Strategic Analysis Of Woolworths In The Australian Supermarket Industry

Internal and External Factors Affecting Woolworths’ Functions

The environment of a business needs to consider the internal and external factors affecting the functions of the organisation that includes managing the business, staffs, demand, supply, and criteria to satisfy the potential consumer target. The organisation in focus is under struggles constantly since they need to stabilize the market in this threatened business environment along with the consideration of different strategic lines that will reflect both productive and profit section. Woolworths is the organisation in focus in this project. It will evaluate the position of the organisation dwelling in the Australian industry. Various internal operations support and outline the success of this organisation. This project has evaluated these operations in order to realize the operational gap and present the competition that reflects the evidence to micro and macro environment of Woolworths. Several measures like the networks or distribution channels, inbound logistics, and product control have been highlighted at the organisation in order to enhance the manufacture process to produce improved quality products. It has led the organisation to an improved inventory management and distribution channel.

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Surroundings of the business

In order to operate the business and bargain, Woolworths works in Sydney through basement outlets. It started out in 1924, since then the market of this organisation has taken over 31% of the retail market of the supermarket chain in Australia. The company has been able to develop a strong hold over the market and success through efficiency in work and product delivery. The business expansion and acquisition of this organisation has displayed smart approaches that led to the success of the organisation. It has shared operations with big organisations like Dick Smith Powerhouse and some others. According to the present financial report, Woolworths displays 21 effective and active stores that produces sales volumes worth AU$ 104 million (Woolworthsgroup.com.au, 2018).

The industry in focus is that of a supermarket retail market that provides the consumers with basic requirements for daily life and extraordinary requirements, which is concluded by customer-driven businesses attributes and activities. These large organisations in the supermarket retail industry are fostering the complete sales growth of the business through an intermediary position. The enhanced growth and revenue through the intermediary production have shown invariable earning in the last four years. The revenue has displayed an increase of 4.1% during the estimation of the outcomes. The consistency in growth in Gross Domestic Product (GDP) has displayed a stronghold the organisation has in reference to a standard pattern. The organisation has shown a limit of AU$ 78,502 million but with a revenue increase up to 4.4%. Food Works and Franklins have been considered by the organisation concerning business expansion. The present reports display the effective approach Woolworths has taken in order to be the industry leader in the retail industry of Australia. Coles holds 23% of the overall share of the market, which identifies as one of the competitors in the concerned industry.

Position of Woolworths in the Australian Supermarket Industry

Legal and political factors: In the case of this organisation, the political and legal aspects have highlighted the legal laws and regulations. These laws have influenced the overall operations of the retail organisation significantly. The organisation has focused on the different policies that accept the important initiatives reflecting the empowerment, employment along with the other important organisational responsibilities. The structure of the criteria sets up the policies of the government as in the current condition the development of crusades has taken place in order to block the retail organisation by the sides of Woolworths.

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Economical factor: Financial and economical factors are the similar supplement of the concept depending on the spending levels in the optional products and goods. The change in the current situation with the customer or consumer trends depicts a larger value to consumer needs. The customers have proclaimed highly their involvement in the disposal of income to the market (Schaltegger and Wagner, 2017). In the case of this organisation, the private organisations or the supermarkets have displayed the contribution to the complete business growth by making maximum efforts that displays the capability of the organisation to gain consumer attention.

Demographic: The definition of the demographic environment is determined by the demographic factors, which include gender and ethnicity in concern. The identification of the consumer target market in an organisation is determined by the analysis of the demographic specifications of the industry in order to achieve profits through the products and services displayed in the market. According to the factors of the market in Australia, there has been a wide change in the demands and needs of the consumers (Vora and Jayswal, 2018). Therefore, the current situation displays the technological factors changes that have influenced the demands and needs of the consumers.

Global: The overall factors that have comprehensively emphasised on the requirements of the organisation according to the considerations are determined by the global concepts. The factors that reflect the survival of the market have related to the unique needs of the customers along with the processed operations during the de-regulation courses in the trading hour. The organisation offers products that maintain an exponential growth that stays in the global dimensions.

Socio-cultural factors: The organisation in focus has its priorities towards the well-being and health of the customers. In addition, Woolworths have taken an interest in the materials and food products that are organic in relation to the customer nature biased towards health based food products (Edge, Newbold, and McKeary, 2014). Changes in the supermarkets in the current period in order to survive in the constantly changing and growing business environment are posing as a potential threat for the farmers in Australia.

