Value chain analysis
A Woolworth’s group is dealing with 3 kinds of businesses and it is well known in the business of the supermarket. The other businesses of the Woolworth are its hotels, liquors, and petrol stations. The retail stores of the Woolworth Company are spread across the Australia. The supermarkets of Woolworths are 955 in number located in the Australia. Talking about the manpower working at the Woolworths is the 111,000 in numbers. All the workers of the Woolworths need to focus on the aim of the Woolworth that is to provide the best quality of products and services to their customers. The Company is a well renowned company because of its quality of the products. The Woolworths are the only company that provides 96% of the fresh fruits and vegetables and 100% fresh meat to the people living in the Australia. This is the Unique selling proposition (USP) of the company and the company is providing fresh food items because of its strong relationships with the farmers and the suppliers. The mission of the Woolworths Company is to become the best retailer for the all categories of the age group like home, kids, and families.
The Woolworths group is the brand that represents the diversified business and it involves the group of companies. There are 3 kinds of business that Woolworths group is doing and the different name of companies are presented below-
- Woolworth’s companies offering the Food items: – Woolworths Supermarkets, Countdown, Thomus Dux.
- Companies providing services of Beverages: – Dan Murphy, BWS, Cellarmasters, Langtons.
- Portfolio business: – Big W, EziBuy, Hotels(WHL, 2015).
A Value ChainManagement is the reason behind the success of the Woolworths it will help to identify the inventory that is delivered as well as the required by the retail stores and Supervision is important because that stock available in the retail stores is limited. The supervision with regard to meeting the requirements of the stores is important. The Woolworths have the ability to provide the fastest as well better services of shipment of the goods because of the location of the production houses near to the distribution channels. The management of the inventory is done by the employees of the Woolworths and look after the batches of the stock delivered to the retail sectors and quantity of the stock. As it is clear fact that the demands and needs of the people are changing and these demands are not static in nature. Thus, it is recommended to analyze their demands(Ensign, 2001). There are many methods used to identify the changing needs of the customers and these are surveys, questionnaires, Interviews, etc. This is possible only by hiring the new experienced persons for gathering the data of employees and then encourage them accordingly.
The value chain analysis of the Woolworths is possible only by the Porter model which is based on the two activities. The following is the flow chart that shows the value chain analysis of the Woolworths company
- Primary Activities: – The primary activities of the Woolworth value chain management are the part of logistics management and that includes-
- Inbound Logistics
- Operations
- Outbound Logistics
- Marketing and Sales
- Support Activities: – These refers to the activities that helps in the completion of the primary activities. The support activities of Woolworth Value chain are as follows-
- Human resource management
- Technology
- Firm Infrastructure
- Procurement(Sultan & Saurabh, 2013).
Inbound logistics: – The Woolworths company is mainly an Australian company that works all over the world and builds strong relations with its suppliers and focus mainly on supply chain management.
The roadmap of the activities of Woolworths is shown in above diagram that depicts how the Value chain management takes place(Santos, 2012).
Support activities
Outbound Logistics: – Outbound logistics of the Woolworths is the process to store and distribute the ready food items like vegetables, fresh meat, fresh fruits and other products of the Woolworths. Ecommerce sale is the best way to sell the products of Woolworths in Australia. The Woolworths holds a god position in Australia for doing a e commerce business.
Marketing and sales: – There aremany methods to promote and sell the ready products in the market. Woolworths is using seven different ways and these are
- Retail stores
- Direct sales
- online sales
- Third party resellers
- Wholesalers
- Retailers and
- Value added resellers.
According to the statistical data, Woolworths is selling its products through direct sales is 35% and through indirect sales its 75%. in the year of 2016. Woolworths have the budget for the advertisement is around $100 million. The company decided not to disclose the budget to the public of 2016 (Bryceson, 2008).
