Discuss about the Business and Management in Woolworths.
Woolworths is amongst the top-notch retailer in Australia. Along with Coles, this company accounts for catering nearly 70% of the entire Australian market. The main aim of Woolworths is to be amongst the leaders in the supermarkets by keeping their customer happy and content (www.woolworthsgroup.com.au, 2017). In order to sustain and progress in the business any company must try to have a strong corporate entrepreneurship and innovative business model.
According to Hsu, corporate entrepreneurship is the process through which any established business develops new ideas to directly influence the productivity and outcome of the company or organization. Through corporate entrepreneurship, competencies of core operation and improved technologies any organization tries to come up with innovative ideas that can help them sustain in the business (Hsu et al., 2014).
Through this report, initially the background of the company has been briefly discussed followed by the theories, which speaks about the role of entrepreneurship and innovation in the business. The report ends with the impact of innovation and a concluding discussion on the entire findings about the importance of innovation and entrepreneurship in the business established by Woolworths.
Background of Woolworths:
Woolworths falls under the retail industry and one of the largest supermarket chains of Australia. In Australia, there are nearly 980 stores of these brand-employing 111,000 employees. It is engaged in selling grocery items, fresh foods, dairy products, cookware, home-ware, clothes, accessories and every other possible stuff needed in daily life.
Reason for Taking up Innovation & Entrepreneurship:
According to the report published in a leading Australian daily, Woolworths has faced its first and dramatic loss within their 23 years span of business. The company lost around $1.235 billion in the FY 2015-2016. The loss came from their sale of petrol and food items (www.news.com.au, 2016). According to Brad Banducci, the loss occurred as an effect of some internal changes in investment decision, which the company had taken up as a necessary measure of restructuring the same. This background induced to think and construct this report on the need and impact of entrepreneurship and innovation of the company.
Theories and its Application by Woolworths:
There are several theories relating to entrepreneurship and strategies of a supermarket. The term entrepreneurship is dynamic in nature in the sense that it evolves out of the need to survive, to compete and to win over others. It is a metamorphosis of the past and present strategies having socio-economic, psychological and cultural aspects (Methner, Hamann & Nilson, 2015). Few famous theories have been put forwarded by Schumpeter regarding innovation, Mark Casson’s theory of entrepreneurship and Knight’s theory of entrepreneurship have been discussed along with its implementation of the theory by Woolworths.
Schumpeter’s Innovation Theory:
According to Schumpeter, in order to develop in business a company or organization must try to look for opportunities to bring innovation in their business strategies through creativeness. In order to do this, the organization may introduce new products in the market, it can enter a new market, try to find out new sources for acquiring raw material and introduce new technologies to improve the production procedure of the company (Bento, 2014).
Application of Schumpeter’s Theory by Woolworths:
The largest retailer of Australia has always kept its customers as their first priority. It is the customer’s demand that makes the company the industrial giant. Along with the advancement of technology, Woolworths tried to set up innovative ways of shopping within their in-stores of Australia. The research and development team of this retail store recognized that its customer faces a loss of their valuable time while standing in the queues for billing up their products. Hence, the company has started up a new system of billing on the go, whereby after picking up a product and scanning its barcode through their mobile, the customer gets their products billed (Biddle, 2016). Also, many people, especially the office-goers and the bachelors face problems in choosing up healthy food products. In order to solve this problem the company has used in-shelf LED lighting whereby by clicking on a iPad kept in front of the shelf, the customers gets to know the food to pick up. They can also mail some healthy recipes from the iPad to their personal mail id (www.dailytelegraph.com, 2017).
Mark Casson’s Theory of Entrepreneurship:
According to Mark Casson, an entrepreneur should possess 4 qualities namely, motivation, judgmental, co-ordination and imagination. An entrepreneur must be motivated by his own self-interest that will drive him towards success. An entrepreneur must also possess the capability to take up necessary decisions and allocate the scarce resources optimally with an imagination of future success (Casson, 2014).
Application of Casson’s entrepreneurship theory:
Another strong decision has been taken up by the retail store is to promoting their existing MD of Food Group of Woolworths as the CEO of the company. Mr. Brad Banducci, who has been promoted as CEO has a long term experience of 25 years working under the retail industry. As per the statement of Woolworth’s chairperson Mr. Cairn, the company in future is going to re-invest in their traditional supermarket business and focus more on their customer satisfaction (www.dailytelegraph.com, 2017). This change of the CEO indicates the application of entrepreneurship theory whereby the competent candidate has been given the duty to bring in innovation through his entrepreneurship qualities.
Knight’s Theory of Risk and Uncertainty:
According to the theory put forward by Knight, the entrepreneur should also have the capability to undertake risks in order to succeed in their business (Frank, 2013). Without any risk, the company cannot expect to gain a large amount of profit.
