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The Business Environment Woolworth Group

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Question:

Discuss about the Business Environment Woolworth Group.
 
 

Answer:

Introduction

In the business environment, firms strive to remain competitive by increasing the company sales, enhancing market growth, leveraging technology, and offering quality products to the consumers. Factors in business operating environment affect the nature of competition, and this means constant effort to monitor the movements, trends within the global community, economy, industry forces and the market segment. However, developing sustainable competitive positioning requires great strategies, understanding of rivals, operating environment and exploiting own strengths and minimizing the weaknesses (Prajogo, 2016).

Corporation identification 

The report identifies Woolworth group which has its origin is in Australia and has many business portfolios, but the report focuses on Woolworth supermarket chain for the case study. The group’s business portfolios include Supermarkets chains, wines and spirits, Hotels chains, Petrol, essential services and general merchandises. The supermarket business unit trades under Woolies brands in Australia and other international markets. Woolworths Supermarkets is a premier chain with a presence in all the territories and states in Australia (Jie, Parton & Chan, 2015).

The term corporation is defined by Long & Helms Mills, (2010) as a business formed by individuals with inherent liabilities and rights separate from those of the owners. A corporation can be either a profit or nonprofit organization engaging in the provision of commodities and services to the public, other corporations, governments, and individuals for the purpose of generating revenue. Legally the entity has rights and responsibilities similar to that of a person because it can buy, own property, sell, enter into contracts and leases, and bring lawsuits in case of harm.

Bustinza, Parry & Vendrell-Herrero, (2013) defines the terms services and product portfolios. The term business portfolio includes the entire assets indicated in the firm’s balance sheet. A Service Portfolio is a representation of a full list of services provided or managed by a particular company or a provider. These services are either visible or not visible to the customers. The term product portfolio is also defined as organization set of investments such as the brand, holdings, and products. The portfolio is in products mix segments (Stark, 2015).

 

Business Unit of Wools Worth Group

Business unit identification

Kownatzki et al., (2013) view the term strategic business unit as fully-fledged sections of an enterprise complete with its vision, mission statements and chart its direction. In many organizations, the strategic section operates separately from others but reports its operational status to the group’s headquarters. It has a target market to focuses on, and departments such as marketing, human resource, and training departments undertake different responsibilities. Besides, the unit generates its revenues; incur costs, makes investment decisions, budgeting and the activities are separately audited independently of the larger group. Therefore, Woolworths Supermarkets as a section of the group makes decisions on their own based on market forces, generate revenue for running its activities, hire employees, and design their budget without the influence of the parent organization (Keith, 2012).

Product Lines and Services

The term product line is defined as a combination of related products, which is a single brand of the company. Many business firms such as Samsung, Woolworth group, Apple Incorporation, and Microsoft have different service and product offering in their lines under various brands. When expanding the range of service and products offered, many prefer to do this by adding to the already existing product lines because consumers are familiar with the brands and thus it can consider it. This is part of strategic marketing in a bid to have loyal customers attached to the brand purchase for them. The underlying principle is that, buyers will likely respond positively by buying based on the previous experiences with similar brands (Bilbiie, Ghironi & Melitz, 2012).

On the other hand, the term service line is defined as a general term describing the kinds of services provided by a particular business in the market. For example, a company that manufactures disk drives can be said to have a service line of data storage solutions and cloud solutions (Camara et al., 2013). Woolworth offers non-core services to the consumers including banking and other financial services; catering services and restaurants, loyalty cards, health care services like pharmacies, custom arranging, entertainment, decorating and other services. Provision of special services to consumers by supermarket brands is becoming a common practice for many chains across the world. The aim of these service offering is to generate impulse buying behaviors from the organization, increase competitive advantages and response to sophisticated business environment. Products offered include groceries, general merchandise, beauty products and pharmaceutical products (Gupte & Doyle, 2014)

 

Business unit revenues

The term revenue is defined as the amount earned by an organization for providing products and services to the market. In accounting, the total income is recorded during the time of delivering the goods and service irrespective of whether it is received or not. In some regions, the terms gross income is used. A firm calculates the total revenue from a particular time, and it includes deductions and discounts accrued from returned and sold merchandise (Meissner & Strauss, 2012). Examples of income generated by companies include sales, interest income, service revenues, interest revenue and others depending on the type of business and sector. If revenues earned by a corporation are the core activity, it is considered as operating revenues, and those emanating from secondary activities are referred to as non-operating revenues. For example, the interest earned by a manufacturing company is known as non-operating revenue while those made by a bank is known as operating revenues (Perakis & Roels, 2010).