Evaluation of Woolworths’ Internal Operations

Physical: According to the current situation, Woolworths is working around the market environment full of challenges, in which the market displays entire attention on the expansion of the businesses and growth while concentrating on the innovative ways of production and manufacture. These factors of the organisational social responsibilities are the priorities of the organisation, which positively affects the operations of the business.

Technological: According to the current scenarios in the business environment, the technological aspects have standardised the features of a business that grows significantly through the operations of the business. The technological factor allows the organisation to have a competitive edge and advantage over the other businesses in the market. According to the innovations, the changing trends positively harness the survival of the organisation, which motivates the organisation with plans and long-term approaches (Jeston, 2014). Technological innovation dwells in the processes of the operations, which include the supply chains and the business inventories. The managers of Woolworths have managed to install green-refrigeration techniques in the structure of the organisation, which supports implementation of the advancements in technology within its business processes.

The competition between the present market competitors: An organisation like Woolworths in the market of Australia faces potential competition from the rising small organisations. In alignment with other factors that display the offers of the organisation, which display different requirements depending upon the service or the product nature in alignment with market needs. This organisation has three vital areas that include efficiency in locating the stores in the market, consideration in the customer valued product prices, and knowledge of the market or customer needs and requirements. The competition for Woolworths in the present market of Australia is Costco and Coles.

Substitution threats: In recognition of the market in Australia, the threats posed represent the dangers that have to be eliminated in the market. The organisations undergo enhanced changes that have led them to come across several challenges or threats from the convenient and special grocery stores (Bryson et al., 2018). The increasing number of the competition in the market has affected the innovations of the products to increase in the market. The organisation has resorted to products that are aiding them curb the number of increased competitors in the market.

Suppliers bargaining power: The bargaining power of the suppliers in the business that supply the raw materials are displaying low levels of bargaining approach, as the organisations are not dependent on only one supplier for the supply of the raw materials. The large organisations like Woolworths and Coles have a control of 81% over the market share of the retail industry. Hence, the delivery of the intermediate selection of the products is carried out within a given time.

Analysis of Industry and Competitors

Buyers bargaining power: The assurance of the increase of aggressive sales requirements needs development through the federal government and ACCC in order to refer the purchasing pattern of the organisation. The market in Australia along with its bargaining power of the buyers is lowered due to the high availability of consumer-based products within the market. The customers are ensured with a large range of products and choices that they can manage to compare in the terms of utility and price through various sources and e-commerce websites.

The new entrant’s threat: The threat of the new entrants has an increased intensity that lowers the sustained business future chances for the organisation (Christensen et al., 2015). They have to bring about innovative operations and changes in the manufacturing, technological, and distribution channels.   

The direct sales of Woolworths help in highlighting the fact that there has been increase in the income level of the consumers. In other words, it can be said that poor customers have increased. Coles, which is the American retailer in the supermarket industry is the arch rival of Woolworths and has replaced the middle and high management. All these are considered in regards to competitiveness.

One of the greatest hazards that is being faced by the organization is, the cost of raw materials is increasing that are require to manufacture the food and non-food items. This is in turn influencing the profitable boundaries. When recession hits the economy, this process is going to be helpful that will lead to a growth strategy for the organization. The growth strategy is, the organization will be opening up new stores. The organization is facing stern challenges from the global companies as well.

The opportunities for the organization lie in the new markets. The new market should comply with agreements stated down by the government. This will help in adopting many new technologies. Government agreements are helping the organization to manage trading agreements that needs to match the performance and system standards. The new customers base in the market are likely to acquire their products from the e-commerce sites and this fact is found out using big data analysis. This is helpful in delivering customer-friendly and effective products. Economic boost depends on the increased expenses done by the consumers during the time of recession. The marketing department of the organization should enhance its strategies in order to give a tough competition to the rivals. 

Legal and Political Factors Affecting Woolworths

Internal analysis for a firm is conducted in order to control the strengths and identify the weaknesses. After evaluating the commotions, the capacity in the relationships can be measured. This incorporates the entire value chain and introduces different foundations so that challenging benefits can be gathered.  The year of 2011 had a put emphasize on the fact that vendors needs to be identifies in the trading model.

There are some 3000 stores registered under the name of Woolworths in Australia and in New Zealand. The 3000 stores have some 180000 employees working in it. Human resource and innovation approved by the organization are the tangible and the intangible resources of the organization (Sarasvathy et al., 2014). The amount of stores the organization has helps in increasing the market share for the organization.

