Business Background
The term strategic information system can be defined as the information systems which are created for the purpose of responding towards corporate initiatives. The main motive of strategic information systems is to offer a competitive advantage to the organization. They may deliver a service or a product which is distinguished and is at lower cost along with keeping the focus on specific market segment (Laudon & Laudon, 2016).
The focus of this report is on Woolworths Limited. The report makes the complete external and internal analysis of Woolworths and then proposes an information system solution which can be used for the purpose of gaining the competitive advantage in the market.
Woolworths Group Limited is the major company of Australia having extensive retail interest throughout New Zealand and Australia. The main operations of the company include liquor retailing (as Dan Murphy’s and BWS in Australia), supermarkets (under the brand Countdown in New Zealand and under the brand Woolworths in Australia), pubs and hotels under the Australian Leisure and Hospitality Group umbrella and Big W discount departmental stores in Australia. The headquarters of the company is situated in New South Wales, Australia (Woolworths Group, 2018).
Woolworths Group Limited belongs to the retailing industry. The retail industry of Australia is engaged in selling the goods and services to the consumers with the help of multiple channels of distribution for the purpose of earning profit. The demands of the customers are satisfied by the retailers in the Australian retail industry through an efficient supply chain. A variety strategic level decisions are being taken by the modern retailers including the market to be served, type of store, customer service, optimal product assortment, overall market positioning of the store and supporting services.
Economic- the Australian Economy suffered from uncertainty and slow growth in the recent times which, in turn, has posed a serious threat for the retail players including Woolworths. It is expected that their growth may face stagnation in the future if this situation continues to exist for a longer period of time.
Physical- The physical environment of Woolworths is protected through a range of programs and sustainability strategy so that the activities of the business leave minimal impact on the environment.
Socio- Cultural- The attitudes, lifestyles and the societal concerns of the people in Australia is changing which, in turn, have resulted in dramatic changes in the Australia’s supermarket industry. The increasing health and obesity concerns have resulted in increased demand for low- fat and organic foods (Charlton, Kähkönen, Sacks & Cameron, 2015).
Industry
Global- the business operations of Woolworths have been expanded in New Zealand and India for the purpose of sustaining its growth in the retail industry. It is further taking steps for capitalizing on its market strengths.
Technological- New technology have been adopted by Woolworths. In the year 1994, it became the first major retailer who subscribed to Global Electronic Marketing and Merchandising Network (GEMMnet). It also took steps for improving its supply chain and distribution system as it significantly impact the cost savings. Woolworths also took a first mover advantage by developing a company website and providing online shopping facilities to the customers. It further takes steps so that the online shopping experience of the customers can be enhanced.
Political/ Legal- There is a direct impact of the government on the supermarket industry of Australia in terms of legislating trading hours and through the regulation and monitoring function of Australian Competition and Consumer Commissions (ACCC), the Foreign Investment Review Board (FIRB), THE Trade Practices Act (TPA) and the Commonwealth Government.
Demographic- The population of Australia is a mix of religious and ethnic groups due to the existence of immigration policy. The forecasts provide that the population above the age of 65 is expected to grow by 25 % by the year 2051. The growth rate of population above 85 is also increasing at a fast rate.
Bargaining Power of Buyers- Homogenous products are offered by the Australian supermarkets in which the switching costs between stores are low and therefore, provide buyers with high bargaining power. However, the stores which customize their offers for particular markets are the exception.
Bargaining Power of Suppliers- the size of the supermarket and the brand name of the suppliers are the factors on which bargaining power of the suppliers depends in the Australian supermarket industry. The bargaining power is high to moderate in the supermarket retail industry of Australia (Grimmer, 2018).
Industry Substitutes- The supermarket industry is surrounded by a number of substitutes in the form of grocery stores, fresh food markets, online stores, convenience stores, etc. Convenience is the most important factor for the consumers such as easy parking, less queues, etc. Therefore, there is high to low availability of substitutes in the industry.
