External Analysis of Woolworths Limited in the Australian Retail Market
Strategy is defined as the plan of actions conducted by the management of the organization for achieving the overall aim and alternative aims of the organization. Strategies mainly evaluate the company’s success. In other words, organizations are evaluating it in terms of future perspectives. In this context, strategic analysis is defined as the process through which management conduct research in terms of the organization and its operating environment. It must be noted that the definition of the strategic analysis can be different from the business perspective but the process of strategic analysis include number of common factors such as management needs to identify and evaluate the data related to the strategy of the company, management needs to define the internal and external environment of the organization, and management can use the analytic methods such as Porter’s five forces analysis, SWOT analysis, and value chain analysis for conducting strategic analysis (Maunder & Vissar, 2013].
Structure of this assignment includes two arts that are Part 1 and Part 2. Part 1 conduct the external analysis of the chosen organization and Part 2 conducts the internal analysis. Lastly, brief conclusion is stated for concluding this Paper. For the purpose of this report we choose Woolworths Limited as the local company of the Australia.
Woolworth supermarket is the supermarket and grocery store of the Woolworths, as it is the store chain which is owned by the Woolworths Limited. This company was founded in 1924, Woolworths holds of the 80% shares of the Australian market. Following are the 5 achievements of the Woolworths-
- Woolworths build the customer and store-led culture.
- Generate maintainable sales momentum in terms of food.
- Woolworths evolve their drink business for providing more value and also convince the customers.
- Empower the portfolio of their business for pursue strategies in context of delivering the shareholder value.
- Focus on become the lean retailer with the help of end-to-end process and systems excellence (Woolworths, n.d.].
Woolworth operates its business in the retailing industry. Retail industry of Australia contributes maximum success in the economy of the nation (Woolworths, n.d.].
This section of the report defines the general environment of the Australia in which Woolworths operates its business. In other words this section conducts the ESTEL analysis-
Political factors- Political factors lay important role in terms of determining those factors which determines the profitability of the Woolworth’s in Australia. Woolworths stands in the beneficial position because of the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA). This agreement adjoins the two countries and Woolworth’s worked as the single community for the purpose of fulfilling the needs of their customers.
Economic factors- Economic factors of Australia also provide benefit to the Woolworths, as both the countries Australia and NZ ensures economic stability. In comparison of the other countries both New Zealanders and Australians maintain a high living standard (Global data, 2012).
Political factors
Socio-cultural factors- Woolworths are the organization which ensures best for the society, as it becomes the trend settler in terms of greener and healthier lifestyle. There are number of techniques which support green environment, and Woolworth’s is the company which adopts these techniques.
Technological factors- Woolworths is committed in context of innovation and develop better technologies in continuous manner, as these technologies enhance the service efficiencies of the organization and also meet the quality expectations of their customers.
Legal factors- It must be noted that, government trading and other policies of the organization affect the policies and strategies of the organization in direct manner. There are number of authorities and policies which positively influence the supermarket business of Australia such as Australian Competition and Consumer Commission and the Trade Practicing Act.
Environmental factors- Environmental factors greatly contributes in the business strategy as these are considered as important business factors because they greatly affect the sustainability of the supermarket retail business. Woolworths develop environmental friendly policies (Fern Fort University, n.d.].
Supplier power- the efficient and timely production of the goods in terms of Supplier is deemed as the most important factor of the supermarket retail industry. Woolworths focus on building the strong and healthy relationship with their suppliers, and they always in the priority list of the organization. Organizations conduct the annual trade performance measurement meeting and awards for encouraging their suppliers, and they also recognize the innovations conducted by their suppliers.
Buyer power- It must be noted that customers are considered as the most behind the retail industry of supermarket. This company implement the innovative and new technologies on continuous basis for retaining and impressing their customers, as customer refer the convenience they get and the better savings. It is easy for customers to switch the supermarket stores in terms of their references such as lower rice of any commodity and better offers (Foo, 2008].
Potential entrants- However, new entrants and competitive organization general impose less or no threat for the market leader like Woolworths, but new entrants can impose threat in terms of any specific product. In other words, new entrants can provide better offers related to any specific product, but it is not possible for them to overtake the complete market of the Woolworths in Australia.
Substitute products – There are number of new products in the market which are introduced in the market as the substitute of groceries, but because of their strong strategic Plan, Woolworths is able to deal with the threat imposed by the substitute products.
