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Analysis Of Operation Strategy Of Woolworths Ltd.

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Question:

Discuss about the Analysis of Operation Strategy of Woolworths Ltd.
 
 

Answer:

Introduction to Organization

Woolworth limited is an Australian retail organization that has extensive business operations throughout the Australia and New Zealand. The company was founded in 1924 with the name of “Wall worth Bazaar Ltd”. Woolworth is mainly specialized in sale of groceries like vegetables, fruits, meat and packaged food. It also sells magazines, DVD and stationery items (Woolworth, 2016). Woolworth is operating 961 stores across Australia. The company employs a staff of 111,000 employees in its stores and distribution centre. Slogan of Woolworth is, “The fresh food people”. Woolworth endeavours are aimed to produce a world class experience for its customers.

Business strategy and objective of Woolworth

Woolworth’s core business aim is to become the best loved retailer for kids, youth and families. The core objective of Woolworth is also to improve stock turns and optimize network efficiency in market. Woolworth has invested a large amount in its supply chain and distribution network.

Objective and strategy

Woolworth has planned different strategic priorities for successful accomplishment of long-term business goals. Woolworth wants to extend its leadership in food and liquor. It acts to maximize its share holder value in portfolio. Woolworth is striving to build competitive market position in retail sector (Financial Mail, 2016). It takes strategic move to profitability through the effective supply chain and focus on overall growth. Woolworth is changing the staff policy to get the advantage of using local and international talent.

Woolworth is dedicated to improving customer’s perception, delighting existing customers and attracting new customers. It seeks to build competitive advantage by delivering world class operational efficiencies in a sustainable manner (Robert et al., 2010). Main objective of Woolworth is to establish a leading value proposition through positive business efforts. For this purpose, company focuses on hiring of highly skilled and competent human resource.

 

Operational Strategy of Woolworth and Analysis of Strategic Actions

Operational strategy is a business function of an organization, which is largely linked with supervision, design and redesigning of the business operation for production of goods and service. A company can design an effective and efficient system for using resources and work process by procurement of technologically advance machineries and hiring of competent staff (Brown et al., 2013).

Operational strategy of Woolworth’s is aimed to deliver the quality products and services to customers. Operational strategy is undertaken by operational divisions. Under this division many type of areas are looked after like management of supply chain and distribution centres, investment in constant improvement of information technology and strategies to reduce the shrinkage.

Woolworth believes in sub-contracting with its suppliers, so it does not have manufacturing plant. So, the company needs to improve selection process of suppliers, as the quality of products received from suppliers will determine satisfaction of customers (Hubbard et al., 2014). Woolworth emphasizes on developing long term relationship with supplier, because it does not believe to buy a product from open market. Rather it believes in buying stock from the suppliers, who are producing products only for Woolworth (Ungson and Wong, 2014).

Main focus of Woolworth operational strategy is to reduce the waste of material. The layout technology in operational strategy of Woolworth also took a step ahead. EPC GEN 2 tags are used by company at specific supplier distribution centres for tracking and tracing of fresh products their movement in supply chain and distribution network. It reduces need of paper work under documentation process of Woolworth (Kenny, 2012). Main operational plan of Woolworth is to save money as much as it can without compromising with quality, because making availability of quality products can reduce the competition level in the market for company.

Operations Objective of Woolworth:

Cost Reduction: Cost control is one of the operational objectives of Woolworths. The core business purpose of company is to avail quality products at affordable price. This can only be done through controlling cost of operational activities. In addition to this, cost control motto can also be fulfilled through minimization of waste (Parker, 2012). Cost is necessary to be controlled to fulfil the profit objective of the company.

Quality of the product: ‘All should focus on the quality of the product, whatever product they are selling’ is the core business aim of Woolworths. Focus on quality is likely to lead profit maximisation in company (Dubey, 2016). Customers prefers the purchase the products with high quality and competitive price structure.

