Brief description of Woolworths Company
The competitive advantage is described as advantage which keep company distinct with those of others in market. In this report, Australian company has been selected. The name of the company is Woolworths which has been offering its retail business services around the globe with competitive advantage of providing cost effective services. The main objective of company is to keep its clients highly satisfied by following two main leadership strategy that is cost leadership and product differentiation strategy. Moreover, this report analyses the internal and external environment of Woolworths and how company has been competing with the competitors with its current sourcing strategies. In the starting of this report, description of Woolworths Company has been given. After that detail description of the current sourcing strategy of Woolworths have been divulged to understand how company has been paving with the tough competition in market. Afterward the analysis has been made to evaluate sustainability of the current sourcing strategy and how well company has been copping up with the ramified economic factors. In the end of this report, recommendation to make the business more sustainable in this changing business environment have been given which could be adopted by Woolworths to make effective changes in its business. . The Australian retail gain Woolworths has created core competency in market by following two main strategy named cost leadership and product differentiation strategy. However, Local support strategy is also one of the imperative one for the sustainable business of company. These core competency allowed company to compete with its rivals and offering the best quality services with a view to compete with those of rivals in market.
Woolworths is an Australian retail business which is indulged in providing retail services through its different retail stores. This company has been providing retail services with a view to provide satisfy its clients through cost leadership and product differentiation strategy. Company has increased its overall turnover by average 12% of the last three year net profit which divulges that company has increased its business outcomes and profitability throughout the time. Nonetheless, the share price of Woolworths company has been traded at WOW (ASX) A$ 28.56 +0.26 (+0.92%) which is 92% higher as compared to last year share price. The headquarter of the company is in Bella Vista, Australia. This company has several business units around the globe which has been offering the same retail services to its clients. All the employees and staff members of the Company are accustomed to act as per the directions and instruction of its present CEO named Bradford Banduccci. He has been assisting company to diversifying the business with a view to increase the overall turnover and profitability at large. The financial structure of company is also reflecting that company has kept high financial leverage and if it wants to keep its business more sustainable in the sluggish market condition then it will have to lower down its debt funding as well. In addition to this, company, with the increase in its profitability, company has focused on lower down its overall costing by strengthening the efficiency in deploying the cash and increasing the overall financial leverage. This has shown that company has easily managed its business with a view to increase the overall outcomes.
Vision
Woolworths has diverse business operations such as supermarkets, liquor, hotels and convenience stores and offering retail services through the different retail stores. Woolworths has largest team numbered around 220000 employees and has a shareholder base of 530000 (Woolworths, 2018).
Vision
Woolworths Company has vision to become most recognized and trusted brands in retailing business by serving more than millions of customers.
Mission
It has mission to increase its overall retail business market share to 40% in Australia and offering clients retail services at the least cost without compromising with its quality of the services.
Aim
The main aim of the organisation is to satisfy its stakeholders and stretching the overall outcomes to society (Beeri, Bernstein, and Goodman, 2008).
The current sourcing strategy of Woolworth’s local food sourcing strategy which support local producers for their sustainable development. Company has focused on promoting the local suppliers to strengthen their business process and align the interest of the organization with the supplier’s development at large. This current sourcing strategy of the Woolworths is based on the economic growth and consistent supply of the best quality products from its retail stores (Kumar, and Azad, 2017). However, Company has invested more than AUD $ 223 million amount of capital to support the local food and product suppliers so that they could strengthen their business process and production process. This type of current sourcing strategy of Woolworths will allow it to expand its business and customized its products and services as per the client’s need and demand in market (Singh, Shukla, and Mishra, 2018). This collaborative logistic planning will assist in setting up the linkage with the organization development and supporting its suppliers in best effective way for their sustainable long term supply of goods (Mathu, and Phetla, 2018). Nonetheless, due to the increased business costing and high cost of capital it failed to undertake its own production chain (Rajabian Tabesh, Batt, and Butler, 2016). There is another sub current sourcing strategy of company which focuses on setting standards and Six sigma quality check which assess the quality of the goods and services offered to clients. Only those goods and services will be passed which will meet the standards set under the six sigma quality check program ( Jurevicius, 2013).
