S.W.O.T and PESTEL analysis
‘Woolworths’ supermarkets is a subsidiary business of Woolworths Limited. ‘Woolworths’ came to existence in 1924. It is headquartered in New South Wales, Australia. Despite having the largest market shares in the supermarket industry, the company does not enjoy a very healthy business in foreign locations. Instead, New Zealand and China are the only two business locations outside of Australia. In New Zealand, it has only a chain of few stores. ‘Woolworths’ operates as an e-commerce service provider in China in collaboration with Tmall of Alibaba (Woolworths.com.au 2018). Hence, there are scopes for ‘Woolworths’ to enter a foreign market. The recommended foreign market is ‘Sweden’. The main purpose of this report is to design a market plan for ‘Woolworths’ targeting the people of ‘Sweden’.
SWOT analysis:-
|
Strengths · Resource capabilities such as technological and human resources · Strategy making towards achieving zero food waste and reducing its carbon footprint |
Weaknesses · A cost-leadership strategy is less competitive compared to Aldi · Inability to fulfill the planet, the people and the profit of the triple bottom line (Woolworths.com.au 2018) |
|
Opportunities · Sweden has constantly maintained a high rank in the Forbes list of countries with the best business environment (Forbes.com 2018) · Woolworths has a high market value in Australia (Woolworths.com.au 2018) |
Threats · Competing companies such as Handlar’n, ICA Supermarket, Lidl, Netto, Tempo, and Willys in the Swedish retail market (Apanasevic, Markendahl and Arvidsson 2016) · Tax rates are still higher than most developed countries; however, it fares well in terms of the tax burden on businesses (Forbes.com 2018) |
Table 1: SWOT Analysis
Resource capabilities are in favor of an international expansion. The mission to attain a zero food waste and reduce its carbon footprint will find acknowledgment in the Swedish market. It needs to focus on store size, stocks and its relationship with suppliers as these few flaws are affecting Woolworths’ dominance in Australia and allowing Aldi to gain the advantage. Since 2006, Sweden has constantly improved its rankings in terms of providing the best business environment, it should be a very healthy market entrance for Woolworths. However, Woolworths need to have a robust marketing plan and feasible business level strategies in order to compete with competing companies and establish a good market value in Sweden.
PESTEL analysis:-
|
Political · Compliance with labor laws · Investment and trade policies |
Economic · Growing minimum wage · Economic growth is expected to slow down a bit due to capacity constraints · Public spending has increased |
|
Social · Premium customers will also pay to those their offers are more competitive compared to others · Swedish people flock to discounted offers |
Technological · Growing popularity of e-commerce · Involvement of advanced technologies to enhance the shopping experience and automate a few portions of the operation |
|
Environmental · Wastage reduction · Carbon footprint · Business sustainability |
Legal · Strict adherence to environmental policies · Competition policy |
Table 2: PESTEL Analysis
(Source: Dimitratos et al. 2016)
Apart from a few challenges that are common to businesses such as legal, political and environmental challenges, Woolworths would have a fair supportive business environment in Sweden. The competition policy can have an impact because this will limit boundaries for experimenting with pricing. Online retailing is an area where Woolworths need to work to boost its customer base and so the number of customers.
Most people want to spend less on any item. Particularly, the middle-class which forms a huge piece of Woolworths’ customer base loves low-cost items. The advantages of cost-leadership are clear. It accomplishes higher sales, earns a huge customer base and gains recognition as well. Discounted offers and promotional campaigns will be in practice to quickly grab customers (Skarmeas, Zeriti and Baltas 2016). The fresh-food-people concept of Woolworths will again be followed to pronounce the freshness and pureness the Woolworths’ products have. Nonetheless, a few rare customers will look for price value. Hence, the quality of products will be one of the areas of focus.
Product strategy
According to the “Theory of Reasoned Action”, some consumers follow their buying behavior for decision-making (Katsikeas 2014). Swedish consumers carry an attraction for discounted and low-priced offers. However, Woolworths should never compromise with the quality of products as this will act as the unique selling point for the company in a low-priced segment of the market. Demographic segmentation will be used to identify product lines to offer to the people of different age groups.