Economic factors
Rivalry among competitors – There are number of competitors of the Woolworths in the Australia, and these competitors includes the Alde, Coles and IGA. There are number of programs which are introduced by the Woolworths for ensuring strong customer base and long term relations with the customers such as their “Everyday Rewards” program help the organization in gaining the loyalty of the customers. However, competitors impose serious threat for the Woolworth, as they are also offering good offers and programs to the customers of the organization and also for attracting the new customers (Dufficy, 2011].
Supermarket retail industry of Australia witnessed tough competition for all its layers, as there are number of organizations which are conducting business operations in this sector. The biggest competitor of Woolworths in this context is Wal-Mart, as it imposes big threat for the Woolworths. Following are the capabilities of the Wal-Mart which need to be considered by the Woolworths while making the strategies for the organization-
- This company holds immense number of experience in this sector and also implemented modern retail trade model.
- It is the well-known brand which is referred by number of Australian customers.
- Operations of this business are efficient and effective in nature.
- This company holds the strong base of customers and always introduce new programs for attracting new customers.
Wall-mart use the cost advantage and differentiation strategy in terms of strengthen its capabilities and also for providing the best services to the customers (Wal-mart, 2017]
Following are the opportunity and threats of the Woolworths in terms of the Australian retail sector of supermarkets-
Opportunities- Supermarket retail industry of Australia is flourished sector as it holds large number of customer base of the Australia. This sector introduce number of opportunities for its layers such as-
- Opportunity of promoting the brand of the organization, as Woolworths gets the opportunity to promote its brand on the social media platform. As this is the platform which can ensure number of customers for the organization.
- Organization can seek the opportunity of growth by adopting the acquisitions and franchise models in this emerging economy of the Australia.
Threat- This industry also impose number of threats for the organization, and some of these are stated below-
- High competition from national and international players of this industry is the biggest threat for the Woolworths.
- Threat of increase in the raw material cost in both food and non-food sector, as it directly impact the profitability of the organization (Kraft & Mantrala, 2010].
Woolworths hold number of resources and these resources are divided into two categories that are tangible and intangible resources. At the present stage, Woolworths operated almost 3000 stores in Australia for giving best and convenient services to their customers. Machines and warehouses owned by the organization is considered as the tangible resources of the organization.
For conducting operations in these stores, organization employed almost 205000 employees in their organization for serving almost 29 million customers. All these things mean that tangible and intangible resources of the organization are very strong. As this organization holds the efficient management and human resources, designed logistics management, etc. All these employees are deemed as intangible resources of the organization which provides great advantage to the organization (Woolworths, 2017].
Capabilities of the organization are defined as the skills of the organization in terms of coordinating its resources by putting these resources in the productive use. From number of years, this organization conducting the operations of its business in successful manner, as it holds number of capabilities to ensure this. Some of these capabilities are stated below-
- Organization put the right person on the right place at the right time, which means organization known very well which person is able to handle which situation at an appropriate time period.
- Organization conducts its operations in effective manner, and adopts various strategies for gaining the cost advantage for itself.
- Organization also ensures effective strategies for meeting its objectives, and in case any changes required in the strategies (Woolworths, 2016].
Socio-cultural factors
There are number of core-competencies of the Woolworths, and all these competencies provide competitive advantage to the organization over its competitors. As some of these competencies are stated below-
- Supply Chain of the Woolworths is world class, which means, competitive advantage for the organization is developed through the Supply Chain of the organization. As stated, this company mainly ensures effective strategies for getting the cost advantages in its operational process. Usually organization get these advantages are cutting down the unnecessary expenses from the Supply Chain.
- Another important competency of this organization is the effective branding and marketing. Slogan adopted by the Woolworths store is the fresh food people. This slogan helps the organization in creating the differentiated reputation. In other words, thorough this slogan organization ensures health and quality products for its customers at the reasonable amount.
- Innovation is deemed as most important competency of the Woolworths, as this organization implement number of projects for its customers such as re- fresh and new idea program, etc. This company implement the innovative and new technologies on continuous basis for retaining and impressing their customers, as customer refer the convenience they get and the better savings.
- Another capability of the organization is the integration, which means, this organization vertically integrated number of its supplies by ensuring the production of its own inputs in terms of enhancing the power in the market and also by give reasons to the private level trend (Woolworths, 2017].