Speed of delivery of the product: It refers to the lead time in which product delivery is done. If the company is effective in timely and speedy delivery of products, customers would prefer to purchase products from Woolworths. Woolworth focuses on identification and elimination of bottleneck in operational strategy to maximize customer satisfaction and profits.

Dependability: Dependability is a quality aspect related to the reliability and certainty of the products and services. Dependability leads to the reputation of the company. All the companies need to focus on the reputation by supplying good quality products in the market. This has the significant value to the business. Good reputation leads to maximum profit. (Stevenson, 2012)

Flexibility: It’s a reference on how quickly the company adapt changes according to the demand for a particular product will increase or decrease according to the predictable time. It also refers to meet the product demand of consumers. It concerns with how a service is delivered or how the good is produced. It’s a cash flow and an income generation objective. They should be flexible according to the demand of the customers as they should deliver the product at the right time.

 

Woolworth competitive priorities:

Customer Satisfaction: Companies main priority is to satisfy the customer’s needs by fulfilling their demands whatever product they likely to desire. Every company’s main priority should be to satisfy the customers and deliver the product on the right time. Customers satisfaction is must as without the customer satisfaction no company can earn the profit. As without customers no business can run in the market.

Quality: This is also the priority of the company to earn maximum profit. As they should keep in view the product quality before (Buttle and Maklan 2015) delivering the product. As what kind of quality product they are delivering to the market. They should improve their products quality time to time. According, to the customer needs or desires. Focus on quality is likely to focus on profit maximisation.

Time: It refers to reacting quickly to the customer orders. It also the delivery time of the product that how much times the product is taking to deliver in the market. It refers to the performance of company. It also refers to speed and dependability of the product.

Innovation: Innovation is defined as introduction of new product and processes in the market. It can also be referred as improvement in the existing product by putting new ideas, abilities, and new technologies in the old product.  This measures reduction of product development time and introduction of new products. (Thompson and Martin,2010)

Internal Consistency:

The wool worth internal consistency is good. It is focused on goals and objectives of company.  They fulfil the customers’ needs and higher satisfaction of the customers.  They focus on the quality of the product they are selling to the customers. This helps the company to earn maximum profit. They deal the product concisely with taking into consideration the customer satisfaction. Their main motive is to build good relation with the customers and satisfy the customers’ needs.

 

Competitive advantages are as follows:

  • Uniqueness: It’s for finding unique opportunities for the organization. Unique is different for all. It’s a business capability. Uniqueness takes the organisation on the way of success. As launching unique product which no-one cannot copy is the profit maximisation of the organisation.
  • Strategic Focus: It’s about longer view of competitive advantage. It’s to focus developing combination of purpose and competency. It also creates an internal environment for the competitive advantage. This also helps to face the competition with other suppliers in the market.
  • Innovation: In this, the new ideas are developed to have great success for the organisation. This helps to build up skills and ability so to compete with other organisations. Business organisations may innovate to with the changing environment and launch new products according to the customer’s satisfaction.
  • Vision: This is also the important part of organisation. As to build up the organisation they had to think about future vision. This is the main concept of development of the organisation. Vision is to think about future as future is uncertain. So, every organisation should be ready to face the future conditions or circumstances.
  • Skills and competencies of staff: staff skills and competencies that employee need to perform their job effectively. These skills will vary by job and position. This is an important part of organisation, it hire employees with basic fundamental competencies and teach more specific competencies, which directly related to the job of the employees.

