Developing a Business Strategy: Woolworths

Introduction

Businesses should update their strategies periodically and consider the nature of rivalry in their respective industries to remain profitable. Leaders can utilise such strategic actions or initiatives to attract more potential customers, maximise performance and achieve their outlined organisational goals. Woolworths has been in business for 95 years. It currently markets groceries, DVDs, household products, stationery and magazines to customers of varying demographics.

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Being one of the leading players in Australia’s retail industry, Woolworths Group should consider a four-year strategic plan that includes additional outlets, online marketing strategies and evidence-based approaches to overcome the challenge of their retail competition. The discussion below provides a detailed description of Woolworth’s organisational context, a strategic analysis of internal and external environments, strengths, weaknesses, opportunities, and threat (SWOT) analysis, and recommendations to make it successful within the targeted period.

Organisational Context

Statement of Strategic Intent

Woolworths remains profitable in the Australian retail industry due to its powerful business model. The current mission is to provide value, quality and convenience to every customer. The vision revolves around becoming a trusted partner to all local manufacturers and farmers. Its goals include improving stock performance, optimising business efficiency and ensuring that all potential customers receive value-for-money.

However, this organisation is currently focusing on the most appropriate strategies to become a recognisable brand in several continents within the next four years. Its leaders can also monitor the current trends in the global market arena to maximise profits by attracting more customers. These intended goals require a powerful initiative or tactic that will take the company to the anticipated level. This means that Woolworths will have to implement powerful marketing strategies, maximise it operational and distribution process and identify additional approaches to inform more customers in the new markets about its products.

The successful launch of the proposed strategic plan will eventually transform the nature of rivalry and eventually promote performance (Ebitu 2016). The main intent is to extend its business model in the retail industry and increase its market share by over 20 percent within the next four years. The involvement of key stakeholders will be essential to ensure that positive results are recorded and meet the diverse needs of every potential customer.

Positioning Statement

For all customers who require quality grocery supplies, informational magazines, baby products and beauty goods, Woolworths is the true retailer that intends to deliver exception, so they can pursue their goals in life diligently because of this organisation’s promise and mission to offer the best in quality, value and convenience to both new and existing customers.

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Industry Value Chain

As described above, Woolworths operates in the Australian retail industry to meet the changing demands of a wide range of customers. This means that it follows a powerful value chain that maximises competitive advantage and profitability in the industry (see Figure 1).

Woolworths’ industry value chain.
Figure 1. Woolworths’ industry value chain.

The first part of this value chain entails sourcing materials from importers, manufacturers, and farmers. These key suppliers support the operations and aims of Woolworth’s. The second phase is that of warehousing and packaging depending on the needs of different clients. The next part is to deliver such items to different retail stores and wholesalers (Everest 2018). Marketers also coordinate and identify products that need to be delivered to customers who order them online. Finally, all customers are encouraged to recycle and dispose various materials to maintain the integrity of the natural environment.

External Strategic Analysis

Porters Five Forces

Leaders in Woolworths Group can utilise Porters Five Forces to establish a sustainable strategy that will eventually make this organisation more profitable in the retail sector. These major forces characterising the company’s current external environment are presented below.

Threat of New Entrants

Newcomers in the Australian food industry can introduce new strategies and innovations to maximise performance. Such companies can decide to reduce their prices or offer value additions to the targeted customers (Mukhezakule and Tefera. 2019). This means that the threat of this force is quite high.

Bargaining Power of Suppliers

The retail industry has powerful suppliers who provide different materials to Woolworths and other players. They occupy a dominant position, thereby being able to force organisations in the retail industry to abide by their terms. The bargaining power of such suppliers, therefore, remains quite high in this sector.

Bargaining Power of Buyers

Modern customers expect quality and sustainability from various marketers of various products while, at the same time, receiving better deals. This kind of expectation continues to put more pressure on Woolworths (Yuliansyah, Gurd, and Mohamed 2017). Customers have the ability to consider other established or emerging competitors in the industry who can meet their demands. This reality means the bargaining power of such buyers remains high. Woolworths should consider this factor and make evidence-based decisions to remain competitive in the industry and eventually add value to every customer.