Information system is defined as the tool which is created by combining the technical and human resources of the organization for giving the storage, computing, distribution, and communication in the organization. As this tool mainly ensures the distribution of the information in effective manner in all those departments of the organization which required those information’s.
The best types of IS in context of the Woolworths is the management information system (MIS), which gives the information in terms of managing the enterprise. It is the information system which is generally used by the organizations for ensuring the effective distribution of the information in all the areas of the organization. This information system is deemed as computerized database system in terms of the financial information which is organized and programmed in such manner as it create regular reports related to the operations for each and every level of the management (Harsh, n.d.]..
Management information system is the most suitable solution for the Woolworths as it provides best solutions to the issues faced by the organization in terms of implementing the information system in the organization. It is the only system which fulfils all the related requirements of the organization by distributing the information in each and every department of the organization in effective manner. Following are the important recommendations in this context-
- Organization needs to implement this system in effective manner, and before implementing this systems organization needs to analyse all the necessary aspects and requirements of this department.
- Management information systems must be soured by the relevant software, which means, organization needs to outsource this functions.
- MIS must be implemented by exerts and exert advice need to be taken on continuous basis.
- Management must ensure on continuous basis whether any changes are required (Harsh, n.d.].
Conclusion
After considering the above facts, one thing is clear that strategic evaluation of the organization includes both internal and external analysis of the organization. Strategic analysis is defined as the process through which management conduct research in terms of the organization and its operating environment. In terms of the resent structure of the organization, price strategy is deemed as most important strategy in context of the retail industry. As amount of the product or service is the most important and first factor which is consider by the consumer while taking the decision of buying the product. Decision process of the supermarket industry includes number of stages and the most important stage in terms of the consumer is the rice of the product. It is necessary for the Woolworths to focus on this stage while offering products and services to the consumers.
Supply Chain of the Woolworths is world class, which means, competitive advantage for the organization is developed through the Supply Chain of the organization. As stated, this company mainly ensures effective strategies for getting the cost advantages in its operational process. Usually organization get these advantages are cutting down the unnecessary expenses from the Supply Chain. It must be noted that the definition of the strategic analysis can be different from the business perspective but the process of strategic analysis include number of common factors. It must be noted that, Supermarket retail industry of Australia witnessed tough competition for all its layers, as there are number of organizations which are conducting business operations in this sector. The biggest competitor of Woolworths in this context is Wal-Mart.
References
Dufficy, T. (2011). An Overview of Woolworths. Available at https://www.slideshare.net/tomdufficy/an-overview-of-woolworths. Accessed on 31st August 2018.
Fern Fort University. Woolworths Limited PESTEL & Environment Analysis. Available at https://fernfortuniversity.com/term-papers/pestel/nyse4/4816-woolworths-limited.php. Accessed on 31st August 2018.
Foo. (2008). Woolies Boost Supply Chain Technology. Available at https://www.theaustralian.com.au/australian-it/woolies-boosts-supply-chain-technology/story-e6frganf-1111115892003. Accessed on 31st August 2018.
Harsh, S. MANAGEMENT INFORMATION SYSTEMS. Available at https://departments.agri.huji.ac.il/economics/gelb-manag-4.pdf. Accessed on 31st August 2018.
Kraft & Mantrala, (2010]. Retailing in the 21st Century, Springer publications, London.
Maunder, N. & Vissar, M. (2014]. STRATEGIC EVALUATION. Available at https://www.unocha.org/cerf/sites/default/files/CERF/WFP%20Eval%20of%20PFs%20-%20full%20report.pdf. Accessed on 31st August 2018.
Walmart, (2017]. Annual report. Available at https://s2.q4cdn.com/056532643/files/doc_financials/2017/Annual/WMT_2017_AR-(1).pdf. Accessed on 31st August 2018.
Woolworths, (2017]. Annual report. Available at https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf. Accessed on 31st August 2018.
Woolworths, 2016]. Annual report. Available at https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf. Accessed on 31st August 2018.
Woolworths. How we do business. Available at https://www.woolworthsgroup.com.au/page/about-us/our-approach/how-we-do-business. Accessed on 31st August 2018.
Woolworths. Strategy and objectives. Available at https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives. Accessed on 31st August 2018.
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