Mission
Another current sourcing strategy of Woolworths is to focus on the clients. This strategy focuses on gathering the required amount of information such as their values, belief, culture, expectation, social needs and their particular demand associated with the products and services offered by Woolworths in market (Zhu, Sarkis, and Geng, 2005).This sourcing strategy has allowed company to make its business process more customized and satisfy its clients to their best level. It is analysed that the loyalty card method has been introduced by Woolworths for the consistent connectivity with the clients. By using the loyalty card approach, company has gathered required amount of information and possible changes which company should undertake to make it retail business stores more client’s oriented in long run (Papenbrock, and Naumann, 2017). These all are the changes which are undertaken by Woolworths after implementing the supply chain management theories such as logistic management, efficiency and efficient value chain activities and quality check program in logistic work channels (Hervani, Helms, and Sarkis, 2015).
Woolworths has also created core competency in providing cost leadership services to its clients. The main rivals such as Tesco, Wesfarmers, Morrison and ALDI are giving the tough competition to company. Wesfarmers has set up automation in its value chain activities by installing the cyber computing enterprises resources planning process which not only increase the efficiency of its offered services but also lower down the cost associated with the process. It has allowed company to beat the competition in market through its cost leadership program and also resulted to increased brand image and sustainable business process in long run (Devin, and Richards, 2018).The latest system in its stores which rolled out was new Retail point of sale systems running on IBM POS hardware with LCD touchscreens which assists clients to understand the updated price and system process of organization (Ye, Cao, Zhang, and Zhang, 2017).
Therefore, it could be inferred that Woolworths has followed several sourcing strategies to keep its business more sustainable and challenging to the ramified business growth. However, the main area which company need to focus is based on strengthening the client relation program and supporting the local suppliers to maintain the quality of the goods supply in system process of the company.
Aim
The company put its customer first as per the current sourcing strategy. It works with cost leadership strategy and product differentiation strategy. It offers its product at a lower cost as compared to its competitors. The cost leadership strategy performs a significant role in establishing a competitive edge. Lowering the price of product is a common technique to decrease the cost, so a significant advantage of following the cost leadership strategy is the development of employees oriented culture program. It is a competitive strategy. Being the market leader in Australia, Woolworths performs as a chain of supermarkets that enhances its purchasing power also. If we discuss about the sustainability of such strategy, the strategy is very helpful in creating a company culture that continually pursues an efficiency, which provides an important competitive advantage to the company. In contrast, it cannot be sustainable for long time as there are various other sources which influence the strategies i.e. inflation costs, higher cost labour and un-trained personnel.
This local food suppliers supporting strategy is fruitful for the business success of the Woolworths in long run. It has established nexus with the organization growth and food supplier’s development. It is analyzed that company has focused on allowing the food suppliers to provide the best quality products so that it could strengthen the client’s satisfaction at large (Elmasri, and Navathe, 2010). The research and development department of the Woolworths also suggest local food suppliers to identify the ways and process to increase the quality of their goods produced by them. Woolworths was formulating plan for downside integration process where it will start up its own production process and own brand goods to meet the standards of the client’s need. It is analyzed that company could support local goods suppliers by giving them capital funding and arranging new technologies for their strengthening supply chain process.
The company also works with a differentiation and focus strategy. In this strategy, the company provides some special and unique offers to its customer through its products and services that makes the company different from its competitors. To continue with such strategy is more than beneficial for the company as the differentiation makes the company’s goodwill higher. Apart from that it also manages to attract the customers for long run. However the company cannot really manage to pursue that diffentiation strategy for so long. For that the differentiation and uniqueness in the product of company is necessary.
Detailed description of the current sourcing strategy of Woolworths
On the same time company also follows the focus strategy. It involves the selection of specific market segment, in which the company can offer its products on a lower price. This is the following strategy of prior two strategies. After ascertaining the lower price and product uniqueness, the company decides the suitable market to sale the product. For better execution of such strategy, the company builds a team that listens to its customers and suppliers and receives daily feedbacks from them. By using that strategy the company can focus on improving its offers and shopping experiences of its customers. These strategies ensure the companies to use their resources in most effective way to enhance their performance.
In the conclusion we could state that company has used following sourcing strategies such as product differentiation, suppliers support program and cost leadership business strategies to compete with the rivals. Woolworths needs to adapt its business process system with the installation of the advance technologies in its value chain activities. This process will not only increase the client’s satisfaction but also assist in creating value on its investment. It is analyzed that company should hire more expert employees, changing the supply chain activities and adopting the new measures and standards to strengthen the overall outcomes for its clients. Hence, the currently opted sourcing strategy of the company is sustainable. It manages to carry the performance of the company higher. Nonetheless, the main rivals such as Tesco, Wesfarmers, Morrison and ALDI are also facing the tough competition from the Woolworths after when it developed these souring strategies in its business process system.