According to Sotgiu & Gielens (2015), Woolworth supermarket chain has been in so many challenges due to economic fragility in the international environment. One of the biggest revenue generated by the supermarket division including Caltex petrol brand was underpinned by its business expansion strategies. In 2012 financial year, the company recorded a profit of $2.3 billion which was 24% increase from the previous year, and the revenue contributed to the group rose by about 6.9 per to hit $58.9 billion.4.0 External environment analysis of AustraliaAny organization must operate within a particular environment which impacts and influences the planned activities of the business in many ways. In such a context, external environment analysis is essential to the understanding of the factors likely to affect it (Yazdifar & Askarany, 2012). The term business environment comprises internal and external which affects the business operations. In the context of a particular business environment, political factors comprise the existing legal regulations which affect the regional trading agreements, the spending power of buyers, tax regulations, political stability and economic policy. The economic factors include the issues of interest rates, purchasing power parity, inflation, Gross Domestic Product, and other factors that are necessary for international marketing.

The socio factors to be considered include religion, population size, language, attitude, leisure time, gender roles, population demography, and issues of environmental awareness.On the other hand, technological factors related to emerging technological innovations and forces. The issue of technology relates to how technological forces improve the competitive advantages of the organization such as the production of innovative and quality products, efficient provision of services communication and customer relationship. Legal factors pertain to laws of a country and the effects on businesses. An example includes consumer laws, labor laws, safety standards, and others. Lastly, environmental issues touch on all the influence of the surrounding environment.Political FactorsThe Australian government monitors the competitive landscape in the retail industry in the country. The businesses enjoy the political stability of the country that has seen significant growth in the sector for the last two decades. The government is in record protecting any emerging competitive practices in the country that can discourage setting of new organizations and the collapse of the existing one. This has been achieved through a raft of legislations such as the formation of the Australian Competition and Consumer Commission (ACCC). The agency facilitates of a fair ground to protect the businesses.
 
 

Government interferences in the sector range from a review of industrial pricing to promote competitive pricing and making the players in the industry accountable the prevailing pricing policies (Dwivedi et al., 2012). Economic FactorsEconomic factors are essential to consider for Lazada because these forces largely influence the demand for commodities, costs, profits, and prices of the products in the industry. For instance, one of the most influential factors to consider is the high levels of unemployment, which affects the demand for goods in the market. The firm cannot control the elements, but the impact on the marketing mix and performance are very profound (Dwivedi et al., 2012). As such the economic factors in the industry are likely stronger and contribute to profits for the players and growth due to stability.Social and Cultural FactorsThere are social and cultural factors affecting the lifestyles of the communities such as massive immigration of people to the country and the influence of traditional communities’ remains evidence in the public life. The analysis of the labour market reveals the existence of income-based promotions, which makes the economy disadvantageous due to prospects of social agility. Besides, the society is at risk of baby-boomer generation attaining the retirement, which means that there will be declining employment contribution (Dwivedi et al., 2012). In Australia, there have been changes on social issues that show that consumers are buying a broad range of products based on the price they can afford and concerns for health issues on the type of product requested.


Technological Factors

Technology is one of the variables that have influenced the formation of online shopping and other e-commerce businesses. The new technologies are beneficial to the company and its customers because companies can deliver the services very fast and at lower prices. When well utilized, it can raise the level of customer satisfaction because clients can log into the site and request what they want through the internet (Nenycz-Thiel, 2011). To efficiently manage consumer services and their supply chain the following technologies are at disposal and paramount in the company’s operations. They include wireless devices, intelligent scale, online money transfer techniques, and electronic scanners to improve the efficiency of distribution. Besides, the company should commit very high budgets to the installation of faster technologies to enable easy access to suppliers and consumers (Dwivedi et al., 2012).

Environmental Factors   

The Australian government is in a pole position to ensure strict safeguarding the national environment. Therefore, all the companies venturing in the country must initiate private activities aimed at protecting the immediate environment. The government proposes and insists on environmental friendly operations as a result of excessive pollution caused by the mass emission of carbon II oxide. There are also strict rules and supervision to companies operating in the country, and therefore Lazada needs to comply with the set levels following to concerns raised by lead contamination that killed thousands of birds (Nenycz-Thiel, 2011).