Woolworths positions its business as a company that offers fresh products at the lowest price. This strategy should also work in Sweden as the Swedish people are more inclined to low-priced products. Woolworths offer every-day low price (EDLP) strategy to Australian consumers. The company should sustain similar offers for the Swedish consumers; however, utmost care will be required to be given to the supply chain operation. It is because EDLP creates a burden on the inventory management and hence, on the supply chain.
Woolworths tries to keep up as low costs as possible without diminishing the quality of its items or forcing itself towards the loss. With the end goal to pass all cost-advantages to its customers and keep them cheerful, it utilizes various measures, which also includes the economies of scale that Woolworths enjoys. Woolworths will instead continue with this for the Swedish market. Woolworths’ methodology of low costs is the thing that it kept on recommending it to customers throughout the years. This will also make it possible for Woolworths to outperform all desires and turn into the leading supermarket store chain in Sweden. However, competition is expected to be tough as the Swedish market has numerous big players of supermarket industry (Buckley, Doh and Benischke 2017).
According to Demangeot, Broderick and Craig (2015), there are broadly five types of distribution strategy classed as indirect distribution, direct distribution, intensive distribution, exclusive distribution and selective distribution. Indirect distribution is suitable for such businesses that reach to end customer through numerous channels. Direct distribution instead is different from the indirect in a sense that it does not travel through numerous channels. Intensive distribution is suitable for those companies that target mass people. They require their products reach to the target people effectively before launch. Hence, they rely on following a mass distribution of products. Selective distribution strategy is followed by those companies that plan to operate with a limited number of store outlets in a city. Exclusive distribution is followed by such companies that operate with just one store in a region of a close to 7 cities.
Segmentation and positioning strategy
Woolworths instead follow a direct distribution strategy to maintain its EDLP. Woolworths should stick with the same distribution strategy to operate in Sweden as this is highly suitable for modern retailers.
Woolworths’ greatest advantage is its low costs. This separates it from most other supermarket store chains. Also, this is the thing that it uses to improve its brand image (Brunswicker and Vanhaverbeke 2015). Its real goal is to enhance its brand image by reducing costs and being consistent with its commitments while expanding the benefit as well. To this end, it should utilize TV commercials, promotional campaigns, support charitable events, and focus on CSR programs.
It should target popular magazines, daily newspapers and news channels to advertise their entrance to the Swedish market. As opined by Ahi et al. (2017), promotions should be made attention-grabbing. Advertisements, especially in magazines, should have a combination of attractive and meaningful images with justifying messages. For example, Woolworths can promote itself on the Swedish market by highlighting its unique selling strategy ‘the fresh-food-people’.
Woolworths has struggled against Aldi in Australia in respect to offering cheaper products. It is because Woolworths has a large product line and that it creates a burden on the supply chain with its EDLP strategy. Aldi, on the other hand, has a very limited product line compared to Woolworths.
Woolworths must work towards lessening its product line. This will also lessen the operation area and hence, the overall operational cost. A good market performance will boost its bargaining capacity. Hence, Woolworths will be able to get quality products on cheaper rates.
As stated by De Mooij (2015), it is essential to use effective measures to control the marketing operation to ensure that marketing expense does not get higher than the sales. Types of marketing control are as mentioned below (Gnizy and Shoham 2014):
- Annual Plan Control:-
- Sales Analysis
- Analysis of Market-Shares
- Comparing Market Expenses with Sales
- Analysis of Market Scoreboard
- Financial Analysis
- Profitability Control:-
- Comparing Direct Cost and Entire Costing
- Analysis of Market Profitability
- Determination of Corrective Action
- Efficiency Control
- Strategic Control
Conclusions, recommendations and timeline
In summary, this can be said that Sweden should be a favorable market for Woolworths for a fact that it has one of the best business environments in the world. In addition, Swedish people want quality products for cheaper rates. Woolworths must seek to reduce its product line as being used for Australia to lessen its impact on the supply chain. This will help the company to offer products at much lower rates.