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Threats of Substitute Goods

The Australian retail industry has many companies that deliver high-quality grocery products to their customers. The abundance of groceries and other products in the market makes it possible for consumers to switch retailers. Woolworths needs to focus on emerging demands to realise its market (Aghazadeh 2015). The number of products available from alternative sources is a clear indication that the threat of substitute goods remains high in the retail industry.

Industry Rivalry

Woolworth’s operates in a competitive environment with small, medium, and large companies that provide superior services and products to many people (Kasanagottu and Bhattacharya 2018). The current level of rivalry remains extremely high, thereby making it impossible for this organisation to record their intended long-term profits.

PESTEL Analysis

External forces and situations inform various strategic decisions to support or enable long-term profitability. Woolworth’s operates in a complex market characterised by the following factors:

Political Factors

Woolworths operates in different regions and countries that present diverse political situations. In the Australian market, a stable government is in place that promotes the demands of both its citizens and corporations (Everest 2018). Before deciding to invest in any new country, Woolworths needs to consider the reported levels of corruption, government interference, existing trade policies and laws and pricing regulations (Aghazadeh 2015). These attributes are worth considering because they can promote or disorient business performance and eventually affect profitability.

Economic Factors

This organisation operates in countries that have stable inflation and interest rates. For instance, the economic performance of Australia has been positive within the past two decades. The country has favorable trade policies that allow suppliers and manufacturers to acquire raw materials from different regions and maximise productivity (Yi, Park, and Kim 2019). A capitalistic economic system exists that creates the best environment for doing business. The presence of advanced infrastructure, positive government incentives, and stable policies continue to support organisational performance.

Social Factors

Woolworth’s external environment is comprised of different cultural groups with diverse values and goals. In terms of demographics, the population has both young and middle-aged citizens who desire high-quality services. The majority of potential customers have a college or other tertiary education. The income rate is moderate, while the level of unemployment remains quite low (Yuliansyah, Gurd, and Mohamed 2017). Many people currently focus on the concepts of sustainability, recycling and healthy eating. These forces have continued to support the profitability of this company.

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Technological Factors

The disruptive nature of this force is something that Woolworth’s leaders should begin to take seriously. Different aspects of this industry are embracing emerging technologies, including transport, marketing and production. New technologies have become a reality that compels companies to focus on the best ways to add value to their customers (Yuliansyah, Gurd, and Mohamed 2017). The use of social media platforms is a trend capable of influencing the goals and strategies of retail companies.

Environmental Factors

Many countries around the globe have introduced additional laws that promote the integrity of the natural environment. Similarly, companies are presently taking the processes of recyling and reusing products more seriously than ever before. Some customers are associating or doing business with companies that have evidence-based strategies for conserving the environment. A detailed analysis of these emerging trends and changes will make it possible for Woolworths to succeed in emerging markets. The company needs to consider laws addressing the problem of pollution and overutilisation of resources (Yi, Park, and Kim 2019). Attitudes towards the introduction of renewable energy are also worth taking into consideration.

Legal Factors

Australia and other countries have strict regulations aimed at controlling the performance of various retailers. There are numerous laws and policies that dictate the quality of services and products available to customers. Some guidelines have been introduced to protect workers and suppliers. The key legal factors to consider include equality and discrimination laws, consumer protection strategies, employment empowerment initiatives and intellectual property legislation (Everest 2020). Companies also required to protect client data to deliver the highest level of confidentiality.

Internal Strategic Analysis

Firm Value Chain

The Firm Value Chain is one of the tools analysts use to examine the internal strategy of a given organisation. Woolworth’s has primary and secondary activities that operate simultaneously to ensure that raw materials and supplies are eventually marketed successfully to the targeted customers.

Primary Activities

Inbound Logistics: For the primary operations, inbound logistics are pursued whereby different suppliers use established systems to deliver materials and products depending on the needs of the final clients.

