External Analysis
Strategic information systems are the information systems which plays an important role in supporting the different initiatives undertaken by the corporates. These information systems are used by the organization in order to gain competitive advantage in the market. Furthermore, these systems help the entrepreneurs in the effective understanding of the changes taking place in the environment and assists in utilizing such knowledge for the advantage of the business. The decision making process is also simplified with the help of strategic information systems. The business objectives are streamlined and aligned with the business strategies of the company through these support systems.
This report is based on the organization Woolworths Limited. It provides the business background, details of the industry, general environment analysis, competitive environment, industry environment, opportunities and threats. Furthermore, the report focuses on the internal analysis of the organization which provides the tangible and intangible resources and capabilities. At the end of this report, an information system solution has been proposed for Woolworths which should be utilized for the efficiency of the business.
Woolworths Group Limited is the company engaged in the retail sector of Australia having its headquarters situated in New South Wales, Australia. It is one of the major companies of Australia. The operations of this organization are spread over New Zealand and Australia. The company is engaged in a variety of operations such as supermarkets (under the name Woolworths in Australia and Countdown in New Zealand), Big W discount departmental stores, hotels and pubs under Australian Leisure and Hospitality Group umbrella and liquor retailing (BWS and Dan Murphy’s) (Woolworths Group, 2018).
Woolworths Group Limited works under the retail industry. Australian retail industry is focused on the selling of products and services to the ultimate customers through multiple distribution channels. The major players in the retail industry of Australia are Coles and Woolworths. They adopt competitive strategies in order to lead the market. The retailers in the retail industry of Australia take all the possible steps in order to fulfill the demands of the customers. An efficient supply chain is maintained throughout the industry. Modern retailers have provided a different outlook to the industry by taking a number of strategic level decisions such as the market to be served, optimal product assortment, customer service, store type, supporting services and overall market positioning of the store (Bailey, 2017).
Political/ Legal- the supermarket industry is directly affected by the rules and regulations formulated by the government. The government is also involved in the regulation of legislative trading hours which has impacted the supermarket industry. Other monitoring bodies such as Australian Competition Consumer Commissions (ACCC), the Commonwealth Government, etc. also affect the industry practices.
Business Background
Economic- slow growth and uncertainty faced by Australia in recent times have a severe impact on the economy of Australia. This economic impact has created a threat for the entire supermarket industry and has also impacted the major players of the market including Woolworths. If the current situation does not change in the near future, it may affect the market players by leading them towards stagnated growth (Nenycz- Thiel, 2011).
Socio- Cultural- with the passage of time, there has been a drastic change in the attitudes, cultures, lifestyles and societal concerns of the societal people. These changes have also affected the supermarket industry as it has to take into account these changes for the purpose of meeting the demands of the people. The people are becoming concerned regarding their health due to which they have adopted healthy lifestyles and prefer healthy and organic food which has significantly increased its demand.
Technological- Woolworths is known for the adoption of latest technologies in order to meet the changing demands of the customers. It also adopts the leading technology so that its supply chain and distribution system can be improved and unnecessary costs does not incur. First mover advantage was obtained Woolworths by developing the website of the company and offering facilities to the customers so that they can make purchases online. It takes necessary steps from time to time so that online shopping experience can be improved (Balaji & Roy, 2017).
Physical- the society is showing increased concerns for the environment. Furthermore, the expectations of the society are reaching next levels that the business will take into account the environmental aspect while undertaking its operations. Woolworths have undertaken a variety of programs along with a sustainability strategy in order to reduce the environmental impact of its activities.
Global- the business operations of Woolworths have already been expanded in India and New Zealand. This is done for the purpose of sustaining the growth of the company in the retail industry. Woolworths is further taking a number of steps so that its market strengths can be capitalized (Rose, 2017).