The only recommendation to Woolworths is to lessen the product line and the store size to reduce the overall operational cost and positively impact its supply chain in Sweden.
Timeline:-
|
MARKETING TIMELINE DATA |
|||||
|
PHASE TITLE |
TIMELINE |
||||
|
CALENDAR |
BEGIN |
FINISH |
# of DAYS |
||
|
Phase A |
05-01-19 |
05-05-19 |
07-01-19 |
57 |
|
|
Phase B |
06-01-19 |
05-10-19 |
08-10-19 |
92 |
|
|
Phase C |
07-01-19 |
06-10-19 |
03-01-20 |
265 |
|
|
Phase D |
08-01-19 |
06-22-19 |
08-04-19 |
43 |
|
|
Phase E |
09-01-19 |
07-14-19 |
11-01-19 |
110 |
|
|
Phase F |
10-01-19 |
07-14-19 |
01-20-20 |
190 |
|
|
Phase G |
11-01-19 |
08-01-19 |
10-01-19 |
61 |
|
|
Phase H |
12-01-19 |
08-14-19 |
08-30-19 |
16 |
|
|
Phase J |
01-01-20 |
09-01-19 |
12-10-19 |
100 |
|
|
Phase K |
02-01-20 |
10-01-19 |
11-15-19 |
45 |
|
|
Phase L |
03-01-20 |
10-01-19 |
12-01-19 |
61 |
|
|
Phase M |
04-01-20 |
11-01-19 |
12-01-19 |
30 |
|
|
Phase N |
05-01-20 |
11-10-19 |
12-10-19 |
30 |
|
|
Phase P |
06-01-20 |
12-01-19 |
02-10-20 |
71 |
References
Ahi, A., Baronchelli, G., Kuivalainen, O. and Piantoni, M., 2017. International Market Entry: How Do Small and Medium-Sized Enterprises Make Decisions?. Journal of International Marketing, 25(1), pp.1-21.
Apanasevic, T., Markendahl, J. and Arvidsson, N., 2016. Stakeholders’ expectations of mobile payment in retail: lessons from Sweden. International Journal of Bank Marketing, 34(1), pp.37-61.
Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium?sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators. Journal of Small Business Management, 53(4), pp.1241-1263.
Buckley, P.J., Doh, J.P. and Benischke, M.H., 2017. Towards a renaissance in international business research? Big questions, grand challenges, and the future of IB scholarship. Journal of International Business Studies, 48(9), pp.1045-1064.
De Mooij, M., 2015. Cross-cultural research in international marketing: clearing up some of the confusion. International Marketing Review, 32(6), pp.646-662.
Demangeot, C., Broderick, A.J. and Craig, C.S., 2015. Multicultural marketplaces: New territory for international marketing and consumer research. International Marketing Review, 32(2), pp.118-140.
Dimitratos, P., Buck, T., Fletcher, M. and Li, N., 2016. The motivation of international entrepreneurship: The case of Chinese transnational entrepreneurs. International Business Review, 25(5), pp.1103-1113.
Forbes.com 2018. [online] Forbes.com. Available at: https://www.forbes.com/sites/kurtbadenhausen/2016/12/21/sweden-heads-the-best-countries-for-business-for-2017/#18d58bda7ecd [Accessed 11 Oct. 2018].
Gnizy, I. and Shoham, A., 2014. Uncovering the influence of the international marketing function in international firms. International Marketing Review, 31(1), pp.51-78.
Katsikeas, S., 2014. Journal of International Marketing: Objectives, challenges, and the way forward. Journal of International Marketing, 22(1), pp.1-4.
Skarmeas, D., Zeriti, A. and Baltas, G., 2016. Relationship value: Drivers and outcomes in international marketing channels. Journal of international marketing, 24(1), pp.22-40.
Woolworths.com.au. 2018. Retrieved from https://www.woolworths.com.au/
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