Threat of New Entrants- Due to the low profit potential, the Australian supermarket industry is not an attractive industry for the new entrants. The requirement for strong relations with the suppliers and establishment of distribution centers also acts as the barrier. Therefore, there are moderate barriers for entry in the supermarket industry.
General Environment Analysis
Rivalry among competitors- there is intense rivalry among the competitors in the Australian supermarket industry.
Aldi and Coles are the biggest competitors of Woolworths. Aldi has played a great role in bringing a reduction in the earnings of Woolworths. However, it has adopted the strategy of stablishing simpler and more agile logistics arrangements. This constitutes a threat for Woolworths as this measure represents that how the leases and legacy store structures of Woolworths continue to hold back any important profitability turnaround. On the other hand, Coles have adopted the strategy of driving leased and smaller format stores for the purpose of retaining customer patronage. Along with this, Coles have been able to easily refresh their retail locations. Also, they have become capable of adding more floor space to the business where necessary (Pulker, Trapp, Scott & Pollard, 2018).
More retail capacity is being added by Woolworths in order to compete with its rapidly growing competitor Aldi. As a result of this, the costs of Woolworths are increasing along with the relative decline in the profit margins. Coles and Aldi are taking innovative steps for bringing attractive offers for the customers in the form of discounts, Buy 1 Get 1 offers, etc. Such offers poses a serious threat for Woolworths as it lead to a significant declines in its sales and profitability.
Opportunities- With the increase in the health consciousness of the customers these days, healthy food products have become more popular. Therefore, Woolworths have a growth opportunity in the health food sector. New technologies are evolving which can be used for the purpose of cost cutting and pursuing new sales opportunities. When innovative approaches will be followed by Woolworths, it will be able to increase its customer base and the market share. Also, the rapid increase in the population of Australia is creating a number of opportunities for Woolworths Group. Social media can be used as the platform for the promotion of the brand across a larger customer base. With the help of this, Woolworths will be able to stay in direct contact with the customers and can easily resolve their queries on time. Furthermore, franchise models and strategic acquisitions can be adopted by Woolworths for the purpose of seeking growth in the emerging economies (Singh- Peterson, Lieske, Underhill & Keys, 2016).
Threats- in the recent time, the Australian economy has suffered from uncertainty and slow growth due to which the profits of Woolworths may get impacted. Growing unemployment and recession is also affecting the buying capabilities of the purchasers due to fall in the level of income. This also impacts the overall growth strategy of Woolworths related to the opening of more number of stores. The industry also suffering from the dominating power of the suppliers due to which Woolworths may suffer from certain difficulties in the maintenance of required stock levels. The increased adoption of technology by the investors may lead to shifting of the preference of the customers from Woolworths to its competitors. Also, Woolworths is facing increasing competition from the international players due to which its sales might get affected. The overall profit margins are also being impacted from the rise in the raw material costs from both non- food and food sector (Ariyawardana, Ganegodage & Mortlock, 2017).
The Industry Environment
With the passage of time, Woolworths have attained the position of the largest supermarket chain of Australia. 995 stores are operated by Woolworths across Australia with the help of 115,000 team members in stores, support offices and distribution centres so that superior service, value, range and convenience can be offered to the customers. This further implies that the tangible and intangible resources of Woolworths are very strong. Moreover, Woolworths has efficient human resources and management , product innovation skills, wider product range, strong brand image, well- designed logistics management, alliance and partnership management, reputation for fresh and quality food products along with strong relationship with the businesses that are vertically- integrated with Woolworths (Knox, 2015).
The most valuable capabilities of Woolworths are its brand reputation, its highly efficient supply chain and effective top level management. The efficient distribution of network is both the resource and capability of Woolworths. With the help of its tangible and intangible assets such as supplier relations and technological capabilities, Woolworths has been capable of achieving significant cost savings throughout the logistics network and increased its profitability over the competitors (Sutton- Brady, Kamvounias & Taylor, 2015).
