Company Overview

Discuss about the Gaining and sustain competitive advantage.

The report helps in analyzing the different kind of functional strategies that can be used by the respective company named Woolworths based in Sydney, Australia. The different kind of analysis is required to be done on the achievement of superior efficiency in comparison to the competitors. The analysis is required to be done on the material management of the company as this will help in solving the different kind of processes that is used by them such as Just-In-Time process. The analysis of the reasons of achieving superior efficiency in terms of different products and services has to be analyzed effectively.

The main aim and purpose of the report is to understand the different functional strategies as this will help the respective company named Woolworths in achieving the superior kind of efficiency in the entire competitive market.

The structure of the report will include analysis of the different functional strategies that will help in solving the issues and gaining superior efficiency. The processes used by the company have to be analyzed along with reasons for achieving superior efficiency in terms of goods and services as well.

Woolworths is one of the largest supermarket food chains based in Sydney, Australia. It is the company that has extensive retail kind of interest through New Zealand and Australia. Woolworths Supermarket was founded in the year 1924 in the month of September. The supermarket is operating in more than 996 stores across Australia with more than 115000 team members along with distribution centers. The revenue earned by the respective supermarket is 5900 crores AUD till the year 2017 and they are succeeding in the market as well.

The mission of the company is to satisfy the customers as well as the partners with the unique experience of shopping that offers proper quality and price based on commitment of the employees.

The vision of the company is to be independent along with innovative in which the different customers are able to choose from the different wide range of the different goods at reasonable prices.

Woolworths is famous for providing different kind of goods and services to their customers at an affordable rate. The main motive of the supermarket is to gain competitive advantage in the market by offering wide range of products and services in an effective manner as this will help in being more innovative in nature as well.

Functional Strategies Analysis

Woolworths is one of the largest supermarket chains that is based in Sydney, Australia (Woolworths.com.au., 2018). Proper analysis is required to be done in order to understand the different techniques that will help them in gaining superior efficiency over the other competitors namely Wesfarmers and ALDI. Proper external analysis is required to be done by Woolworths as this will help them in providing ideas about the different moves of their competitors and it will help Woolworths in gaining cost advantage and differentiation advantage as well. Proper PEST analysis is required to be done by Woolworths as to understand the strategies used by other competitors (Barney, 2014).

With the help of PEST analysis, Woolworths has implemented three strategies that includes the following:

• Offer: It will help in improving the core kind of offer wherein customers will put Woolworths first
• Growth: It is the second strategy wherein they will innovate different goods and services as per needs of customers (Cohen & Olsen, 2015)
• Efficiency: It helps in creating customer value by organizing for the success and it will be executing Lean Retail Model

The pricing along with range strategy has to be analyzed effectively wherein they have implemented the strategy to neutralize the Coles and contain impact of ALDI on sales of Woolworths. Furthermore, the lean retail model has been used to drive the three-year plans of growth wherein it has helped them in delivering $500 million of the cost reduction across the FY 2015-2016. With the help of the lean retail mode and pricing and range strategy, it has helped Woolworths in gaining superior competitive advantage in an effectual manner.

Porter’s Five forces model analysis can be done by Woolworths as to tackle the situation as this will help them in understanding their scope and gain competitive advantage.

• Bargaining Power of suppliers wherein Woolworths need to build efficient supply chain management with help of multiple suppliers (Steinbach, 2017)
• Bargaining Power of Buyers wherein they need to build large base of customers and this will help them in gaining superior competitive advantage
• Rivalry among existing competitors wherein Woolworths need to build differentiation strategy with sustainable differentiation (Slack, 2015)
• Threat from new entrants wherein Woolworths need to innovate new products as this will help them in gaining more customers (Morschett, Schramm-Klein & Zentes, 2015)
• Threat from substitute products wherein Woolworths has to be service oriented than product oriented

• Proper and accurate identification of materials that has been stored in their supermarket as this will help in receiving the receipt of the incoming goods (Bettis, 2016)
• Proper inspection of the receipts has to be done wherein this will help the company in understanding the defective materials present in the stock
• Proper storage and preservation is required to be done by Woolworths as this will help the company in controlling the inventory
• Issue by FIFO method is essential as this will help in easy stock taking and this will help the company in performing control of inventory

Woolworths Supermarket has maintained the material management in the above manner as this has helped in understanding the handling the materials in an effectual manner. Woolworths has applied the Just-In-Time process as most effective in nature wherein it is the strategy that is employed by the different companies as to employ more efficiency and decrease the wastage of goods by receiving such goods when they are required in the process of production. This kind of strategy helps in reducing the cost of inventory as well and this requires the producers to analyze the demand in an accurate manner.