Operations: In terms of operations, employees are equipped with relevant resources and support equipment because they form the most important asset for the company (Yuliansyah, Gurd, and Mohamed 2017). A cultural policy exists whereby workers are expected to focus on the changing demands of the customers. Woolworths uses training sessions and incentives to improve the overall productivity of workers and improve service delivery. The presence of high-quality facilities reveals the competitiveness of the established standards in the retail industry (see Figure 2). An operations manager in each region focuses on the activities being undertaken to ensure that they improve the experiences of the customers.

Woolworth’s value chain.
Figure 2. Woolworth’s value chain.
Outbound Logistics

This model goes further to guide analysts to examine the issue of outbound logistics in a given corporation. At Woolworth’s, vegetables, fruits and other goods are usually dispersed to all stores (Mathu and Phetla, 2018). The use of online outlets ensures that the ordered materials are delivered in a timely manner (Knox 2015). Customers are encouraged to provide timely insights to influence decision-making processes and promote future success in outbound logistical operations.

Marketing and Sales

Marketing remains a powerful practice that supports Woolworths’ business aims. This organisation has been introducing innovative approaches and approaches to enhance the quality of customers’ experiences (Mathu and Phetla, 2018). The decision to introduce more modern stores, which include sushi bars, has revolutionised this company’s competitiveness (Knox 2015). New campaigns focusing on value additions and price reductions have constantly improved Woolworths’ competitive advantage in the retail industry (Yi, Park, and Kim 2019). Targeted customers receive timely updates whenever the company decides to lower prices. The ultimate objective is to add value to the targeted buyers.

Service

At Woolworths, the element of marketing and service are combined to maximise the experiences of customers and eventually increase profitability. The concept of “end of life” is critical since it encourages customers to recycle specific materials in an attempt to protect the natural environment (Rezaee 2017). Woolworths’s also pursues corporate social responsibilities (CSR) as a way of transforming the lives of more community members and the needy.

Supportive Activities

Firm Infrastructure

In addition to those key activities, support procedures for every aspect of the internal operations remain critical. For instance, the company has modern infrastructure to provide warehousing and support the needs of customers (Mathu and Phetla, 2018). Individuals in the organisation can capitalise on the infrastructure to pursue better processes, solve problems, and improve service delivery continuously.

Human Resources

The human resource department remains ready to identify emerging predicaments, hire people who possess the competencies to take the company from point A to B, and provide the required interpersonal support (Everest 2016). The department goes further to match available skills with emerging roles.

Technology

The established information technology (IT) infrastructure and the subsequent supply chain systems have been instrumental in ensuring that all products are available to the end-users in a timely manner (Mathu and Phetla, 2018). Such a business strategy minimises chances of role duplication and streamlines operations.

Procurement

Procurement procedures are designed in such a way that the required materials for different departments are delivered in a timely manner (Yuliansyah, Gurd, and Mohamed 2017). The company liaises with suppliers and other key stakeholders to ensure that emerging obstacles are identified and addressed before affecting the established model (Knox 2015). From this analysis, it is evident that the internal operations undertaken at Woolworths are effective and can support a superior model aimed at maximising profits and increasing this organisation’s competitive edge. Those involved in such a strategy can consider expanding the internal activities to achieve the intended aims.

SWOT Analysis

Woolworths follows a strong business model that empowers employees to focus on the changing demands of the greatest number of customers. It has established a broad portfolio of products that add value to the clients, including non-vegetable products, vegetables, confectionary items, kitchenware, footwear, and apparel (Yuliansyah, Gurd, and Mohamed 2017). Private labels and popular brands are considered and delivered at low costs. With over 1,000 stores and supermarkets, Woolworth’s remains a recognisable competitor in the retail industry (Everest 2016). The table below gives a detailed summary of this organisation’s SWOT analysis (see Figure 2).