Demographic- Different religious and ethnic groups exist in the population of Australia. This is the result of the existing immigration policy of Australia. The older age population is also increasing at a fast pace. Therefore, Woolworths has to take into account the demographic structure of Australia while formulating its business strategies (You & Barry, 2016).
Industry
The industry environment of Woolworths is analyzed in this report with the help of Porter’s five forces.
Bargaining Power of Buyers- there is low switching costs between stores as the supermarkets offers homogenous products to the customers. This leads to high bargaining power of the customers. However, the customized offers provided by the stores are considered to be exception (Wardle & Chang, 2015).
Bargaining Power of Suppliers- the suppliers bargaining power is dependent on the supermarket size and suppliers brand name in the supermarket industry of Australia. There is high to moderate bargaining power of the suppliers in the Australian supermarket industry.
Industry substitutes- there are a number of substitutes in the supermarket industry in the form of convenience stores, grocery stores, online stores and fresh food markets. There is high to low availability of substitutes which has made convenience as the most important factor to be considered (Knox, 2015).
Threat of New Entrants- the industry has low profit potential which has made the supermarket industry of Australia to be less attractive for market entrants. Requirement of supplier relations and distribution centres also creates a barrier for the market entrants leading to moderate entry barriers in the industry.
Rivalry among Competitors- Woolworths faces intense rivalry from the competitors such as Coles supermarket in the Australian industry.
There are two big competitors of Woolworths namely Coles and Aldi. The earnings of Woolworths have significantly affected due to the competitive strategies of these supermarkets. Aldi makes the use of simpler and agile logistics arrangements which poses a threat for Woolworths. Coles use smaller and leased format stores so that the customer patronage can be retained. The store locations are also refreshed from time to time by Coles. More space is being added to the business through this strategy. They are also offering competitive offers to the customer from time to time in the form of Buy 1 Get 1 and discounts (Azeem, Baker, Villano, Mounter & Griffith, 2018).
Woolworths is working on its retail capacity in order to compete with its competitor Aldi and Coles. This has also led Woolworths to incur excessive costs with a relative decline in the profit margin. The innovative strategies of Aldi and Coles have posed a serious decline in the profitability and sales of Woolworths (Mortimer, 2016).
Opportunities- the customers are increasingly becoming health conscious due to which healthy and organic food is gaining popularity. This, in turn, offers growth opportunity to Woolworths in the healthy food sector. A number of technologies have evolved in the market which can be used by Woolworths for pursuing latest sales opportunities and reducing costs. The market share and customer base will automatically improve when innovative approaches will be adopted by Woolworths in the market. The population of Australia is increasing at a rapid pace which offers a number of opportunities to Woolworths. Social media is emerging as an innovative platform which is increasingly being used for the promotion of brand across wider audience. This will further allow the company to stay in touch with the customers and will be able to revert to their query on time. The company can also facilitate their growth in emerging economies through the adoption of strategic acquisitions and franchise models (Banwell & Dixon, 2016).
General Environment Analysis
Threats- uncertainty and slow growth has been suffered by the Australian economy in recent times. This has created a severe impact on the profitability of Woolworths. The purchasing capabilities of the buyers have also impacted by the factors like recession and unemployment. The dominance of the suppliers suffered by the industry may become a threat for Woolworths by creating difficulties in maintain the needed stock level. The innovative strategies of the competitor may attract the customers of Woolworths towards them. The international players are also creating a threat for success of Woolworths in the global market (Thornton, Crawford, Lamb & Ball, 2017).
The success of Woolworths is the result of its tangible and intangible resources. It has allowed the company to attain the position of the largest supermarket of Australia. Currently, Woolworths operates around 995 stores in Australia with the help of its 115,000 team members across distribution centres, support offices and stores. These teams aim at providing diverse product range to the customers along with superior service and convenience. In other words, Woolworths has a strong resource base. Furthermore, Woolworths also has product innovation skills, reputation for quality and fresh food products, strong brand image, wider product range and efficient management and human resources (Keith, 2012).