Woolworths has applied the Just-In-Time inventory management system wherein they receive the different kind of dairy and other products that can be damaged in a short span of time. With the help of this strategy, Woolworths has been able to decrease the wastage of goods and it has helped them in gaining more profit as the inventory costs has been reduced as well. A separate department has been created by the supermarket wherein they inform the higher officials when there is requirement of such products and they are sold on daily basis as well. This kind of strategy has helped Woolworths in avoiding the wastage and this is also known as Toyota Production System (Rothaermel, 2015).

External Analysis

Figure 1: Just-In-Time Model

(Source: Ginter, Duncan & Swayne, 2018)

From the above diagram, it can be analyzed that the respective strategy is flexible and reliable for the supermarket as this will help in small lot delivery of the different parts with the philosophy of Just-In-Time and this has helped the entire company in gaining competitive advantage in comparison to the other companies in the competitive market. Woolworths has tried to gain huge profit along with revenue with the respective philosophy wherein they have reduced the inventory cost (Johnson, 2016).

Woolworths achieve superior quality of different products and services in the competitive market by implementation of different kind of strategies. Woolworths need to analyze the principles that have to be achieved by them as to gain more competitive advantage and attract more customers in the competitive market as well. The five principles that has been analyzed by Woolworths are as follows:

• Building customer along with store led team and culture
• Proper generation of sustainable sales momentum (Hill, Jones & Schilling, 2014)
• Becoming the lean retailer through the help of end to end process along with systems excellence
• Empowering the portfolio business as to pursue the different strategies as to deliver shareholder value
• Evolving the business of drinks as to provide more convenience and value to the customers

It has been seen that there are different competitors in the market of Woolworths wherein they apply different kind of strategies that helps them in gaining more competitive advantage. Furthermore, Woolworths has applied the different strategies that include:

• Woolworths has tried to improve the range and pricing strategy that has helped them in measuring the sales of Woolworths in an effectual manner. Proper measurement is required to be done by Woolworths in lowering the pricing strategy and greater usage of technology as this is an innovative process to make the shopping of the customers more easy
• Proper refurbishments along with new stores are the other strategy that has been used by Woolworths wherein it has helped the company in gaining competitive advantage. Woolworths has tried in implementing the different technological advancements in their strategy such as opening new stores in different locations along with introduction of the new products has helped the company in attracting customers in comparison to the other competitors in the market
• Delivering the new products as well as services to the customers in the market as this has helped the company wherein they have introduced FoodCo wherein it has developed food products for the new born babies along with the expecting mothers as well. These kind of product categories has helped the company in gaining competitive advantage in comparison to other competitors
• The online delivery strategy of Woolworths has helped them in gaining competitive advantage in the entire market in Australia as this is the only company in the market that has started delivering different products through online medium and this has helped in easing the difficulties of the customers in the market as well
• The people and performance are the other strategies adopted by Woolworths wherein their main motive is the first preference is provided to the customers in the market as they are the assets of the company and they are required to provide importance as well

Conclusion

Therefore, it can be concluded that Woolworths has tried to gain competitive and superior advantage in the entire market against the different competitors with the help of analysis of external factors. The PEST and Porter’s five forces analysis has been done as this has helped the company in tackling the situations. The Just-In-Time approach has been adopted by the company as this helped in analyzing their competitive advantage position.

Therefore, it can be recommended that the respective company Woolworths need to improve their products and services in comparison to competitors wherein they have to introduce products and services for the old age individuals. The respective company needs to understand the material management concept as this will help them in gaining more competitive advantage.

References

Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson higher ed.

Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal, 37(2), 257-261.

Cohen, J. F., & Olsen, K. (2015). Knowledge management capabilities and firm performance: A test of universalistic, contingency and complementarity perspectives. Expert Systems with Applications, 42(3), 1178-1188.

Ginter, P. M., Duncan, J., & Swayne, L. E. (2018). The Strategic Management of Healthcare Organizations. John Wiley & Sons.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Johnson, G. (2016). Exploring strategy: text and cases. Pearson Education.

Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management (pp. 978-3658078836). Springer.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Steinbach, A. L., Holcomb, T. R., Holmes, R. M., Devers, C. E., & Cannella, A. A. (2017). Top management team incentive heterogeneity, strategic investment behavior, and performance: A contingency theory of incentive alignment. Strategic Management Journal, 38(8), 1701-1720.

Woolworths(2018). Retrieved from https://www.woolworths.com.au/