Situational Analysis
Strategic Management is the continuous planning, monitoring, analysis and assessment of all that is necessary for the organisation and industry in order to achieve the objective (McDONALD, 2016). In this report, Woolworths has been taken into consideration to analyse the internal and external environment. In the beginning of this report, the market size and trend will be discussed. After that the financial performance, and corporate performance will be analysed for the competitive advantage of the company. At the end of the report, the strategic recommendation has been given for the expansion of the company in the market.
The supermarket and groceries stores industry are the most competitive industry of Australia. The companies of the industries are continuously growing in the market such as ALDI. The rapid growth of ALDI builds the strong brand image with the low price products and strong growth. The rise of ALDI has forced the other companies to cut the prices such as Woolworths in order to expand the business. It has been analysed that the smaller supermarket chain are struggling to compete the increasing price intense. The industry is growing over the past years with the rate of 1.9% (Orel& Kara, 2014). The GDP rate of the industry is growing with the annualised rate 2.7% over the same period. It is observed that the exiting companies open the new stores by expanding the business which creates the difficulty for the new companies to enter the market. There are two best performers in the market who gain the high market share in the total grocery market such as ALDI and Woolworths. There are various retailers that compete in the fresh food segments such as butchers, seafood retailers, bread shops, fruit shops, and many others. It is observed that the Woolworths are the best performer in this segment with the rate of 26.7% (IBIS World, 2018).
It is expected that the supermarket and grocery industry will grow with the percent of 2.2 in 2017-18. The families are the main segment which helps the industry to grow in the Australian market. The companies of these industries open the stores in the different areas in order to distribute the services to the consumers. Open the agencies and small stores are the distribution channels of the company.
It has been analysed that the company faced the loss in the last year with the amount of 2347.9 and gain the profit with the rate of 1593.4 in 2017. By comparing both the years, it is observed that the company profit margin is raised. The company invest in the assets and other activities of the business with the negative amount of 1431.4 in the year of 2017 and in the 2016 it invest the amount 1266.7 which is less than the amount of 2017. It reflects that the company purchase the asset and the cash in hand is reducing from the company. The operating activities of the company are 3122 in the year of 2017 and 2357.5 in 2016. It is observed that the company faced the loss in 2016 due to spending more in operating activities. Now, the company put more efforts by spending more in the operating activities to modify the loss into profit (Woolworths, 2017).
Industries to Choose From
As per the financial analysis of the industry, it has been analysed that the profit margin of the industry is failing over the past year. Industry profit margin is reduces due to reducing the prices to stay in the competition of the market. The annual growth rate of the industry is 2.1% and the revenue is $103bn (IBIS World, 2018).
SWOT analysis of Woolworths
Strength
The supermarket of the Australia is governed by the two leaders such as Woolworths and Coles. It has been seen that the company grab the 80% of the market share which helps in reducing the threat of competition (Phadermrod, Crowder, and Wills, 2019).
The company opened the stores with the high brand value by targeting the high class of people. After a certain period of time, the company down their prices to compete the competitors. Now a days, the company have strong presence in both the spectrum.
The company always track the customer with the analytical tools in order to satisfy the customer by delivering the quality of product. The company also track the customer bills and also ensure that the customer buy the company product to satisfy their needs and demands.
Weaknesses
The income target segment of the company send the confuse segment signal to the consumer. The company target the different income segment which creates the confusion for the customer in order to buy the product in the prices.
Woolworths have high value of goodwill due to which the company faces the high competition in the market in the context of price. The company has to reduce the prices to gain the competitive advantage but the company suffer loss due to low the prices (Woolworths Group, 2018).
Opportunity
Each and every supermarket offers the same services to the customer. The company has the opportunity to focus on the production of different products in order to grab the high market share in the market. The company can offers the self-checkout, personalised services, personalised loyalty schemes and many others so that the company serve the different services from the other companies to the customers,
Threat
The biggest threat for the company is the high competition in the market. The company has high competition due to high value of goodwill.
It has been analysed that the demand of the consumer is getting change with the passage of time. The consumer’s focuses on the chemical free products which are not delivering by the supermarket that is threat for the company in the context of reducing the sale. The supermarket has to change their services so that they can easily grab the high market share.