Strengths
  • Woolworths is one of the major companies that dominates the regional retail market.
  • This organisation has succeeded in penetrating the market and focusing on the demands of more potential customers.
  • A powerful policy and model for managing perceptions exist in this company.
  • The organisation trains, mentors and empowers employees to maximise satisfaction and improve service delivery (Everest 2018).
  • A powerful customer tracking strategy exists to increase sales
  • The existing aggressive strategy attracts more customers continuously.
Weaknesses
  • The ongoing price war between Woolworths and Coles increases losses due to continuous discounts and reduced prices.
  • The decision to target both premium and value chains confuses customers, thereby affecting the level of sales (Yi, Park, and Kim 2019).
  • The company targets different income populations or segments. This practice confuses customers because they are unaware of where to receive discounted prices (Everest 2018).
Opportunities
  • Woolworths has a remarkable experience in marketing. The existing in-store operations and procedures can meet the demands of future customers.
  • The increasing number of potential customers is a new opportunity to increase sales (Everest 2018).
  • Modern technologies and emerging forces of globalisation and consumerism can support this organisation’s future business model.
Threats
  • The retail industry continues to attract more potential competitors, including Amazon which uses online platforms to deliver experience and quality to more customers (Comyns 2015).
  • More people are presently focusing on the health promotion measures of companies.
  • The current trend arising from the use of apps and online stores can undermine the competitiveness of this organisation in the future.

Figure 3. SWOT Analysis for Woolworths.

Recommendations

The above analysis and discussion identified the unique strengths and opportunities that Woolworths can capitalise on to improve performance and increase its profits by over 20 percent within the stipulated period of four years. Those in charge of strategy can consider the existing political, environmental, economic, and social factors that support the intended goals and deliver quality to more customers (Everest 2018).

The use of existing supportive and primary activities can make it possible for Woolworths to achieve its potential and become a recognisable competitor in the emerging innovative retail industry. Top management needs to consider various strategies that transform performance and continue to improve the experiences of the greatest number of clients.

The first evidence-based strategy capable of taking this organisation to the next level is the move to consider untapped markets and establish new stores and supermarket chains to deliver quality products to an additional number of customers. This approach can deliver desirable results because the region has positive economic and political indicators that sustain business performance. The current resources, processes, assets and logistical operations can make such a move a reality (Yi, Park, and Kim 2019).

The outstanding benefits of this suggestion include the ability to increase sales within a short duration, the opportunity to dominate new markets, and the provision of better services that may eventually increase Woolworth’s competitiveness (Rezaee 2017). Risks associated with this model are the availability of different retailers, the uncertainty associated with new changes, and the lack of adequate human resources to support the entire strategy.

The second strategy recommended to this company is the decision to launch more online stores whereby customers can place orders and have their items delivered within the shortest time possible. This initiative is relevant since many corporations have pursued technological means to improve their competitiveness and deliver quality to more customers. For instance, Amazon and Alibaba have considered such a strategy to focus on the changing demands of customers at the international and local levels (Rezaee 2017).

Woolworth’s use of a similar strategy can increase the current customer base and maximise profits. The benefits associated with this approach include the ability to increase the percentage of sales without incurring numerous costs, the presence of supportive systems and IT infrastructure, the reduced requirement for additional service providers and the predicted gains (Yi, Park, and Kim 2019). However, this model may trigger various risks that may have negative implications on the company’s future. For example, the strategy may take time to deliver positive results due to the nature of the online retail sector (Everest 2020).

Such a recommendation can also discourage more customers since it deviates from Woolworth’s reputable business model. These risks may eventually affect overall performance due to the intentional deviation from the current and existing strategy.

The third recommendation is to transform the nature of the operations at this company by matching them with the anticipated four-year strategic plan. This initiative means that the company can introduce or pursue additional insights to overcome potential sources of wastes. Although there are current manufacturing processes at Woolworth’s, leaders focus on this idea to improve the level of service delivery, guide workers to add value to the targeted customers, and revolutionise logistical operations. These additional measures will make it easier for this organisation to achieve its goals within a very short time.