The success of Woolworths Group is dependent on its biggest capability, i.e. the maintenance of an efficient supply chain. The distribution network of Woolworths has been developed through its technological capabilities and relations with the suppliers. Through this, cost savings have been achieved by Woolworths and its profitability has increased (Scollo, Bayly & Wakefield, 2015).
The efficient top level management is the biggest capability of Woolworths which has led the organization towards new heights. The top level management have assisted the organization in dealing with every circumstance and assisted in achieving high growth rates.
Another capability is the brand reputation maintained by the company by offering fresh food to the customers. It has built the reputation in the form of “the fresh food people” over a number of years. This capability has offered a distinctive image to the company and has facilitated positive experience of the customers and has provided higher satisfaction to them (Dixon & Banwell, 2016).
Resource- The efficient supply chain and brand reputation of Woolworths is the biggest resource of Woolworths. The supply chain ensures the availability of products on time and brand reputation ensures hat the customers prefer the brand over the competitors (Sultan, Wong & Sigala, 2018).
Political/Legal
Capabilities- the efficient supply chain and distribution network possessed by the business is both a capability and a resource of the organization. It facilitates Woolworths to maintain adequate stock level both at factories and at the stores. The customers are satisfied when they are able to get what they want.
Competitive Advantage- the brand reputation possessed by Woolworths have provided it a competitive advantage over the competitors. The customers prefer a reputed brand with differentiated image in the market. The innovative strategies along with the efforts of the workforce have made the organization the largest supermarket of Australia (Bailey, Price, Pyman & Parker, 2015).
Strategy- the efficient top level management of Woolworth is capable to formulate effective strategies for the success of the organization. In other words, the success of the organization is the result of the top level management and their effective strategies. They brings out innovative strategies from time to time, the implementation of which have provided new heights to the organization (Cameron, Sayers, Sacks & Thornton, 2015).
The business operations of Woolworths Group require dealing with the customers on direct basis. Therefore, it requires a system solution with the help of which the operations are simplified and the customer information is kept safe. The customers provide their personal details to the organization based on the brand reputation. Therefore, an information system solution should be adopted which provide high level protection to the customer data through safe security techniques for the minimization of internal and external threats. These systems will also be helpful in intrusion detection and act as a remediation tool so that the confidentiality and integrity of the data can be ensured (Pearlson, Saunders & Galletta, 2016).
Another recommended information system for Woolworths is for the internal working of the organization through which the operation of different departments can be easily linked. When the requirements and progress of different departments will be easily accessible, the business operations will be simplified due to timely identification of demand and production.
The evaluation of the proposed system solution provides that its adoption will ease the business operations of Woolworths. For any organization, the security of customer data should be the most important task. The reputation of an organization in the marketplace will automatically improve when proper security standards will be maintained. The needs of the business will be more effectively catered when the system will be integrated with that of other departments (Cassidy, 2016).
Economic
Conclusion
Therefore, it can be concluded that strategic information systems plays an important role in supporting the different initiatives undertaken by the corporates. This report focused on Woolworths Limited and provided a complete external and internal analysis. At the end of this report, an information system solution have been proposed for the enhancement of the internal and external operations. The general environment analysis of Woolworths provided that the company is capable of handling the outside factors in an effective manner. The competition faced by the company from its competitors have severely affected its sales and profitability.
The internal environment analysis of the company provides that its resources have made a major contribution towards the success of the organization. Efficient supply chain, brand reputation and capable top level management comprise some of its capabilities. The information system solution proposed in this report will play a major role in the enhancement of internal and external operations of the organization.
References
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https://www.inbenta.com/en/customers/woolworths-supermarket/
https://www.itnews.com.au/news/woolworths-supermarkets-hit-by-it-outage-489080
https://www.news.com.au/finance/business/retail/is-the-era-of-coles-dominance-over-woolies-over/news-story/924553315b9d1546ce468ff953483f4f
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