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Wednesday, May 6, 2020

Woolworths Strategic Management for Supermarket - myassignmenthelp

Question: Discuss about theWoolworths Strategic Management for Supermarket Industry. Answer: Introduction Woolworths supermarket is an Australia supermarket store chain ran and owned by Woolworths Limited. Founded in 1924, Woolworths is the leading supermarket in the supermarket retail industry in Australia commanding 39% of the market share with Coles as its main competitor who is ranked second regarding the market share. Woolworths operates about 1000 stores in Australia. Till lately, the Australian supermarket and retail industry were dominated by only two giant companies Woolworths and Coles with a joint market share of 72.5% (Knox 2015, pp. 109). However, over the recent past years, there has been an emergence of other supermarkets such as IGA and Aldi who command market shares of 10.3% and 9.5% respectively. It is important to note that the entrance of the new supermarket and retail outlets is posing a significant challenge to Woolworth with the main problem being the stiff competition being witnessed in the market (Madsen and Walker 2015, pp. 115). Therefore, the primary aim of this report is to analyse the strategies being put in place by Woolworths to counter competition and remain the leading chain store in Australia. Moreover, the report will also put in place the recommendations and what is to be done for Woolworths to stay at its current position in Australian supermarket industry. Macro-Environmental Analysis The analysis of macro-environmental factors impacting on Woolworths and the whole Australian retail industry can be best analysed by majorly looking at PEST analyses of the Australian business environment (Ho 2014, pp. 6480). These factors may include economic factors, legal, political, technological, social and demographic changes. The political conditions in Australia affect the retail industry to a more prominent level. For example, Australia's Federal Government has launched a competition policy which limits the companies' chances of eliminating their competitors (Starkie 2016, pp. 110). Companies such as Woolworths and Coles have been put into stiff competition from other small retailers struggling to thrive in the retail industry in Australia. Therefore, Woolworths faces a challenge from the competing small retailers like IGA and Aldi to maintain their leading market share. Woolworths performance will be profoundly affected by the drop in the economic market conditions with Australia. In the recent past, Australia has witnessed a fall in the economic activities which will profoundly affect the operations of Woolworths (Perera and Reddy 2017, pp. 92). Also, variations in the rate of currency exchange and the fall in the value of the Australian dollar have also affected the Woolworths operations to a greater extent. The growth in technology is also affecting Woolworths daily operation. The global technological advancement and use of technology its daily process, there has been a significant improvement in the way Woolworths operates and conducts its activities. For instance, the introduction of green refrigeration technology has helped the supermarket to store that perishable good for a long time. Therefore, technology is impacted positively by Woolworth's operations. It is crucial to note that Woolworth's operations are profoundly affected by the society where it operates in. The companies like Woolworths need to attain high societal development which includes being socially responsible by undertaking societal initiatives (Perera and Reddy 2017, pp. 92). A company like Woolworths needs to win the hearts of the people living around it by being socially responsible to them. By doing so, the company will increase its brand awareness as well as customer loyalty (Payne and Frow 2013, pp. 308). Thus, Woolworths need to look at their strategies and establish whether they are favouring the society and what is meant to be spent in such activities. Some of the legal regulations put across by the government to help in the provision of the way companies operate in Australia have profoundly affected Woolworths (Starkie 2016, pp. 110). For example, the introduction of a carbon tax and regulation by Australian Competition and Consumer Competition has changed the way the organisations operate across the economy. Moreover, the need to run within the stipulation of a fair policy has highly affected Woolworths since their main competitors have a chance of ousting them in the market if they do not remain keen. Industry Analysis The Porter Five Forces strategic is an analytical tool can be used to assess the current position of the total retail and supermarket industry in Australia (Grant 2016, pp. 250). It entails all the factors that affect the performance conditions of the production as a whole (Dawson 2014, pp. 160). The use of Porter Five Forces analytical tool can be applied in the analysis of Australian retail industry is discussed in the subsequent sections. The bargaining power of consumers in Australian retail industry is one of the forces discussed under the Porter Five Forces analytical tool. The availability of a vast number of supermarkets such as Woolworths, Coles, IGA and Aldi has