Strategic Management Essay On Woolworths Group Limited.

Write a Report on strategic management of Woolworths Limited.

Insight into Woolworths and its revenue units

Strategic management is the process of forming and implementing the identified goals and objectives for upgrading the standards and quality of operations. An important component of this management approach is the development of policies and frameworks, which supports the managers to perform the activities according to the requirements (Hill, Jones and Schilling 2014). This assignment attempts to establish a report on the strategic management of Woolworths Limited.  

Founded in 1924, Woolworths Group Limited has achieved accolades and glory as Australia’s major food retailing business. As per Ifama.org (2018), Woolworths has been continuing in farming and agribusiness from the year 2009. The organization started producing agrifoods with the initiative of Farming for Future. From then, the company has been considered as an important agribusiness. Operating under the retail industry, Woolworth Group deals with the provision of quality food and drinks to the clients and the customers in the threshold of Australia, New Zealand, and India among others. It is one of the ASX listed companies, coded as WOW. According to the annual report of 2017, the revenue of Woolworths was recorded as 55.569 billion Australian dollars. According to the annual reports of 2018, the annual revenue is 56,726 million Australian dollars (Woolworthsgroup.com.au 2018).

 

Figure1: Revenue of Woolworths Group Limited

(Source: Woolworthsgroup.com.au 2018)

As per the figure, the revenue of Woolworth comprises of the earnings from the sale of food and drinks within Australia and New Zealand.  The revenue of 56.7 billion is 3.4% hike from the revenue earned in the year 2017. The determinants of this increase are the sales growth of 4.3% in the Australian foods and 4.5% growth in the Endeavour Drinks. From this sales, the gross profit earned is 29.5%, which is 41 bps more from the profit margin of 2017. This is mainly due to the improvements in the quality and standards of the Australian foods. The main reason behind this is reducing the use of the plastic bags, increasing the customer satisfaction to 81%. Credit needs to be given to the introduction of mobile apps, which increased the sales per million square (Woolworthsgroup.com.au 2018).

2017 was the year denoted towards strengthening the business foundation of Woolworths. Reduction in the grocery prices lifted up the investments to $1 billion. This resulted in upsurge in the food sales by 3.6%, which was a makeover for the loss of $1.23 billion in 2016. Putting the customers at the heart of the business enabled Woolworths to stabilize the business scenario. As a matter of specification, the staffs emerged successful in restoring the trust of the customers. The major drive behind this was setting price according to purchasing capacity of the customers. Delivering the right product solutions helped in enhancing the shopping experience of the customers in the process of shopping in stores as well as online (News.com.au 2018).

Woolworth's external environment

Reference can be cited of eight controllable VOC measures, which encountered improvements- ease of pick up, fruits and vegetables and on-shelf availability. Ease of pick up encountered a hike of 12 points, due to the emergence of mobile apps, offering easiest pick up option for the preferred fruits, vegetables and drinks. Acquiring 8 points in the sale of fruits and vegetables indicates the increase in the standards and quality of the food items, which helps in the achievement of trust, dependence and loyalty from the clients and the customers (Woolworthsgroup.com.au 2018).

Political	· Political stability · Military invasion · Governmental interruption
Economic	· Governmental intervention in the free markets · Stability in the exchange rates and currency · Labor costs · Inflation · Interest rates
Social	· Class hierarchy and power structure · Culture · Attitudes
Technological	· Technological diffusion · Value chain structure
Legal	· Data Protection · Consumer protection and e-commerce · Health and safety law
Environment	· Green or ecological products · Support for renewable energy

Table 1: PESTLE analysis of Woolworths Group Limited

Risks of military invasion contradicts the stability in the political sphere. Corruption adds to the risks of exporting and importing the products. Tax tariffs aggravates the complexities in the import and export activities. However, governmental assistance helps in the formation of frameworks for contracts. This alliance is also assistance in terms of getting mandatory employee benefits (Wheelen et al. 2017).

Governmental intervention proves advantageous in terms of dealing with the high tax rates and exchange rates of the host country. Raining local capital helps in achieving infrastructural development. Labor costs reflects the initiatives towards attaching value for the investments made by them through the exposure of efficient and effective performance. Inflation and high interest rates aggravates the complexities towards catering to the specific tastes and preferences of the clients and the customers. Moreover, interest rate, savings, exchange rate and the economic cycle helps Woolworths in determining the investments made to fulfil the demands of the customers (Woolworthsgroup.com.au 2018).

The employees at Woolworths possess shared values and beliefs towards understanding the needs of the customers. This understanding is one of the agents for adverting the products and services. Studying the customers indicates the execution of behaviour and psychographic segmentation by Woolworths. This type of approach increases the sales revenue, maximizing the profit margin.

Technological diffusion makes Woolworths aware of the impact of technology on the business operations. This includes the supply chain network, where the clients are contacted for the execution of the logistics operations. Tax tariffs increases the complexities in providing flexible transport facilities for delivering the orders to the customers. Acquiring greener technologies helps in the production of the products, which consumes less fuel (Woolworthsgroup.com.au 2018). Mention can be made of the latest technologies of processing the food items in less time. Preparation of budgets is assistance in terms of adopting these technologies.

Political

Legal

Anti-trust law is one of the legal parameters, which Woolworths Company Limited complies for averting the instances of customer turnover. Every product and service of the company possesses certified copyrights and patents, which mitigates the chances of encountering illegal scandals and issues. Focus of the business is on the protection of the customers. Data Protection Act (1998) is followed for ensuring the privacy, safety and security of the organizational data. Health and safety law is also an important component within the business of Woolworths. This law caters to the wellbeing of the employees in terms of luring them towards the services. Complying with the IT legislations is assistance in terms of averting the instances of cybercrimes (Woolworthsgroup.com.au 2018).