Human resource management: – The Woolworths Company is focusing more on the retention of the employees and also recruiting the new employees. It is essential for every company to retain its experienced employees. The performance of the company improved if the employees working at Woolworths are satisfied. Employees are playing a very important role in building the brand image of the company. Woolworths uses the strategies of rewards and bonuses given to its employees to motivate and encourage them to perform well in the organization. It is also significant to fulfill the needs of the employees. As some of the employees at Woolworths need monetary rewards and some expects to have appreciation for their work (Hays, 2016).
Technology development: – As we know that technology is the one which can change the life of the people. changes the life of people. Similarly, Supply chain of Woolworths is greatly influenced by the technology. There are many technologies and software used by the Woolworths in supply chain to track the goods, to check the demand of the customers and to upgrade the software etc. Moreover, Woolworth is using the technology named as Bar codes with the help of which it will become to collect and analyze the data of the products.
Firm Infrastructure: -The firm infrastructure means the structure of the Woolworths company and its management. The structure of the Woolworths consists of the different departments like finance, planning, marketing, designing, legal, and quality control management(Woolworths Team, 2007).
Procurement is the process of arranging the raw materials of Woolworths as it involves large number of the suppliers across the world. The distribution channels of the Woolworths are many in. The process of procurement involves the direct relation with the suppliers. The direct relation with the suppliers and farmers can be maintained with the help of direct communication, mailing or the telephonic conversation.
- Developing Strategies for global Marketing
It is very important to use some of the strategies to build the brand image of Woolworths for its growth and success. The products offered by the Woolworths are many and as already explained that, the company is established in Australia. All types of the grocery items like fresh fruits, confectionery, fresh vegetables and fresh meat, etc. are offered by the companies and become an important part of the marketing mix. The quality of all these products should be maintained and need the approval of the experts for more improvements in the products. The company should make it sure that the customers are completely satisfied with their services(Mitchell, 2015).
Procurement
The Woolworths company has a strong network of distribution and there are 1000 stores all over the Australia. There are many stores which are operating in the cities like Victoria, Barcelona, south wales and Melbourne. With the development of the technology, the company also introduced its mobile apps for shopping of its products as well the online shopping stores for the shopping lovers. Because of which it is easy now for the customers to buy the product of the company. The Woolworths have many private label brand names like Woolworths fresh, Select, home brand and Woolworths gold. It is very easy to attract the customers with the help of the price of the product. The company always set prices of the products according to the research on the competitors. The price of the Woolworths products is equally similar to the other competitors. These factors are helpful for the company to gain the competitive advantage in the market. The price of the product is the very important factor to attract the customers. The Woolworths company also offering low prices and premium prices for its best quality products. For example- the company is offering vouchers as well as some of the shopping cards to buy the products at discounted rates. The promotion of the products is possible through better communication channels. The promotional activities are useful in attracting the customers for profit maximization. The c Woolworth used the strategy to promote its services and products that is loyalty card scheme. This strategy or loyalty card scheme attracts those people who look for the discounts, deals, low prices at petrol pump stations. A Woolworth is also using the communication and promotional channels like online media, magazines, newsletters for the effective promotion of the products.
- Optimization of the Logistics systems
Moreover, with the development of the technology, there is an app of inventory system for the mobile phones with the help of which one can manage its flow of the products even by sitting away from the warehouses. To get success in the today’s competitive world, it will be very important to do some planning regarding the present stock levels of the supermarkets and estimate the requirements in the future with the growth. However, the inventory management system has that ability to plan the levels of stock and forecast the requirements for the future. As a result of which, it enhances its services and raise the efficiency of the supermarket.
Previously the Spreadsheets are used on a large scale to handle the small amount of data for small retail business. The data that ranges in the thousands is managed in the spreadsheets. The spreadsheets is not able to manage the advanced searching, tracking and sorting, etc. unlike the inventory management. Inventory management handles any amount of data and helps the supermarkets to manage the data with searching, sorting and tracking.