The capability of Woolworths lies in the unique production techniques that will introduce innovation in the organizational structure (Hohenthal, Johanson, and Johanson, 2015). The workforce of the organization is talented and the recruitment process is very effective. The distribution channel and the chains of supply management in the organization are effective and this helps the company in retaining the brand loyalty among the consumers (Knight and Liesch, 2016).

Brand Marketing: In any organization, a positive brand image is very important. Woolworths has concentrated on brand marketing to increase its presence among the potential consumers (Knight and Liesch, 2016). The organization has ensured that the services and the products of the organization are of high quality so that demands of the consumers can be met easily (Zhou and Wu, 2014).

Innovation: The Company has laid importance on meeting the requirements of the consumers. Innovation is one of the important elements that are necessary to meet the demands of the consumers.

Integration: Woolworths has put an emphasis on the fact that the company will integrate smoothly with the suppliers and the contractors. This needs to be managed by managing different deals with the suppliers and the contractors.

Supply class chain: Woolworths has focussed on to gain competitive advantage in the market and the company is trying to incorporate innovation in the business by developing the research and the development department of the organization (Casillas et al., 2015).

The management information system is quite impactful in meeting the needs of the organization (Zander et al., 2015). Various processes in the market can be successfully managed by this system. Necessary data can be procured using the management information system. SAP will be helpful to meet the needs of the company software with easy and fast evaluation of work.

Economical Factor Impacting Woolworths

The current system of the company is technologically advanced and has in-built automation features. The current management information system monitors, controls, and records the databases. SAP will help in handling the different forms of the data and bring a better ERP planning which is important for the improvement of the system control.

The present retail brand can work on improving the basis of the skills that still exists in the larger supermarket organizations. In the current scenario, it is possible that social media can work towards promoting the brand to the common masses. Woolworths can make use of sponsorship from different areas and advertisements in order to promote its services and products. Therefore, it can be said that the organization is making use of the emerging technologies for its promotional activities.

Conclusion

Complete analysis has been done on Woolworths. In addition to this, the strengths and the weaknesses of the organization have been identified. Woolworths has found out a new tendency among the consumers and this has happened by offering them with various options hat is creating a positive impact on the revenue stream of the organization. Along with it, the present condition of the company has also been analyzed in this project.

References

Bryson, J.R., Mulhall, R.A., Song, M., Loo, B.P., Dawson, R.J. and Rogers, C.D., 2018. Alternative-substitute business models and the provision of local infrastructure: Alterity as a solution to financialization and public-sector failure. Geoforum, 95, pp.25-34.

Casillas, J.C., Barbero, J.L. and Sapienza, H.J., 2015. Knowledge acquisition, learning, and the initial pace of internationalization. International Business Review, 24(1), pp.102-114.

Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive innovation. Harvard Business Review, 93(12), pp.44-53.

Edge, S., Newbold, K.B. and McKeary, M., 2014. Exploring socio-cultural factors that mediate, facilitate, & constrain the health and empowerment of refugee youth. Social Science & Medicine, 117, pp.34-41.

Hohenthal, J., Johanson, J. and Johanson, M., 2015. Network knowledge and business-relationship value in the foreign market. In Knowledge, Networks and Power (pp. 187-224). Palgrave Macmillan, London.

Jeston, J., 2014. Business process management. Routledge.

Knight, G.A. and Liesch, P.W., 2016. Internationalization: From incremental to born global. Journal of World Business, 51(1), pp.93-102.

Sarasvathy, S., Kumar, K., York, J.G. and Bhagavatula, S., 2014. An effectual approach to international entrepreneurship: Overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), pp.71-93.

Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The integration of social, environmental and economic performance. Routledge.

Vora, P.R. and Jayswal, M., 2018. Demographic Factors Influencing Brand Equity in Context of Advergame. Asian Journal of Research in Business Economics and Management, 8(6), pp.40-53.

Woolworthsgroup.com.au. (2018). Woolworths Group: Quality Brands and Trusted Retailing. [online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 8 Sep. 2018].

Zander, I., McDougall-Covin, P. and Rose, E.L., 2015. Born globals and international business: Evolution of a field of research. Journal of International Business Studies, 46(1), pp.27-35.

Zhou, L. and Wu, A., 2014. Earliness of internationalization and performance outcomes: Exploring the moderating effects of venture age and international commitment. Journal of World Business, 49(1), pp.132-142.