led to the growth in the level of consumer bargaining power since they have a variety of options to choose from regarding essential items they want. The threat of new entry is another force under the Porter Five Forces. The entry of new players in the retail industry has not highly affected the existing since larger firms have made it exceedingly difficult for new players to enter the industry (Porter and Heppelmann 2014 pp. 78). It, therefore, concluded that the overall threat of new entry had been reduced to minimal. Bargaining power of suppliers is another crucial force in the Porter Five Forces. The bargaining power of suppliers in the Australian retail industry is moderate. Since the industry is concentrated, some of the big players like Woolworths and Coles have a majority of the market share (Knox 2015, pp. 109). Rivalry among existing firms is another force within the Australian retail industry (Porter and Heppelmann 2014 pp. 78). In Australia, there are significantly high levels of rivalry due to the existence of few significant competitors. Such competitors in the Australian retail industry include supermarkets like Woolworth, Wesfarmers, ASDA, and Coles. The threat of Substitute is last, but a strong force of the Porters Five Forces used to analyse the situation of the Australian retail industry. The consumption of the daily retail products among consumers in Australia is highly essential. The consumers seem to have a limited range of option to select from making it difficult for them to get alternatives (Hubbard et al. 2014, pp. 265). It is understood that the threat of substitute is significantly lower due to lack of alternative retail products. Therefore, consumers lack the choice and thus stick to the available retail products for consumption. From the analysis of Porter five forces above, the Australian Industry has offered a high attractiveness for key players such as Woolworths. The most important reasons for the high attractiveness were due to lack of alternative substitutes for consumable retail products as well as higher barriers to entry for the new players in the industry (Bishop et al. 2013, pp. 45). Company Analysis To keep up with the competition, Woolworths has adopted an integrated competitive strategy. It is argued that their integrated competitive approach has been achieved through its efficient supply chain to minimise operational costs, a well-differentiated brand image and awareness to keep it different from others regarding quality and also combining cost leadership with various elements to compete (Wells 2013, pp. 70). Considering the above mentioned macro-environmental factors, Woolworths has the following resources and capabilities to help it achieve its objectives and strategies. Woolworth has got a highly efficient and effective network of distribution which is both a capability and a resource. The company adoption of technology in its logistics helped to company improves its supply network saving many costs associated with manual distribution operations. The benefits derived from the cost-saving aspect are the best resource for the company. The chain of distribution is also highly complicated to copy by other rivals. Therefore, the supply chain covered here has helped Woolworths to maintain its position as the leading company in the Australian retail industry (Cavusgil et al. 2014, pp. 150). Woolworths has maintained its brand reputation as the best supplier of quality consumer products among the people in Australia. The company engaged in positive consumer experiences through its quality assessment strategy and substantial investment in advertising. As mentioned earlier, the company has been involved in product and service differentiation to the customer satisfaction. Thus, Woolworths has maintained it a strong brand reputation which is hard to a copy-the aspect which made it the leading retail supermarket in Australia. The company also has an effective and efficient top management. Despite the fact that the fluctuation in the currency exchange rate and the fall in the value of their currency has not hindered the growth of Woolworth's initiatives (Perera and Reddy 2017, pp. 92). The increase can be attributed to the efficient top management which was a factor that has enabled the supermarket to compete with other to achieve a considerable market share in the Australian retail industry. Therefore, the company has an outstanding human resource with experienced managers who are committed to delivering. Competitor Analysis The competitor analysis seeks to look at the environment in which the company is operating in and who are main competitors in the market share (Madsen and Walker 2015, pp. 116). Being a leading retail outlet among the supermarkets in Australia, Woolworths has some competitors ad discussed in the next paragraph. In the supermarket and retail industry offering consumer products, there are four key players namely Woolworths, IGA, Aldi and Coles. It is noted that some of the new players like IGA and Aldi have been opening their stores across the country posing more threat to the Woolworths. However, Woolworth has been able to maintain its position as the leading supermarket in Australia beating all it rival initiatives (Perera and Reddy 2017, pp. 92). Nevertheless, with the introduction of