Threats Evident from Industry Analysis and PESTEL Analysis
Discuss about the Innovation Threat And Opportunities.
The report will discuss in detail about the various innovation exercise conducted by the company called Woolworths. The company constantly conduct an in-store agile innovation exercise not just to find some neat technological answers so that shopping experience of the customer can be improved, it also taught old-school followers of retailing a new and effective innovation methods and went some way in the direction where it embeds the concept of business mindset comfortably with number of constructive level failures (Bailey and Alexander, 2017). The company has always approached the process of in-store innovation in a different manner these days. This supermarket giant in the recent time conducts an exercise where it established an innovation lab in one of the superstores where it was considered free to test the solution in the form of technological while dealing with challenges and providing improvements to the procedure in the actual shopping culture. Different exercise has further lasted in just a week, at the same time where the team can test so many ideas where some of which had not been thought up right before commencing it.
To understand the threat evident of Woolworths from industry analysis will be discussed below through SWOT analysis: –
- Strengths: the biggest Woolworths’s strength is that it is the market leader of the Australian retail sector and the leadership status further increases the capacity of the organization is based on exploitation of the market potential via its strong sources with the kind of technological resources along with human resources as well as ideal presence across the sector (Bitzer and Hamann, 2015). The intelligent application of the resources is mainly influenced by the external culture situations which are important to minimise the carbon footprint in addition to find cost-effective methods of decreasing the packaging and accomplishing nil food wastage by the year 2015.
- Weakness: the weakness of the company Woolworths in its development strategy is mainly the influence of the external environment situation which impacts the capacity while dominating the retail market of Australia. For example, the government of Australia has also limited the movement of the company while keeping high prices for the products in association with Coles which shows the major weakness to the organization while supporting the higher development stages (Black and Lite, 2015).
- Opportunities: the retail sector across the country Australia shows good development potential and the elements like computerisation, advances in the process of supply chains and lifestyle changes in customers that have all impacted the ability of retailers and giving ideal opportunities to grow. The company is also positively looking at embracing the option via adopting the strategy of so many options in retailing just to cope up with the transitioning needs of the consumers.
- Threats: the threats of the company’s retail industry that are basically from high competition stage in the sector with the company mainly competing with Coles. In addition, the intervention of the government is another important factor that impacts the development of the company in specific within the retailing of Australia (Dekker et al., 2017).
Another important analytics tool which assesses the external sector environment situation which impacts the performance of the industry. The PESTEL analytical technique for assessing the retail sector performance is conducted as follows:
- Political: the political situation impacts the retail sector in Austral and the overall performance of the company at a great level. For instance, the Federal Government in the country has most recently launched a policy based on competition which saves major independent players like Woolworths and Coles in diminishing competition. The rise in market dominance of such important retailers has further resulted in small retailers that are struggling to work in the industry.
- Economic: reduction in the economic market situation across the country has further impacted the performance of Woolworths majorly, as there has been a decrease in the economic activity in the market of the countries like Australia and New Zealand. Beside any form of decline, the indicators in economic space like fluctuation in the exchange rates of currency and further weakening the dollar of Australia that has adversely impacted the international retail operations of the company (Flax et al., 2016).
- Social: the social elements are also impacting the retail industry in Australia in the way that the company is functioning across the country must accomplish high societal as well as community growth since the recent social trends within consumers implies that people prefer high socially accountable companies and by undertaking society initiative, the retailers like the company develop important impact on the consumers.
- Technological: the role of technological elements impacts the retail sector and the company specifically important as this can be recognized from the fact that the company has considered the application of the technology of refrigeration so that different perishable products can be saved for a long period of time (Foulds, 2017).
- Environmental: these factors are also impacting the performance of the company and the whole retail industry especially across the country Australia. Any form of analysis further implies that the company specifically impacting the environmental elements in the sense that the company petrol and winemaking organizations that are posing some adverse threats on the work performed on environmental situation and thus impacted the revenue performance in the business area of the organization.
- Legal: the legal elements in the kind of carbon tax as executed across the country has also impacted the retail sector and specifically Woolworths. As a part of the assessment of Woolworth shows that the regulation adopted by Australian Competition and Consumer Commission that have impacted the operations of the organization across the economy. In addition, the need to work in a right manner has also impacted the performance of the company as it needs to adopt fair policy while performing the business operations (Hall, 2015).
The overall analysis of the external market condition in respect to the retail industry of Australia and specifically in connection to the company that has resulted in recognising that the strategy of the company and its operations is highly impacted by many external industry situations. In turn, they impacted the strategy of the company specifically performing some successful activities of the current business functions. The external environment situation has impacted the need to work innovation to meet the ever-changing societal trends within consumers.