However, sustainability of the company is also very much required for the long run business success (Svensson, et al. 2018).
Woolworths firstly should focus on re-engineering of its value chain activities. Traditionally, value chain has focused on eliminating waste. A firm`s ability to identify and manage linkage and interrelationships is a critical element in responding to competitive forces. Value chain analysis can be a powerful tool in identifying linkages and developing strategy. Woolworths needs to identify the linkages within the value chain activities and eliminate the unnecessary costing which is associated with the process. This changes in the value chain activities will result to creating competitive advantage. Nonetheless, chain activities cannot remain isolated, one set of program and activity of company should be linked to other one so that it could strengthen the overall outcomes and efficiency of its functioning for the better satisfaction of clients in long run. Wesfarmers could make the changes in its value chain activities but it should focus on using the cyber computing enterprises resources planning in its every process so that automation could be established to eliminate the unnecessary costing (Team FME., 2013).
Woolworths should also focus on hiring the experts sales employees who could establish the positive nexus with the client‘s satisfaction with the organization development. If company could strengthen its HRM department and training and development department then it could train its employee to the extent which could meet client’s demand and need from company. Highly expert employees will assist company to gather required data and make business more customized with a view to satisfy client’s needs and demand in long run (Youssef, and Asfour, 2015).
The current sourcing strategies focus on keeping the cost of its offered services low and providing best quality services and products to its clients. However, the process functioning of the Woolworths needs to be customized to satisfy clients more. The customized business process system and set business process which is more inclined towards the satisfying clients with their needs will assist Woolworths to strengthen its market share and sustain business in long run. It has showcased that if company could re-engineer its business process and strengthen its value chain activities as per the client’s needs and demand then it will result to increased business outcomes and more sustainable business perceptive (Büyüközkan, and Göçer, 2018).
Woolworths needs to focus on keeping its business more sustainable and effective in terms of the economic perceptive as well. It is analysed that Australia is a country which usually suffers from the scarcity of the resources so Woolworths should focus on using the resources effectively to increase the overall outcomes and return on capital employed in effective manner. However, the main issue is related to managing the human resources and employees stability with the process system of company. It will allow company to establish the linkage with the social and economic development with the organizational growth (Unicef 2015).
The board of Directors of Woolworths accepts partnership and strategic alliance to promote the sustainability of the business growth by focusing on mainly four areas- Targeting education and employment outcomes, medical research and health, community and education initiatives, and the Woolworths arts program. Woolworths agreed four-year partnership with Teach for Australia which focused on building the best leadership talent so that educational disadvantages can be eliminated which can help in assisting the organisation in expanding its operations into Western Australia. Woolworths became the best inaugural partner which works on the building, promoting, protecting, and enriching the West Australian parks. It should also strengthen its social and economic development program to keep its business more sustainable in long run (Lawley, Birch, and Craig, 2016).
Woolworths should also focus on lower down the employee turnover and proper training and development program for its employees. Efficiency in serving customers ensures continued competitiveness. It should focus on delivering the best possible outcomes and proper client based program which is provides proper support to system and make business more aware with the existing the challenger propositions in the marketplace. This type of value chain program and client based network will allow Woolworths to increase its overall market share and keep its business more sustainable in long run (Sing, Shukla, and Mishra, 2018).
Company also focus on diversifying its business in other market segments. It should focus on expanding its business more sustainable which will help to increase revenue and profitability and as a widely recognized organisation, it will be easier to expand beyond Australia with the cooperative business program.
Conclusion
After analysing all the detail and case study of the Woolworths, it could be inferred that company has stable business growth and sustainable business. However, it needs to focus on hiring more valuable experts employees who could pave up with the ramified challenges in market and adapt themselves as per the needs and demand of the market. Nonetheless, the quality factor is also very much imperative if company wants to keep its business more sustainable in long run. It is analysed that supporting local producers to provide best quality foods and services might be right for Woolworths to keep its business more sustainable but in short run, it will negatively impact the business growth and profitability. The main crux of this report is related to setting up the nexus between the current sourcing strategies and long term sustainability of company in long run. Now in the end, it could be inferred that company has stable business and will surely have strong sustainable future in long run and it needs to strengthen its relation with its local goods suppliers in its retail stores and client supporting program.
References
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