The first benefit is that the existing level of wastes will be eliminated. The second benefit is that more profits will be recorded without having to incur additional costs (Rezaee 2017). Te third advantage is that more people will be willing to become part of the initiative and make the company more successful. However, there are specific risks that may emerge after this recommendation is implemented. First, the move may complicate the current situation and make it impossible for this organisation to achieve its goals. Second, the consideration of new insights may complicate things further and eventually backfire, thereby affecting the level of profitability.

The final recommendation based on the above analyses is to consider the importance of diversification. Currently, Woolworths remains a retailing company that markets various grocery products and household items. The process of diversification means that the company will introduce new items and consider the importance of venturing into new areas, such as hardware and fast food. When such a move is implemented, the chances are high that additional profits will be made. The first benefit is that this organisation will increase sales while at the same time fulfilling the changing demands of the customers (Everest 2020).

The second benefit is that the company will find a reason to transform its model and overcome most of the weaknesses identified above. The third benefit is that Woolworths will become more competitive and achieve most of its goals. The major risks associated with this model are that the company will have to utilise its resources to support the idea, increase its chances of becoming obsolete, and confuse more customers. These risks indicate that the company may be unable to make positive gains.

Conclusion

The above discussion has identified Woolworths as a successful company whose mission and model focus on the demands of its customers. The presence of enabling factors and opportunities in the identified economy makes it possible for leaders to consider additional strategies to maximise competitiveness. The consideration of the above recommendations will reduce the major weaknesses affecting performance and create additional opportunities for increasing profits. If launched successfully, the outlined initiatives will ensure that the company realises its goals within a period of four years. The acquired gains will eventually make Woolworths more competitive and capable of addressing its customers’ unique needs.

References

Aghazadeh, Hashem. 2015. “Strategic Marketing Management: Achieving Superior Business Performance through Intelligent Marketing Strategy.” Procedia – Social and Behavioral Sciences 207 (1): 125-134. Web.

Comyns, Barbara. 2015. Our Spoons Came from Woolworths. New York: New York Review Books.

Ebitu, Ezekiel Tom. 2016. “Marketing Strategies and the Performance of Small and Medium Enterprises in Akwa Ibom State, Nigeria.” British Journal of Marketing, 4 (5): 51-62.

Everest, Elaine. 2016. The Woolworths Girls. London: Pan MacMillan.

Everest, Elaine. 2018. Wartime at Woolworths. London: Pan MacMillan.

Everest, Elaine. 2020. Wedding Bells for Woolworths. London: Pan MacMillan.

Kasanagottu, Suresh, and Sudipto Bhattacharya. 2018. “A Review of Metro, Target, & Woolworths Global Business Strategy.” International Journal of Mechanical Engineering and Technology 9 (7): 293-302.

Knox, Malcolm. 2015. Supermarket Monsters: The Price of Coles and Woolworths’ Dominance. Collingwood: Redback.

Mathu, K. and Phetla, S. (2018) ‘Supply chain collaboration and integration enhance the response of fast-moving consumer goods manufacturers and retailers to customer requirements’, South African Journal of Business Management 49(1), p. a192. Web.

Mukhezakule, Maluta, and Orthodox Tefera. 2019. “The Relationship between Corporate Strategy, Strategic Leadership and Sustainable Organisational Performance: Proposing a Conceptual Framework for the South African Aviation Industry.” African Journal of Hospitality, Tourism and Leisure 8 (3): 1-19.

Rezaee, Zabihollah. 2017. Business Sustainability: Performance, Compliance, Accountability and Integrated Reporting. New York: Taylor & Francis.

Yi, Hwa Deuk, Sambock Park, and Jonghyun Kim. 2019. “The Effects of Business Strategy and Inventory on the Relationship between Sales Manipulation and Future Profitability.” Sustainability 11 (8): 2377-2394. Web.

Yuliansyah, Yuliansyah, Bruce Gurd and Nafsiah Mohamed. 2017. “The Significant of Business Strategy in Improving Organizational Performance.” Humanomics 33 (10): 56-74. Web.

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