Porters five forces
Competitive strategy defines the long term plan of the company in order to gain the competitive advantage in the industry. The main aim of creating the plan is to set the defensive position in the industry by generating the profit. The company has to analyse the environment before making the plan by using the different model such as PESTLE, SWOT Analysis and porter’s five forces. In this report, Woolworths has been taken into consideration to analyse the environment of the company. It is an Australian supermarket which operates in grocery and supermarket store chain. It also sells the magazines, DVD, household, health and beauty product, and many others. The company also starts operating online with the name of “Home shop” (Woolsworth, 2018).
In this report, the environmental analysis will be discussed by using the business model such as PESTLE, SWOT and Porter’s five forces. After that, the discussion is made on the challenges which are faced by the company. The techniques of the company will also be analysed which is used by the company to address the issue. Resources capabilities of the company will be mentioned in the end of the report.
|
Forces |
Degree |
Reason |
|
Bargaining power of Buyer |
High |
There are various supermarkets and retails market which offer the products in low prices to consumer to attract them towards the company. |
|
Bargaining power of Supplier |
High |
Because of concentrated nature of the company. The supplier attract towards the those companies who have the large market share |
|
Threat of new entrants |
Low |
The existing companies have high goodwill value which is difficult for the new companies to enter in the market |
|
Threat of competitors |
High |
Wesfarmers, Coles and Asda are the competitors of the company which offers the same nature of products and services (Dobbs, 2014). |
|
Threat of substitute |
Low |
Daily consumption did not have any other substitute and these products provide the same level of satisfaction to the consumers. Customers do not have the other option to take the retail products |
|
SWOT analysis |
|
|
Strength · It is an oldest brand in the Australian market. · It has the huge market share in the market. |
Weakness · The company late entered in the Online retail market · The presence of wools worth on the online market is less as compare to the other competitors. · The company always faces the price war due to large number of competitors (Bull, et al., 2016). |
|
Opportunity · It has the opportunity to attract the large number of consumers by using social media. · It can take the advantage of its experience and expand the business in the new market. |
Threat · Competitors of the company are the biggest threat. · The customers are attracting towards the healthy products; organic and chemical free products are in great demand. The company has the threat of the other products those consumes chemical. |
|
PESTLE Analysis |
|
|
Political |
· The company has the political pressure due to duopolistic nature of retail market. · The political policies influence the retail industry to extend the business at the higher level such as competition policy introduced by the Federal Government of Australia. |
|
Economical |
· The condition of Australian market is declined in the terms of economic. The activities of the New Zealand and Australian market have been declined due to decline economic condition. · The international operation of the company also reflects the negative result due to decline the economic condition (Rastogi, and Trivedi, 2016). |
|
Social |
· The company has poor relationship with their suppliers due to changing the business culture. · Lack of social presence in the environment |
|
Technical |
· The company stores the product in the green refrigeration to protect the products from the environment especially perishable products. · The company use the SAP to reduce the frauds and evaluate the appropriate amount of inventory. |
|
Legal |
· Australian Competition and Consumer Commission Act were introduced by the government of Australia. |
|
Environmental |
· The company invests in energy efficiency and carbon initiatives |
The company can takes the competitive advantage by showing its presence on social media. Social media advertising helps the company in promoting the products of the company in the market to aware the consumer about the company’s product. The large number of customer attracts towards the company due to which the revenue is increases. Increasing revenue shows that the company gain the competitive advantage in the external environment.
The use of high technology also helps the company in gain the competitive advantage in the market. The company can adopt the new technology to promote the product or to manufacture the product with the unique technique. By manufacturing the product in the new technique helps the company in reducing the cost of production. The company gain the cost leadership advantage by reducing cost production of the company with the help of using the new techniques (Brewster, 2017).
The competitors of the company are the one of greatest challenge which is faced by the company in the market. The competitors of the company offer the products at the low prices as compare to the company such as Aldi.
Nowadays, the demand of consumers is increases towards the healthy products. The company has a threat of decreasing the demand of the product of the company as compare to the other competitors. The other competitors of the company offer the healthy product to the consumer by using their own brand name.
The company has to use this strategy to reduce the cost of production and attract the large number of customers towards the organisation. The demand of the products of the company is decreases as compare to the competitors due to high prices. By using the cost leadership strategy, the company can attract the large number of consumers and beat the competition (Rothaermel, 2015).
The company also has to use the product development strategy to reduce the challenge of healthy product. The company has to produce their own healthy product which is organic and chemical free to beat the competitors (Banker, Mashruwala, and Tripathy, 2014).
SWOT analysis
Human resource is an asset of the company because the company use the ideas of their employees to operate in the market effectively (Dipboye, 2018).
The best way to utilise the resources is that the company can train the employees at the time of adopting the advance technology.
There are large numbers of stores opened by the company to sale the products and it is also an asset of the company (Gutierrez-Gutierrez, Barrales-Molina, and Kaynak, 2018).
The best way to utilise the resource of the company is to increase the presence of the stores in the market due to which the consumer can easily buy their product.
Woolworths use the green logo which indicates the healthy and fresh food for people. The intellectual asset of the company helps to promote the product in the market. The company use logo to attract the consumers towards their healthy product. The company market value has been increases due to increasing the demand of consumers towards the healthy products
IP can generate the income of the business through licensing, sale or commercialisation. Licensing, copyright are the asset which is used to increase the customer royalties and additional income (Woolworths Holdings Limited, 2018).
Conclusion
From the above analysis, it has been concluded that the company faced the challenges in the external environment such as competition, healthy products. To address the issue the company can use the cost leadership and product development strategy. Human resource and the physical store are the main asset of the company. The intellectual property of the company plays the major role in achieving the competitive advantage in the market. The company will grow in the near future by using the strength and improving their weakness.
References
Brewster, C. (2017) The integration of human resource management and corporate strategy. In Policy and practice in European human resource management. Oxon: Routledge, 22-35.
Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E. (2016) Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services framework. Ecosystem Services, 17, pp.99-111.
Banker, R. D., Mashruwala, R. and Tripathy, A. (2014) Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision, 52(5), pp.872-896.
Dipboye, R. L. (2018) Employee Training and Development. In The Emerald Review of Industrial and Organizational Psychology. UK: Emerald Publishing Limited, 581-624.
Dobbs, M. E. (2014) Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Gutierrez-Gutierrez, L.J., Barrales-Molina, V. and Kaynak, H. (2018) The role of human resource-related quality management practices in new product development: A dynamic capability perspective. International Journal of Operations & Production Management, 38(1), pp.43-66.
Rastogi, N. and Trivedi, M.K. (2016) PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), pp.384-388.
Rothaermel, F.T. (2015) Strategic management. McGraw-Hill Education,.
Woolsworth. (2018) About us. Retrieved from: https://www.woolworthsgroup.com.au/page/about-us
Woolworths Holdings Limited. (2018) our purpose, vision and values. Retrieved from: https://www.woolworthsholdings.co.za/overview/our-purpose-vision-and-values/
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