, it holds second position in
terms of revenues and profits. In addition to retailing, it deals in other sectors as well such as
petrol, hotels, liquor etc. Woolworths Supermarket is one of the most established and beneficial
of Woolworths Limited. This supermarket chain was established in the year 1924. Primarily, it
offers grocery products, health and beauty care products, packaged goods, vegetables, fruits, pet
products and baby products. Today, the company owns 1000 stores in the country by employing
more than 100000 people (Woolworthsgroup, 2018). Now, the company offers its products
online as well and the name of its online portal is HomeShop. As mentioned in the first part, the
company is facing some strategic issues which can affect the growth of company in competitive
retail industry. So, this part recommends the strategic options which the company should use to
resolve those issues.
Strategic Issues
However, Woolworths Supermarkets is operations its business successfully but still the
organization f aces some strategic issues. Two of its major strategic issues are the higher prices
of its products and slow growth of liquor business. Thee strategic issues and strategic options for
Woolworths Company are stated below:
Issue 1: Higher Product Prices
One of the major strategic issues which are confronted by Woolworths is related to the higher
product prices in comparison to its competing brands. This is the major reason that the
organization had been showing very slow growth because of its pries which had been determined
for its products and services in the Australian market. There are some other supermarkets in the
country like Aldi, Coles etc. which are operating their stores as “discounted stores”. These
players are taking the advantage of Woolworth’s higher pricing strategy (Thomas, 2017). In
addition to this, the government in Australia has also restricted the move in setting higher prices
for its products in partnership with Coles that shows the major weakness to Woolworths in
approaching higher level of growth. This strategic issue affects the brand image of the

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organization among the Australian population and they are switching to other discounted stores.
In this way, it led the organization towards loss of brand image, customer base and competitive
advantage.
Strategic Option
In order to deal the issue of higher prices of products, there are two strategic options which are
available to Woolworths Supermarkets. First option is to provide discounted prices and give
them weekly offers. It can be done by keeping the existing pricing strategy. Moreover, the
second available option for the company is to adopt the skimming pricing strategy for its
products so that it can attract more customers towards its products and services (Flemes, 2016).
In the first option, Woolworths can offer its products with its existing higher pricing strategy but
it should offer some discounts and offers weekly and in any festive season. Another option is
skimming pricing under which it can offer the products higher prices in the initial stage and then
lower the prices over the time.
Option 1: Discounted pricing and weekly offers along with existing pricing
strategy
Resources
Along with its higher pricing strategy, Woolworths can provide the discounts to its customers.
The company needs to manage its financial resources effectively. In addition to this, it can offer
provide free products with the primary product. Discounts can be done on the basis of customer
loyalty, product quality and they need be tied to specific promotions.
Acceptability
These offers and discounts should not receive any objection from Woolworth’s related
stakeholders like suppliers, franchises, subsidiaries etc. The company needs to ensure that all the
people related to organization are ready to accept the changes in product offering (Toptal &
Çetinkaya, 2015).
Coherence
This strategic option would be beneficial for both the company and its customers. The customer
will be attracted towards the company’s products as they will be able to purchase the products on

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discounted prices in festive season. There will be weekly sales in the supermarkets. It assists the
organization to provide an effective shopping experience to its customers.
Effectiveness
Applying this strategic option will be very effective that it will allow the customers to buy the
products on discounted prices. The weekend sale will attract major sales to Woolworths as most
of the Australian people are free on the weekend. So they prefer to shop on these days. It will be
effective to maintain the profitability of the company as it can earn profits on normal day by
offering products on higher prices (Woolworthsgroup, 2018).
Sustainability
This option will lend the company towards sustainable competitive advantage as it will enable
the organization to gain more customer base against its competing brand like Coles and Aldi
Australia.
Option 2: Price Skimming Strategy
Resources
Under this strategic option, the marketers will set comparatively higher prices in the initial stage
of products, and then it can lower the price over the time. In this case, the major resource is the
demand from customers. As the demand of first few customers is fulfilled and competitive
brands enter in the market, Woolworth needs to lower the price to attract price-sensitive
customer segment (Huang & Sarigöllü, 2014).
Acceptability
Like the above option, setting skimming prices should not receive the complaints and objections
from stakeholders and other people.
Coherence
Skimming pricing strategy will attract more customers towards company’s product offering.
Price skimming will assist the organization to use different prices for the similar product range
over the tome to produce more profits and revenues.
Effectiveness