Woolworths has also attained the reputation as “the fresh food people” which has been built over the number of years. This has been possible only with the help of positive experiences of the customers with the products. The value of the brand reputation has allowed Woolworths to create a meaningful differentiation from its customers. The brand reputation is directly capable of offering higher satisfaction levels to the customers (Lewis & Huber, 2015).
Irrespective of the rising inflationary rates and recessionary pressures, Woolworths have been able to achieve higher growth rates than the levels expected. This growth rate can be attributed to the effectiveness of the top level management. it is the capabilities of the top level management of Woolworths with the help of which it was capable of steering through the current economic climate and have been able to achieve high growth rates thereby making it a valuable resource.
World- Class Supply Chain- The competitive advantage and innovation have been developed by Woolworths with the help of its supply chain. Cost cutting and efficiency have always been the significant focus of Woolworths for the management of unnecessary expenses (Jie, Parton & Chan, 2015).
Branding and Market- The slogan of Woolworths stores is “The fresh food people” which has played as great role in the creation of a differentiated image (brand reputation) of healthy and quality product range which are available at reasonable prices (Devin & Richards, 2018).
Competitive Environment
Innovation- several projects have been implemented by Woolworths such as “refresh”, the ‘new idea program’ petrol retailing and certain sustainability programs (Phillipov, 2016).
Integration- some of the supplies of Woolworths have been vertically integrated by the production of its own inputs so that its market power can be increased and for responding towards private level trends. It is the effectiveness of the top level management with the help of which the implementation of decisions take place smoothly in the organization (Trevena, Neal, Dunford, Haskelberg & Wu, 2015).
Woolworths Group should aim at adopting software with the help of which it can easily handle all its activities in a single go. At the supermarket, the contact numbers and other related information are obtained from the customers for the purpose of communicating offers to them at a later date. However, such data is provided by the customers to Woolworths due to its brand reputation and therefore, it is required to be kept safe (Hwang, Lee, Park & Chang, 2017). It should adopt an information system solution with the help of which it will be able to protect the data by way of using safe security techniques for minimizing external and internal threats (Van De Walle, Turoff & Hiltz, 2014). Such information system solution will be designed by the experts who will utilize intrusion detection and prevention systems along with remediation tools and vulnerability management through which Woolworths will be able to protect the integrity and confidentiality of data (Information Systems Solutions, 2018).
Furthermore, it should adopt another information system solution for its internal working through which the systems of all the departments can be effectively integrated. The business requirements will be met more easily and appropriately if such applications will be installed in the systems of Woolworths. It will further allow Woolworths to leverage emerging economies and scale solutions by way of creating a system after integrating applications and subsystems (Valacich & Schneider, 2015).
The evaluation of proposed system solution provides that the business requirements of Woolworths will be met more easily and appropriately if the above solution will be adopted. It is recommended that the security of data of the customers should be of prime importance to any business (Kroenke &Boyle, 2015). When such security standards are maintained by an organization, it is able to gain reputation in the marketplace (Duffield & Whitty, 2015). Furthermore, system integration of different departments will allow Woolworths to effectively cater the needs of business.
Opportunities and Threats
Conclusion
Therefore, it can be concluded that strategic information systems play a great role in attaining a competitive advantage by the organization. This report focused on Woolworths by conducting the external and internal analysis and then proposing an information system solution which can be used for the purpose of gaining the competitive advantage in the market. Woolworths Group Limited is the major company of Australia having extensive retail interest throughout New Zealand and Australia. The general environment analysis provided that Woolworths is effectively dealing with the outside factors. However, it is facing immense competition from Coles and Aldi but is still able to maintain its position in the market. Technology can be used as an opportunity for dealing with the competitors.
The internal analysis of Woolworths provides that it is in a strong position in terms of its tangible and intangible resources. Brand reputation, supply chain and top level management constitute the capabilities of Woolworths. At the end of this report, an information system solution is proposed which should be adopted for improving the internal operations and maintaining security.
References
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