Application of Knight’s Theory by Woolworths:
In both the above-mentioned process, the company has been taking risks with unknown outcome. But these risk factors are minimal when compared to a new strategy that has been proposed by Woolworths. According to another news channel, the giant retailer has established a Food Innovators Centre in its HQ in Sydney. The establishment and running cost of this centre moves to millions of dollar. Under this centre, Woolworths is going to promote products from its own brand. Highly efficient cooks using latest technologies and gadgets are going to prepare food, provide cooking classes and sent their recipes to the test centers where customers’ feedback will be taken up. As opined by Brain Walker, establishment of this centre right within 6 month after their major loss indicates the fact that the company is not ready to give up an inch of their market to others but to fight back and make their grounds stronger (www.news.com.au, 2016).
Impact and Expected Outcome of this Innovation and Entrepreneurship:
Mr. Caim opined that the company is going to improve the existing pricing strategies, re-invent their product lines and try to enhance the perceived value of their share-holders in order to come back in the business line.
According to an Australian news channel, the top-notch super-market is trying to put a revolutionary change in their shopping system whereby their customers are going to save their valuable time and effort of visiting the super-market by themselves. Trying to come-up with such an innovative idea requires a lot of imagination and research on the problems faced by people in the existing system (Frank 2013). They have planned to bring down their supermarkets at the public places like train station whereby people can collect their necessary goods while returning from work. They plan to install the “click and collect” facility in the stations
The innovative ideas that have been proposed by Woolworths and discussed through this essay have just been implemented. The resultant effects are yet to arrive after the company passes through a span of minimum 6 months of implementation. However, the reaction of the customers as observed and judged by the in-store R&D team shows that customers are happy to have their time saved through the billing on the go method. On other hand, a lot of customers felt very happy by the in-store LED system which helps them to choose the correct ingredient for their favorite dishes. People even started appreciating the organization’s effort to establish “click and go” selling techniques. However, the true impact and company’s trial to gain back its ground can only be accessed after completion of a year by looking at the financial statement of this retail industry.
Conclusion and Recommendation:
The dramatic yet huge loss faced by Australia’s second largest retail store after Coles, has motivated in taking up the topic of entrepreneurship and innovation within the organization. Findings suggest that the top-level managers and directors were quick in taking up few drastic changes within the company. They never lose their courage instead had the guts to fight out and come up with innovative ideas which can help them in regaining their position. However, from the report it has also been observed that the company had been paying a lot of attention to its daily food items, groceries and dairy products. From this scenario it can be recommended that the company which was once engaged in selling hardware products should re-think and try to open up their closed section once again. The section of Woolworths that once dealt with hardware and home furnishing and improvement closed that section after it faced a loss of A$ 1 million. Loss is just a part of the business swings and hence can be overcome with perseverance and a proper vision. Hence, after the company establishes their strong foot in their business, it is advisable that they should try to open up their hardware section once again.
Bento, P. (2014). Competition as a Discovery Procedure: Schumpeter Meets Hayek in a Model of Innovation. American Economic Journal: Macroeconomics, 6(3), 124-152.
Biddle, I. (2016). The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle. Busidate, 24(3), 3.
Casson, M. (2014). Entrepreneurship: a personal view. International Journal of the Economics of Business, 21(1), 7-13.
Chung, F. (2016). Woolworths unveils $1.235 billion loss. NewsComAu. Retrieved 18 January 2017, from https://www.news.com.au/finance/business/retail/woolworths-unveils-1235-billion-loss/news-story/5a6cd1f33658f536b47d95b305c5bc67
Frank, K. (2013). Risk, uncertainty and profit.
Methner, N., Hamann, R., & Nilsson, W. (2015). The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104). Springer International Publishing.
Our Brands - Woolworths Group. (2016). Woolworthsgroup.com.au. Retrieved 18 January 2017, from https://www.woolworthsgroup.com.au/page/about-us/our-brands/
Woolies cooking up a big comeback. (2017). Dailytelegraph.com.au. Retrieved 18 January 2017, from https://www.dailytelegraph.com.au/news/nsw/woolworths-reveals-a-customer-driven-food-innovation-centre-at-bella-vista/news story/95212187919a8ed5e36d5e9e90929692
Hsu, C. C., Tan, K. C., Jayaram, J., & Laosirihongthong, T. (2014). Corporate entrepreneurship, operations core competency and innovation in emerging economies. International Journal of Production Research, 52(18), 5467-5483.
(2016). Retrieved 18 January 2017, from https://www.news.com.au/finance/business/retail/are-woolworths-and-coles-about-to-give-us-innovation-we-actually-want/news-story/e83c288057efff4cb2e2bbdf9caa0ab8