Adopting greener technology has addressed to the increased concerns over environmental pollution. Recycling the wastes have brought innovation within the products and services. Acquiring solid waste management techniques have enhanced the corporated social responsibility. This is because it is the responsibility of the staffs to maintain the cleanliness and hygiene of the area of operation. Adherence to Animal Protection Act has enabled the staffs to contribute to the conservation of the endangered species (Sakas, Vlachos and Nasiopoulos 2014).

Internal environment of Woolworths

Resources and capabilities

Cost leadership and efficient supply chain management are the two most important components of Woolworths in terms of securing its position within the competitive ambience of the market. In addition to this, risk assessment exercise is vital for ensuring the wellbeing of the clients and the customers. With respect to these factors, three most important resources and capabilities of Woolworths are as follows:

Supply chain

Wide network chain helps in the execution of the in-bound and outbound logistic activities in an efficient and effective manner. Conglomeration of technological capabilities and suppliers relation provides the company with competitive advantage over Coles. The major drive behind this is the saving cost in the network chain (Woolworthsgroup.com.au 2018). The cost saving benefits is non-replaceable. The employees are highly capable of exposing better performance, which helps the company to fulfil the identified goals and objectives. Market research helps the staffs in seeking effective distribution channels, through which the products and services can be transported to the clients and the customers. Search engine optimization reduces irrelevance in the services, which can lead customer and employee switch over.

Brand reputation

Quality assessments have helped in maintaining the integrated structure of the supply chain. These assessments have enabled the Woolworth staffs to acquire positive experience from the customers. Here, mention can be made of the advertisement, “Fresh Food People”. Focus on quality and the health of the customers acts as a major differentiation from the competitors. The products are non-substitutable, which reduces the threat of new entrants. However, the chance of selling fresh foods by the private companies is not negated (Woolworthsgroup.com.au 2018). Focus on quality indicates fulfilment of the specific preference of the customers. Moreover, strong brand image is a means for maintaining the position within the competitive ambience of the market.

Economic

Effective management

The role of the management is crucial in the business operations of Woolworths. Special mention needs to be made of the estimations, which the managers of Woolworths made in terms of achieve competitive advantage. The top level managers consistently assessed the current economic condition. Consistency in the assessment enabled the managers to achieve hikes in the growth rates, which is an important resource. Skills and efficiency of the managers are non-replaceable, which enhances the personality of the Woolworth personnel (Woolworthsgroup.com.au 2018). Prior experience assists in regulating the functions of the Australian Grocery Industry. Effective management techniques in controlling the supply chains is a parity, enabling Woolworths to secure its position within the competitive ambience of the market. Alliance with the skilled, efficient and credible consultants is assistance in terms of broadening the scope and arena of the business.

Woolworths has achieved much in terms of enhancing the sales revenue and profit margin. However, in terms of reaching to the specific preferences of the customers, certain recommendations need to be incorporated within the business. One such recommendation is the adoption of proper advertisement channels. Advertising the labelled food products would answer the queries of the customers regarding the health issues. Along with this, it would be an innovative means for enhancing the brand image. Within this, marketing mix would make the staffs aware of the approaches of the clients and the customers towards the levied services.

Assessment of the current financial condition is important in terms of estimating the progress in the near future. Alliance with the members of the trade union would be assistance in terms of dealing with the instances of inflation, high exchange rates and interest rates. Along with this, governmental support would enable the staffs to deal with the tax tariffs, which acts as an obstacle towards the import and export activities. Specifically, this alliance would be effective in terms of setting the prices for the products. Here, focusing on the purchasing power of the customers would help in attracting large number of customers.

Innovating the stores would help the customers to acquire an enjoyable shopping experience. Typical examples can be installing fusion music, which would alter the atmosphere of the stores. Positive feedbacks from the shoppers would reflect the measurability and achievability of the recommendation. Cleanliness of the stores at frequent intervals would enhance the brand image. Clean stores would lure the customers to visit the shops more. However, it would decrease the trafficking of the customers in the parameter of online shopping. Therefore, the staffs need to maintain balance between both the in-store and online shopping.

Social

Regulation of the store operations and online shopping can be improved through the installation of CCTV cameras. Frequent experiments and checking of the cameras are mandatory in terms of ensuring the safety and security of the products and the staffs. Moreover, the checking would avert the instances of crimes. Market research would make the staffs aware of the latest mobile apps, which can upgrade the standards of online shopping. Adoption of social media would be beneficial in increasing the sales revenue and profit margin. Informing the customers of the discounts, schemes and offers on the products and services would help them to maintain the pace with the latest market trends.

Conclusion

Adopting latest technologies is assistance for Woolworths Group Limited in terms of executing the in-bound and out-bound logistics. These technologies have enhanced the standards and quality of the food items. Quality assessments suffices the aspect of the customer wellbeing. Conscious approach of the managers towards regulation of the activities has assisted in estimating the progress. This estimation is one of the means for maintaining the pace with the other brands like Coles in the competitive ambience of the market. Effective supply chain management is one of the other aspects, providing competitive advantage to Woolworths. Innovation within the business would expand the scope and arena, attracting more and more customers. 

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Woolworthsgroup.com.au (2018). About us. Available at: https://www.woolworthsgroup.com.au/ [Accessed on 23^rd August 201