The results of the Inventory management have a positive effect on the working of the supermarkets and helps in real time reporting. As a result of which helps in reduce the losses in the supermarkets that occur due to the delay in reporting and errors. With the advancement of technology, now it is very easy to handle inventory or stock from the mobile phones. Hence the cost efficiency of the supermarkets is improved by cutting down of error losses.
- Encouraging sales and marketing
Current Scenarios
Talking about the current scenario of Woolworths is expanding and promoting its business through the online stores also. Woolworth is already launched its online store and sell the products through online services and also introduced the mobile apps for purchasing the Woolworths products that makes easy to do the online shopping. Currently, only 15 % of the total profits generated from online sales, but it has been observed that this percentage can be increased in future. It is suggested that the Woolworths should invest in an effective online marketing strategy to encourage onlinesale and increase the percentage of the profits. The social media are already playing an important role for the effective online marketing of the goods and services of the company. Although the social media strategy of the Woolworths company has been enhanced, but there are no effective results are found yet. Because of this, Woolworths should need to attract more new customers through the online channels. The online sales of the products also helpful in determining the changes take place in the tastes and behavior of the customers. Moreover, this is the best method to approach the customers and tackle their problems as compared to the other methods. Advertisement through television, radio station is the expensive method as it involves the paid messages for delivering the information(Khan, 2011).
The sales executives are the one who promote the values of the products to the consumers in the retail sector. Woolworths need to promote more than that it provides to attract the more customers and to enhance the business operations. There are also many other ways of promoting the products like to offer discounts on products, sales promotions and best deals for the customers to buy their products of high quality at discounted rate. The sales promotion activities of the Woolworths may include the coupons, vouchers, percent off deals. The main aim of the promotional activities of the Woolworth company is to attract the new customers, increase the revenue, cash flow and clearance of the extra inventory and also to build the image of the company(Mitchell, 2015). Moving further, all these activities led to build the good relationship with the company and builds the corporate image of the company. The online marketing of the goods is now much more suitable and better in comparison to the advertisement on television and newspapers. The company should need to focus more on the online sales as it is very easy process and it also makes the life of people easier who are busy in their lives. The people need not to go the stores, especially for buying the products. The online services are much better than the customer services at store (AFN, 2015).
The above given 3 different scenarios are analyzed and evaluated with the help of the Porters five forces model. Talking about the First tool of Value chain management is the Porter’s value chain Model and the five forces model was developed by Micheal Porter. This model is helpful to analyze the competitive environment in which a product or company works. The value chain management can be better explained with the help of the Porter’s model.
New Market Entrants:- The threat of new entrants is very rare in the case of Woolworths. The main reason of this is that the new entry requires huge amount of investments in marketing, production and distribution. That is why it is not an easy task to compete with the well established companies and it involves the cost of the new business.The company has the ability to dominate the power of new businesses. (Keith, 2012).
Supplier Power: -The bargaining power of the suppliers is low as there are lots of people in the retail business that supply the raw material to Woolsworth company and the suppliers of the Woolworths are very loyal and experienced people as they are working with Woolworths for the last 10 years. The Woolworths company also has the direct relations and communication with the farmers and growers. This is the reason that company is providing the fresh fruits and vegetables to the customers and is very famous because of the quality of products.
Buyer’s Power: -The bargaining power of buyers of Woolworths is not that much higher as the Woolworths is the company that offers the products at very reasonable and affordable costs. In the retail sector, the customers are the key people that choose the Woolworths across a number of the other brand retail stores. The reasons of the low bargaining power of the buyers is its brand loyalty and customer integration (Schoff, et al., 2014).
Development of Substitute Products:There is always a threat to thecompanies from the development of the substitute products. In the retail sector, many competitors and substitute products of Woolworths are available in market that threatens the Retail industry like Sainsbury, Costco Corporation, Tesco PLC, Metro Group, Home Depot corporation, Kroger, Amazon company,etc. the Sam said, for him the biggest competitor is Metcash Corporation and because of this, high availability of substitute or competitors leads to the huge threat to the retailers. The reason behind the switching of customers is the prices of the same products of different brands. (Woolworths Limited, 2011).
