Woolworths Supermarket: A Leading Grocery Store In Australia, Essay.

The report should demonstrate that the student has thoroughly researched their topic. Students should use examples of business practice from the scholarly journals papers, conferences, books and professional magazines to support their arguments. The strategic analysis will be on a local company. The report consists of two parts and should cover the following requirements:

(External analysis)
1. Business background
2. What industry is it?
3. General environment analysis (economic, physical, sociocultural, global, technological, political/legal and demographic – and work out what the important facts are).
4. The industry environment ((i.e., supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each).
5. Competitive environment (Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?)
6. Opportunities and threats

(Internal analysis and proposal)
1. The firm’s resources, tangible and intangible
2. Capabilities identification (explain the capabilities carefully to indicate what the firm really does.)
3. Core competency analysis (For each capability, indicate which of the four tests for a core competency it meets).
4. Propose a suitable information system solution that meets the chosen company needs.
5. Evaluate the proposed system and provide your recommendations Submission Requirements:
The research should include a list of at least seven (7) references and a bibliography of the
wider reading done to familiarize oneself with the topic.

PESTEL Analysis of Woolworths

Woolworths Supermarket is Australian grocery store which is being owned by Woolworths limited. The company was founded in the year 1924 which has taken over more than 80% of the Australian market (Woolworths.com.au. 2018). The company mostly specialises in various kinds of groceries along with selling magazines and health and beauty care products. Woolworths currently operate in more than 1000 stores across the entire Australia and there are more than 19 convenience stores which is carrying the logo of Woolworths itself. The headquarter of the respective supermarket is situated in New South Wales which is in Australia and the number of employees working in the organization is 111,000 till the year 2017.

Australia has tried to occupy remarkable position in the global retail market wherein the country has huge market potential, low economic kind of risk and there us moderate kind of political risk. Australia is the world’s economy of the different consumers and this has adopted more than 10% of the gross domestic product and there is solid growth of internet. Furthermore, in the year 1880, this was being noticed that Australian retail industry has huge potential in the B2B e-commerce market and the online market has come into the presence which will be at par with the physical market as well. Lastly, the entire luxury segment of Australia is expected to grow more than US$ 45 billion by the end of the year 2018 and this will help in the overall increase of the retail market effectively.

Economic factors- This is the first major aspect in which this has been seen that Woolworths has been under significant pressure from the various economic related changes.

From the PESTEL analysis, this can be analysed that there are various opportunities which can be gained by Woolworths which is inclusive of the following:

• There is huge stability of the different major economies which is a huge opportunity for the company Woolworths
• There is continued growth of the different developing countries which is again a growth and opportunity for Woolworths in handling such matters in an efficient manner

Physical Factors- There are various shares of Woolworths which can create huge impact on the company. It has been seen that there are different physical stores of Woolworths in Australia which will help in improving the growth rate of the company. The different macro-economic factors will be helpful in driving the prices of the organization. The different physical stores of the company have been a huge part of the profitability and revenues of the company efficiently.

Socio-Cultural Factors- The different socio-cultural factors of the business environment of Woolworths will help in influencing the perception and preferences of the customers. There are different socio-cultural factors which might affect the entire growth of the company Woolworths in an efficient manner. The various aspects are inclusive of the following:

• The automation of the business is increasing which is one of the major opportunities and this will help in improving the overall business of Woolworths
• The other opportunity is related to business analytics is the other opportunity which will help in increasing mobile device usage among the different consumers in the market

From the above, this can be analysed that Woolworths can increase the overall market share in the respective two factors which have been stated above. The online selling and online marketing can increase the overall market share of the company in a proper manner.

Global Factors-The entire economic turbulence along with the different environmental factors are required to be provided huge focus by Woolworths. Woolworths need to mainly focus and provide attention on reducing the different kinds of carbon dioxide emissions which will help in improvement of the overall company efficiently.