Final Strategic Recommendations
The company has high competition in the market but the company uses the strategies to attract the customer and gain the high percentage of profit. Cost leadership strategy is used by the company in order to gain the competitive advantage. It has been seen that the company target the different segments in the context of income. The different segment of income reflects the strong presence in the both the sectors which helps the company to achieve the competitive advantage (Block, Kohn, Miller, and Ullrich, 2015).
The company has to the use the different strategies in order to grab the high competitive advantage and high market share.
Ansoff matrix
Ansoff matrix is a perfect method for the company in order to gain the competitive advantage. It contains the four strategies which helps the company in expanding the business and competing with the competitors (Schawel, and Billing, 2018). Market Development, Market penetration, Diversification and Product Development are the strategies which states the development of the product at the different level by expanding the business or by differentiating the product (Gurcaylilar-Yenidogan, and Aksoy, 2018).
Porter’s generic strategies
It has been seen that the company faced the issue of price, competition and product quality. The company has to use the porter’s generic strategy which helps it to set the prices with the differentiate product. The porter’s generic strategy includes the cost leadership, differentiation and focus strategy which helps to develop the product different. This strategy is high recommended strategy in order to achieve the objective (Wicker, Soebbing, Feiler, and Breuer, 2015).
Healthy product
It has been evaluated that the company faces the issue of changing the consumer demand towards the healthy product. Nowadays, consumer demand is change and they attract to healthy products but the company does not deliver those products. It has been analysed that the sale of the company is reduces due to facing this issue. The company has to offere the chemical free products to the consumer so that it can easily attract the consumers towards the product and services (Gostin, 2015).
Fixed price
As per the above analysis, it has been seen that the company has different target segment in the context of income. Different target segment of income reflect the confusion for the consumer in order to buy the product. It is recommended that the company has to fix their prices by targeting the single price of consumer so that the consumer can easily buy the product. The consumers cannot compare the prices with the different websites in order to confirm the prices. The fixed prices attract the large number of consumer towards the services of the company.
Conclusion
From the limelight discussion, it has been concluded that the company faces the different issues such as cost, product differentiation and many others. The company is the main player in the supermarket industry which is strength for the company as well weakness because the high goodwill value increases the threat of competition. The company has to use the Ansoff matrix and porters generic strategy to attract the customer. It has been recommended that the company has to fix the prices and offer the healthy product for the expansion of business. The company will grow in the market with the high percentage of profit margin by following the recommendation.
References
Block, J.H., Kohn, K., Miller, D. and Ullrich, K. (2015) Necessity entrepreneurship and competitive strategy. Small Business Economics, 44(1), pp.37-54.
Gostin, L.O. (2015) Why healthy behavior is the hard choice. The Milbank Quarterly, 93(2), pp.242-246.
Gurcaylilar-Yenidogan, T. and Aksoy, S. (2018) Applying Ansoff’S Growth Strategy Matrix To Innovation Classification. International Journal of Innovation Management, 22(04), p.1850039.
IBIS World. (2018) Supermarkets and Grocery Stores – Australia Market Research Report. [online] Available from: https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/food-retailing/supermarkets-grocery-stores.html [Accessed 20/1/19].
McDONALD, M. (2016) Strategic marketing planning: theory and practice. In The marketing book (pp. 108-142). Routledge.
Orel, F. D., & Kara, A. (2014) Supermarket self-checkout service quality, customer satisfaction, and loyalty: Empirical evidence from an emerging market. Journal of Retailing and Consumer Services, 21(2), 118-129.
Phadermrod, B., Crowder, R.M. and Wills, G.B. (2019) Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Schawel, C. and Billing, F. (2018) Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33). Springer Gabler, Wiesbaden.
Wicker, P., Soebbing, B.P., Feiler, S. and Breuer, C. (2015) The effect of Porter’s generic strategies on organisational problems of non-profit sports clubs. European Journal for Sport and Society, 12(3), pp.281-307.
Woolworths Group. (2018). About us. [online] Available from: https://www.woolworthsgroup.com.au/page/about-us [Accessed 20/1/19].
Woolworths. (2017) Annual Report. [online] Available from: https://wow2017ar.qreports.com.au/xresources/pdf/wow17ar-financial-report.pdf [Accessed 20/1/19].
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