Conclusion
At last, it has been seen that the report aims to find out the new ways to Woolworths Value chain operations. In this report, the value chain analysis is explained with the help of the Porters’ Value chain model and on that basis the current scenarios of the Woolworths are also analyzed. With the change in time, it is very important to check and review the value chain systems to meet the demands of the customer needs. The value chain management is very essential for the Woolworths maintain its brand image as well as to retain its customers for the longer period of time. The process of value chain involves the two main activities – Primary and the supporting activities which are explained in the above report. It is recommended that the company should focus on the online sales and marketing as the customers tastes and behavior of customers and their shopping habits has been changed. The purpose of the report is to analyze the value chain analysis, current marketing scenarios and the evaluation of these scenarios. The Wolworths should focus more on the advertisement and the diversification as it will lead to good profits for the company. The Woolworths company has the opportunity to start dealing in the electronics sector. It is clear from the analysis that the customers are the main target of every big organization and it is very important to understand the needs and its current trend of the market with its significance.
References
AFN, 2015. Woolworths announces new strategies to win over grocery shoppers, AFN reveals full detail, Available at: https://www.ausfoodnews.com.au/2015/05/06/woolworths-announces-new-strategies-to-win-over-grocery-shoppers-afn-reveals-full-detail.html
Bryceson, K., 2008. Value chain analysis of bush tomato and wattle seed products, Available at: https://www.desertknowledgecrc.com.au/resource/DKCRC-Report-40-Value-Chain-Analysis.pdf
Ensign, P., 2001. Value Chain Analysis and Competitive Advantage. Journal of General Management, 27(1), p. 18–42.
Hays, J., 2016. Woolworths Ltd. Supply Chain Management, Available at: https://www.academia.edu/10358309/Woolworths_Ltd._Supply_Chain_Management
Keith, S., 2012. Coles, Woolworths, and the local. The Australasian-Pacific Journal of Regional Food Studies, Volume 2, pp. 47-80.
Khan, S., 2011. Marketing mix strategy adaptation: a retail organisation’s response to the global economic downturn, Available at: https://faculty.mu.edu.sa/public/uploads/1361466031.7048marketing%20mix32.pdf
Mitchell, S., 2015. Strategy under the spotlight for Woolworths, Myer and JB Hi-Fi., Available at: https://www.smh.com.au/business/retail/strategy-under-the-spotlight-for-woolworths-myer-and-jb-hifi-20150808-giukzg.html
Mitchell, S., 2015. Woolworths facing slowest growth in 19 years as strategy resets, Available at: https://www.smh.com.au/business/woolworths-facing-slowest-growth-in-19-years-as-strategy-resets-20150226-13q0vs.html
Santos, M., 2012. Global warming mitigation promotes corporate entrepreneurship within Woolworths’ supply chain. African Journal of Business Management, 08 Agust, 6(31), pp. 9151-9160.
Schoff, P., Moritz, S., White, E. & Ellison, M., 2014. Competition in the Australian Grocery Industry, Available at: https://www.minterellison.com/files/Uploads/Documents/Publications/Articles/Pub_A_20140307_CPI_Comp_Grocery_Schoff.pdf
Sultan, A. & Saurabh, D., 2013. Achieving sustainable development through value chain. International Journal of Managing Value and Supply Chains, June, 4(2), pp. 39-46.
WHL, 2015. Woolsworth limited: Good business journey report, Available at: https://www.woolworthsholdings.co.za/investor/annual_reports/ar2015/whl_2015_gbj.pdf
Woolworths Limited, 2011. Woolworths Limited: Product Maintenance Forms, Available at: https://supplier.countdown.co.nz/media/1131/product_maintenance_forms_qrg_v50.pdf
Woolworths Team, 2007. Woolworths the difference, Available at: https://imm-gsm.s3.amazonaws.com/docs/Assignment_Q_2013_1/WIL301_Appendix_Woolworths.pdf
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