Competitive Environment of Woolworths

Technological Factors-This is the other aspect which is required to be taken into consideration as this will improve and increase the overall efficiency of the organization in a positive manner. Furthermore, this has been noticed that SAP implementation which is based on merchandising will improve the effectiveness of the firm appropriately.

Legal Factors-This is the other aspect in which there are different kinds of legal compliances which will be affecting the overall growth of the company. This has been seen that there are various legal battles in Australian economy which can affect the growth of Woolworths in the firm as well.

Demographic Factors- This is the last aspect which is inclusive of the various households between the age group of 23-26 years of age and Woolworths target both middle and higher income group individuals in the organization for buying variety of the products from them at a reasonable rate.

Threat from the various substitutes is high in nature in the Woolworths Company wherein this has been noticed that there is huge indirect kind of competition in the market which is inclusive of the convenience stores and the grocery stores as well. Furthermore, this has been noticed that the customers in the market are applying their approach towards the different kinds of healthy food habits and this is helping the different convenience stores of Woolworths in selling various kinds of organic food items in the market and this can be a huge potential threat for the entire company.

Rivalry among the different existing competitors is high in nature in which this has been noticed that there is existence of rivalry and there is lack of differentiation as well. The entire price is based on the entire price along with there are various competitors which is inclusive of Coles which they offer the value which is helpful in managing the overall ineffectiveness.

Bargaining power of the suppliers is the other aspect wherein the power is low and this has been noticed that more than 85% of the Australian supermarket is being controlled by both Woolworths and Coles. Furthermore, this has been analysed that there are different kinds of local producers in the market which is making limited kind of selection of the different intermediaries, both Coles and Woolworths are main kinds of producers (Hill, Jones and Schilling 2014).

Bargaining power of the buyers is the other main aspect wherein the power is low and this will increase the overall buying power of the various customers which will be increasing in future. The main aspect of the different buyers in the market is such that they prefer the various kinds of products at a lower price but of same quality from the other competitors.

Threat of new entrants is the last aspect which is low for Woolworths market as the technological advancements of operations of the company has been able to improve their overall market share in the company in an efficient manner and this will be helpful for the company as well (Hill 2017).

The entire competitive environment of Woolworths is high and this is inclusive of the various aspects which should be taken into consideration by the company that has helped them in becoming most effective in nature (Galliers and Leidner 2014). There are different other competitors of Woolworths in the entire Australian market which is inclusive of Target, Kmart and Coles which are performing brilliantly as per the different operations. Furthermore, this has been seen that the Woolworths is in the top position as the company have introduced the self-check out system which helps the company in becoming more effective as they are technologically advanced in nature.

There are various kinds of opportunities along with threats which can affect the company Woolworths in a negative or positive manner. The entire analysis of opportunities and threats are as follows:

Threats-Firstly, this has been seen that there are various kinds of competition in the entire market from various international players. The costs of the different raw materials have been increased which has affected the overall margin of profit of the company in a negative manner (Bromiley et al. 2015). Lastly, the recession will be hindering the entire growth of the company in a negative manner which will be reducing the opening of the different stores in the entire market (Robson 2015).

Opportunities- The different kinds of opportunities in the marketwhich has helped in promoting the brand of the company. With the help of the different kinds of sponsorships along with advertisements, this will help in increasing the overall efficiency of the firm (Frynas and Mellahi 2015). Woolworths can try to seek the growth with the help of different strategic acquisitions with adoption of the different franchise models in the different emerging kinds of economies (Wheelen et al. 2017).  

Financial Resources- This is the first aspect which is required to be taken into consideration at Woolworths Company. The different kinds of financial resources are being properly built on the high amount of revenues which is being generated from the different sale of the goods and services (Jarzabkowski and Kaplan 2015).

Human Resources- The entire base of employees of Woolworths is the huge support for the company as they are the ones who provide proper support to the entire company and the entire operations of the company is being provided in an effective manner effectively to the different customers (Hitt and Duane Ireland 2017).