legislation such as fair policy in Australia, the upcoming player like Aldi and IGA are producing a stiff competition for Woolworths. Hence, the company has decided to counter the competition using its resources and capabilities as discussed in our previous section of company analysis. As the porter five forces maintain, Woolworth has kept it various strategies like use of effective supply chain to support its position ahead of the four main competitors in the Australian retail industry (Williamson et al. 2013, pp. 185). Moreover, the entrance of new threats in the market makes it difficult for new players to enter the market. Strategy Analysis Woolworths has achieved a significant position the leading retail outlet in the Australian retail industry due to its well-structured strategies. Some of the plans have been integrated into the company's operations to give it a competitive advantage (Grant 2016, pp. 257). For instance, in its growth plans, the company has its operations growth strategies in place. Some of the strategies developed by Woolworths include the extension of leadership in all the companys market segments, employee relations and customer satisfaction, tacking the growth of the company through evaluation, maintenance of brand reputation, and corporate social responsibility among others (Payne and Frow 2013, pp. 305). Most of the strategies have worked due to the availability of enough resources and capabilities within the company as discussed in the company analysis. For instance, the company has competent top management which has contributed to better operations within the organisation due to better employee relations (Eden and Ackermann 2013, pp. 197). The strong brand reputation has been maintained through massive investment on advertising, and this has worked very well for the company. As discussed earlier, corporate social responsibility has helped in the growth of the company, and therefore the company has taken this strategy very seriously by participating in societal initiatives and development to win the consumer loyalty (Porter and Heppelmann 2014, pp.80). Policies such as effective supply are not enough in assuring enough competition and should be supported by robust competitive strategies. Brand reputation might not necessarily mean the company has a competitive advantage through sale s and thus they should make sure they deal with actual sales leading to increasing revenues. Recommendations Due to the changing environment in the Australian retail industry, Woolworths is required to follow a particular proposal for growth and maintain its dominant position and market share. As noted that the profitability and attractiveness of the Australian market will fall soon, Woolworths is recommended to diversify their business to more profitable industries. The supermarket is also encouraged to invest more in advertising to create an everlasting Woolworths brand in the consumer minds. Woolworths should also reframe their strategies to be in line with political conditions in the country especially the fair price policy. Due to changes in the consumer preferences and trends, the Woolworths should also engage in continuous innovation for it to address these changes effectively. The chain store should also participate in enhancing and supporting their skilled employees through training to sharpen their skills and improve their levels of productivity. Conclusion A strategic analysis of the Australian retail industry was done paying more critical attention to Woolworth's chain store. The investigation focused on the strategies to be put in place by the company to counter competition and falling nature of the falling attractiveness and profitability of the Australian retail industry. However, we have noted that the company has to be the best due to its commitment to aligning itself to the environmental factors impacting on its operations and performance. Moreover, the paper has covered the recommendations and the adjustments to be made by Woolworths to counter future challenges, maintain its market share and keep up with the dynamic consumer demands and social trends. References Bishop, J., Kent, C., Plumb, M. and Rayner, V., 2013. The resources boom and the Australian economy: a sectoral analysis.RBA Bulletin, pp.39-50. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014.International business. Pearson Australia pp.135-165. Dawson, J., 2014.The Marketing Environment (RLE Marketing). Routledge pp. 156-165. Eden, C. and Ackermann, F., 2013.Making strategy: The journey of strategic management. Sage pp. 190-201. Grant, R.M., 2016.Contemporary strategy analysis: Text and cases edition. John Wiley Sons pp. 245-260. Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis.European academic research,2(5), pp.6478-6492. Hubbard, G., Rice, J. and Galvin, P., 2014.Strategic management. Pearson Australia pp. 255-277. Knox, M., 2015.Supermarket monsters: The price of Coles and Woolworths' dominance(Vol. 6). Black Inc., pp. 104-112 Madsen, T.L. and Walker, G., 2015.Modern competitive strategy. McGraw Hill pp.109-120. Payne, A. and Frow, P., 2013.Strategic customer management: Integrating relationship marketing and CRM. Cambridge University Press pp. 302-310 Perera, T. and Reddy, W., 2017. 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