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In this, the company should conduct the market research and find out the pricing policies of its
competitors. After satisfying the needs of first customers, it should reduce the pries according to
the competitors’ prices (Toptal & Çetinkaya, 2015). It will be effective for the long-term growth
of Woolworths Supermarkets in Australia.
Sustainability
This strategic option will allow Woolworths to gain a competitive advantage in Australian retail
industry. The company will be able to operate its business with the sustainability.
Strategic Choice
In today’s competitive business world, it is very important to choose the most effective strategic
option so that organization can overcome its strategic issues. Woolworths Supermarket will
make strategic choice by using a process that includes steps like recognize different options,
analyze the options, and select the most appropriate option and implementation. As Woolworths
Organization is operating its business in supermarket industry so it will be better to use first
strategic option so that company can make more profits (Peppard & Ward, 2016). It will lead the
organization to long-term growth. Currently, company offers its products on higher prices than
its rivals. Now by offering discounts and offers in a specific season, the company will be able to
develop its customer base and revenues in Australian retail industry. Thus, the company should
choose first strategic option for its product offerings.
Issue 2: Slow Growth in Liquor and food Business that led the changes in
Management and Leadership
Apart from the above issue, Woolworths Supermarket is facing the issue that its food and liquor
business has not shown growth in the recent time. Due to this, there are changed in company’s
management and leadership. As mentioned above, this company is operating its business
processes in different segments like grocery products, fruits, and liquor and food products.
During past few years, the company has not experienced a growth in the liquor and food business
which has changed the management and leadership of company (Woolworthsgroup, 2018). Due
to this, the company has appointed a new leadership team for Woolworth’s liquor and food
segment. This issue has affected the overall sales and revenues of the company.

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Strategic Option
To resolve this strategic issue, the company can adopt two strategic option i.e. implementation of
democratic leadership and focus on promotion and advertising of food and liquor business. By
adopting democratic leadership, the leaders should involve all the people in the decision making
process. In addition to this, the organization should make more focus on promoting its liquor and
food business (Lasserre, 2017). It can promote these products to the customers as well who are
coming to shop at supermarkets.
Option 1: Democratic Leadership
Resources
The company has already made the changes in its leadership and management resources. Now, it
should use democratic leadership so that they can involve all the team members in decision
making process.
Acceptability
The stakeholders of the company have already given the permission to hire a new management
and leadership team. They need effective and training so that they can understand the processes
of Woolworths (Bolton, 2015).
Coherence
By using this strategic option, the company will be able to develop a profitable corporate culture.
It will fit in these segments of company perfectly.
Effectiveness
This technique will be very effective for making decision in the food and liquor business of
Woolworths Limited. The team members will be able to give their opinion for the growth of
these businesses (Ayers & Odegaard, 2017).
Sustainability
As mentioned above, the food and liquor business of this company are least profitable so
company has changed its leadership and management. If the company will use democratic

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leadership option then it will be able to take the opinions from others who are working for the
organization. These employees will assist to analyze the issues faced by the company (Patapan,
2017).
Option 2: More Focus on Promotion and advertising of Food and Liquor
Business
Resources
Woolworths needs to shift its focus from supermarket to its food and liquor business. It needs to
create a marketing team that focuses on the promotion and advertising of these two businesses. It
needs to make investment on advertising and promotion activities (Barton & Behe, 2017).
Acceptability
The acceptability will depend on the outcome of these processes. It should be able to increase the
customer base (Meffert, 2013).
Coherence
Company thinks that it can generate significant revenues from its supermarket business so it does
not want to make advertising investment on these two businesses.
Effectiveness
It is very true that focusing on advertising and promotion of liquor and food business will enable
the organization to enhance growth of these two businesses. This strategic option will be
effective for the company’s growth.
Sustainability
Advertising and promotion will increase the awareness of the businesses among the population
of Australia. It will definitely lead the organization to gain sustainability and competitive edge.
Strategic Choice
From the above analysis, it can be stated that adoption of democratic leadership is the best
strategic choice for the company. It will enhance the decision making process of the company
that will eventually improve its business operations (Mitchell, 2015). However, the company can

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use second option also because it will enhance the brand awareness of its food and liquor
business among Australian population.
Conclusion
Thus, it is hereby concluded that Woolworths Supermarkets can use effective strategic options to
overcome its strategic issues. It is very important to recognize the strategic issues in an
organization. If the company does not do this, it will become detrimental to the organization and
reduce its competitive edge. In this way, the above chosen organization should use effective
strategies and techniques so that it can increase its customer base in the industry.

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References
Ayers, J. B., & Odegaard, M. A. (2017). Retail supply chain management. CRC Press.
Barton, S. S., & Behe, B. K. (2017). Retail Promotion and Advertising in the Green Industry: An
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107.
Bolton, S. (2015). Woolworths workers back at work. Green Left Weekly, (1065), 3.
Flemes, D. (2016). Brazil: strategic options in the changing world order. In Regional Leadership
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Huang, R., & Sarigöllü, E. (2014). How brand awareness relates to market outcome, brand
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Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
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https://www.smh.com.au/business/woolworths-to-slash-400-jobs-to-turbocharge-cost-
cuts-20150505-ggui53.html.
Patapan, H. (2017). Democratic leadership. In Islam Beyond Conflict (pp. 77-88). Routledge.
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Toptal, A., & Çetinkaya, S. (2015). The impact of price skimming on supply and exit
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Woolworthsgroup, (2018). Australian Food and Liquor leadership changes. Retrieved from
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_Liquor_leadership_changes/.
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