Physical Resources- This is the other kinds of resources which are being analysed by the different number of stores which are present in all over New Zealand and Australia. There are various stores which are being able to provide effective kinds of products along with services which are the part of the entire Australian economy (Schaltegger, Burritt and Petersen 2017).

The main capabilities that have been gained by Woolworths in the retail market of Australia is being built on the various kinds of models which are being offered to the various customers of Woolworths (Ausfoodnews.com.au. 2018). The company is being able to provide various products to the different customers with proper level of coordination with the different local market farmers. The products are fresh in nature and the customer satisfaction level is high in nature. The customer centric approach of Woolworths has helped the company in becoming successful (Rothaermel 2015).

The major kind of competencies of Woolworths are as follows:

Firstly, to improve their position in entire retail industry by providing fresh kind of products in the market in an effectual manner.

• Valuable – Moderate
• Rarity – High
• Imitability –Moderate
• Organization – Yes

Secondly, the entire process which has been adopted by the firm is being able to improve themselves in lean kind of retailer with implementation of end-to-end processes and systems.

• Valuable – Moderate
• Rarity –High
• Imitability –Moderate
• Organization –Yes

Proper development of the businesses related to drinks will help in providing value to the company and this will increase the number of customers.

• Valuable – Moderate
• Rarity – Moderate
• Imitability – High
• Organization –Yes

(Source – Created by author)

From the VRIO analysis, this can be analyzed that the company is efficient in the different kinds of operations which are being undertaken by Woolworths. Furthermore, this has been noticed that the efficiency related to cost is essential and this helps the company in becoming more effective in nature in order to compete with the other competitors in the entire market (Lasserre 2017). The uniqueness of the company inclusive of self- check-out system helps the company in becoming more significant in analysing the strengths of the company and applying them as the opportunity in order to become successful.

The kind of information system which is being used by Woolworths is done on the entire implementation of management information system which will help in managing the different activities (Helfat and Martin 2017). The process which is made on the decision-making is used in the entire analysis of the entire information which is being based on the entire profits and this will help Woolworths in analysing the choice of the different customers. Furthermore, the MIS will be analysed and identified in such a manner which will help Woolworths in maintaining confidentiality level and this will increase the security related data as well in the entire organization as well.

Proper implementation of the accurate MIS will be essential and manage the customer’s data in the effective manner. The entire system is required to be adopted by Woolworths which will help in improvement of the performance of the organization. The entire performance of the different employees will improve the overall management of the organization and this will help the employees and organization in reducing the security which will be implemented by Woolworths.

Conclusion

Therefore, this can be concluded that both internal and external analysis of Woolworths have been done in an effective manner. Furthermore, the different kinds of aspects have been taken into consideration which is inclusive of the VRIO analysis that has helped the company in making their different activities more effective.

This has been noticed that the Woolworths company needs to focus more on the information system which will help them in becoming more appropriate in gaining competitive advantage in the market and this will improve the overall efficiency of the organization as well. The information system along with management information system will help the company in gaining competitiveness in the entire industry and this will assist in managing their different kinds of operations of the company in a positive manner.

References

Ausfoodnews.com.au. 2018. Ausfoodnews.com.au. [online] Available at: https://www.ausfoodnews.com.au/2015/05/06/woolworths-announces-new-strategies-to-win-over-grocery-shoppers-afn-reveals-full-detail.html [Accessed 31 Aug. 2018].

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Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Helfat, C.E. and Martin, J.A., 2015. Dynamic managerial capabilities: Review and assessment of managerial impact on strategic change. Journal of Management, 41(5), pp.1281-1312.

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Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, pp.45-63.

Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.

Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.

Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship?strategic management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.

Robson, W., 2015. Strategic management and information systems. Pearson Higher Ed.

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

Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for sustainability. Routledge.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.

Woolworths.com.au. 2018. Woolworths.com.au. [online] Available at: https://www.woolworths.com.au/ [Accessed 31 Aug. 2018].