The company Woolworths has time and again has proven itself as a brand that can constantly reinvent itself just to keep the pact with domestic as well as global customers trends. In the current time, as per most popular benchmark like Orange index to calculate the high level of service delivery among all the players in the specific sector, permitting the organization to assess the own service-based delivery which is completely against the competitors (Jie et al., 2015).
Identify and Evaluate Its Current Innovation Strategy
In the changing time where economy, technology and retail space competitor insight are crucial to the baseline. The company in the recent time has not just won the section of Food Retail Awards but was the complete winner where they completely outperform the competition in its own sector and across all the private sector-based consumer service sector customer industries. The company’s food business has always maintained its authority on food credential by continuously striving to provide consumer best, convenient, innovative and high-quality products. The vision of the company is having choices for the consumer from the world of food via having a mindset of the supermarket but the soul of the deli. The company is on the path to becoming the largest food business which is also trying to make the difference ethically by maintaining the leadership status in fresh products, quality and innovation while also making sure competitive level priced products that deliver value to the consumers (Luiz, 2016).
The analysis of the company can be done via BCG growth boxes. In 1960, the company was its peak and they were considered as the lead company that have massive chains of stores in the retail sector. The company also finished century and proved to be the star of the sector. The business growth and market rate graph were also on its peak in 1990 since the market share was large and the stars of the past were not entered the cash cows phase in addition to the company also have the high revenue cycle (Methner et al., 2015). The marketplace for the company was indefinite with no kind of competitors in the sector. however, in the present time, the company is slowly becoming a problem child since there is some negative development and their shops are closing leaving so many people unemployed. The company is also developing many new answers and have come into the business with some strategies like to open some shops with so many ideas and they have gone into the space of administration with again launching the company in online space with new product lines which meet the consumer requirement and one can comfortably access the market (Patroni et al., 2016).
This is a nine-box matrix which provides a systematic approach for the decentralized companies to decide where one can invest right. Despite depending on every business units and its projections of many upcoming potential, the organization can also judge a unit by two elements that will decide whether it is going to do good in near future and the overall attractiveness of the crucial sector and the unit’s competitive level strength within the sector (Morioka et al., 2016).
BCG and McKinsey GE Frameworks
The business units placement as a part of the matrix gives a map which is based on analytics for properly managing them. The units discussed are diagonal where a company like Woolworths can pursue a different set of strategies for growth and investment and can come along with the diagonal can be those candidates for selected investment, those below diagonal can be sold best, further liquidated or run mainly on cash (Rajabian Tabesh et al., 2016). The sorting units here are based on three sections that are an important initiating point for the overall analysis, however, judgement is needed to weight the trade-offs as involved. For instance, a strong unit is also based on the weak section which is in a very diverse case than any weak unit in an immensely attractive sector.
The analysis on Woolworths is based on several portfolio models consisting MACS and other portfolio initiatives. The categories for the assessment sector attracts and comes with a competitive level strength which has grown in a more sophisticated manner. Till this date, companies like Woolworths with a formal way of handling to model the business is based on a nine-box matrix or some other descendant (Recker, 2016).
MACS framework
The framework is called as Market Activated Corporate Strategy Framework which was developed in the year 1980s. However, it has not seen any growth or development at once and there are many predecessors to the current framework. There was a time when BCG Growth-Share Matrix showed the market development rate as well as the relative share of the market and as per this level, the business units were distinguished into four sections (Rosemann, 2016). It was utilised usually however over a period it is discussed more comprehensively and were designed, to remove the weaknesses as shown in BCG matrix, like the fact that is also focused on two elements completely ignoring many others that have an immense impact on revenue (Recker et al., 2016).
Following are the set of recommendations: –
- Less self-served checkouts: for every consumer who say no to the usage of self-serve checkouts there is another approach where they like it. Customers trends show that they don’t like automatic register because the machines are unable to pack the goods for them (Smart, 2016).
- The concept of ‘All Aussie Aisle’: this concept can suffer because there are not many products. The company must find resources to determine all forms of products. Woolworths must also have aisles for the products of the company which can reduce the overall profit margins by some percentage (Thomas and Plowman, 2016).
- Customer services: it is one of the most important factors and the company must believe that the customer is always right. However, many consumers also say the company doesn’t cur in this process and there are incidences of rude staff answering the complaints of the customer (von Briel and Recker, 2017).
Conclusion
As discussed, the company is on the path to innovation, however, there are many challenges which the company needs to overcome. The important thing is they must continue to focus on innovation which will enable constant advances with ranges and the technology in the process, a decrease in sugar and salt-based products and the introducing innovation via cooking methods and many first to market products (Westland, 2016). The company is constantly taking new steps like Good Business Journey which focus on making a crucial difference as its key area of sustainability covering energy, sustainable farming, ethical activities in the form of sourcing and many more.
References
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