Biggest operations management challenges and operations strategy in the future

 

Operations management challenges for wools worth:

  • Challenges faced by human resource managers because of technical challenges: As human resource department is responsible as they manages the organization and the persons those who are working there. As the technology advances, it creates technical changes that human resources managers face. They should know how to face these (Krajewski, et.al.,2013) challenges to build up the organisation. They should develop changes according to the today’s technology.
  • Competing Prices: Managing competing prices within the organization is the major challenge for the operation managers. The differences in the business procedure can effect on operations and can also affect the delivery quality of goods and services. Weak communication (Slack and Lewis, 2015) processes can make of loss in orders or payments of the invoices. Members of the organizations should understand the how the organization operates and should follow the procedure.
  • Product quality becoming an issue: Product quality is also becoming an issue for the organisations as good quality product is important for customer’s satisfaction. Before buying the product the customers focuses on the quality of the product. This is (Poonia and Virender2010) becoming a challenge or stress in the organizations that they had to produce the good quality of product so as to earn maximum profit or to compete in the market.
  • Slow consumer cycle: In the companies like- wools worth also there is a slow consumer cycle as there is a particular season for the sale. As the demands of the customers may be high or low. (Baum,2013) This affects the company’s profit.

Operation strategy in the future:

The organization should take a look what’s going on outside the organisation and how it affects the organization in context of future and identifying opportunities and threats for the future benefit of the organisation.  As well as taking a hard look inside the organisation including its strength and weakness (perhaps doing SWOT analysis). Establishing statements of mission, vision and values also helps in the operation strategy for future. Establishing of goals to accomplish for the future. Identifying how these goals are to be reached such as (responsibilities, strategies and objectives). Performance goals to be established by the organisation for the future strategy. Resources (Mahadevan, 2010) will be needed to achieve the goals for the future. So, they should manage the resources in present so that they can use these resources in the future to achieve organisational goals. Planning is most important for the future objectives.

Conclusion

It can be concluded from the above report that Woolworth supermarket retail has a leadership position both in Australia and New Zealand. It has a competitive advantage according to its market size and scale with positive cash flows and profitable business performance. It has been experiencing successful business management and benefits for several years. To continue business performance, the Woolworth should respond effectively to changing market environment.

 

References

Financial Mail (2016). Woolworth wining strategy. Retrieved from: https://www.financialmail.co.za/business/2012/08/29/woolworths-winning-strategy

Woolworth (2016). The daily difference. Retrieved from: https://www.woolworths.co.za/

Kenny, G. (2012). Strategic Planning and Performance Management. UK: Routledge.

Hubbard, G., Rice, J. and Galvin, P. (2014). Strategic Management. UK: Pearson Australia.

Ungson, R.G. and Wong, Y.Y. (2014). Global Strategic Management. UK: Routledge.

Brown, S., Bessant, J.R. and Lamming, R. (2013). Strategic Operations Management. UK: Routledge.

Robert, J., Chambers, S. and Slack, N. (2010). Operations Management. USA: Financial Times Prentice Hall.

Parker, D. (2012). Service Operations Management: The Total Experience. UK: Publisher Edward Elgar Publishing.

Dubey, R. (2016). Strategic Management of Sustainable Manufacturing Operations

Advances in Logistics, Operations, and Management Science. USA: Publisher IGI Global.

Buttle, F. and Maklan, S. (2015). Customer Relationship Management: Concepts and Technologies. UK: Publisher Routledge.

 Thompson, J.L. and Martin, F. (2010). Strategic Management: Awareness & Change. USA: Publisher Cengage Learning EMEA.

Slack, N. and  Lewis, M. (2015). Operations Strategy. 4th edn.  USA: Publisher Pearson Education Limited.

 Baum, M. (2013). Comparison and Contrast of the Operations Strategy of Two 'Manufacturing Firms' with Two 'Service' Firms. USA: Publisher GRIN Verlag.

 Krajewski, L.J., Ritzman, L.P., and Malhotra, K.M. (2013). Operations Management: Processes and Supply Chains.  10th edn. USA: Publisher Pearson.

Poonia, K. and Virender, S. (2010). Production and Operations Management. UK: Gyan Publishing House.

Stevenson, W.J. (2012). Operations Management: Theory and Practice. USA: Publisher The McGraw-Hill/Irwin series operations and decision sciences.

Mahadevan, B. (2010). Operations Management: Theory and Practice. USA: Publisher Pearson Education.

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