Legislative Factors

Various government policies and legislations have a significant influence on the performance of Woolworths. Legislative changes taking place in the country significantly affects many enterprises, and this causes many organizations to change their operations to satisfy with the legal environment (Dwivedi et al., 2012). Examining the legal system in Australia shows that the government and relevant authority’s exercises generous regulation that borrow on liberal principles. In addition, there are Food Standards Code regulating the safety of foodstuff and labeling of genetically modified foods. The legal environment in the country is hospitable because foreign companies can enter the market without encountering many barriers in the industry (Yazdifar & Askarany, 2012).

 

Source of competitive advantage in business

There are various sources of sustainable competitive advantages in bussines namely the price, product, place, and promotion. The term price describes the amount of money allocated to a particular product in the market. Place is the location where a particular bussines operates in, product is anything offered to the market to meet the consumers’ needs and want and promotion describes all the activities aimed at raising the buyers’ awareness of a brand product and generating sales of a product (Flax, Bick & Abratt, 2016).

Woolworth’s supermarket chain focuses on provision of high quality and accessible products to the consumers. In addition, it is able to sustain its competitive advantage because the products are healthy, meets the needs, want of consumers, and offer value for money. Thus, strong and quality products are responsible for its sustainable competitive advantage (Flax, Bick & Abratt, 2016). Bailey, (2016) argues that the pricing of Woolworths is well evaluated and changed periodically. The company employs distinct techniques to attract new customers and retain the old one through discounts, promotional offers of the merchandize. Therefore, prices has been a source of competitive advantage because it broadens the customer and increased revenue

According to Bailey (2016), another factor for competitive advantage includes the place where the Woolworths stores are located. The chain chooses convenient places with high demand for their products. Their strategy focus includes the convenience and high demand. Flax, Bick & Abratt, (2016) adds that, to sustain the competitive ability, the chain has recently launched online stores for convenient purposes because consumers can use mobile app and computer to shop everywhere. The firm’s promotional activities are supported by advertising through, all mediums and the activities takes place within the store.

Strategic Directions

The term strategic direction is defined as action and activities that the can lead to achievement of firm’s goals and objective in the organization. The bussines environment is changing so much and the industry is taking shape that requires the organization to be competitive. Therefore, Woolworth should take a strategic of investing in online shopping platforms as it reduces the physical outlets and ensure automated shipping to increase consumer loyalty in the future (Mogre, Lindgreen & Hingley, 2017). To sustain intense competition, the management should work on understanding consumer’s behaviors and anticipating when they are likely to reorder the services or products. Other technology such as voice technology used by Amazon should be implemented. Woolworth should   strategically shift from a discount offer and position itself as a one-stop destination, utilize energy-saving technology, excellent visual merchandising, and expanding to biggest cities across the world (Potts, 2010).

Woolworth strategic should be enhancing its private label product quality with an objective of boosting quality perceptions and broadening the targets markets. The aim is to explain the source of products and the mode of delivery. To be competitive in future, strategic moves should predict the future of physical and online shopping. Emerging technologies has changed the way consumers buy products from stores. This has changed how, where and when one can shop because consumers can have access to products from multiple shopping centers across of the world that can be delivered right to their doorstep. While every brand is adopting such moves for the future, the difference will be on how seamlessly access product in virtual and physical stores and new delivery alternatives. Therefore, the firms need to have an initiative to understand the consumers’ needs and wants to know better, what different consumers want and how better it can be done.

Conclusion

In conclusion, Woolworth has many divisions including supermarket chains, petrol, liquor, and others. Woolworth supermarket chains have operation across all states and territories in Australia and offer services and products such as general merchandise, groceries, banking services, catering services, loyalty cards, health care services, and others. Its operation and revenue generation are affected by Australia's political, economic, social, legal, and technological. To increase its competitiveness in the industry, emphasis should be on the product offered, place of operation, promotion of their activities and offering competitive pricing. Other Strategic directions of the future include satisfactory products and leveraging technology.

 

Bibliography

Bailey, M., 2016. Absorptive Capacity, International Business Knowledge Transfer, and Local Adaptation: Establishing Discount Department Stores in Australia. Australian Economic History Review.

Bilbiie, F.O., Ghironi, F. and Melitz, M.J., 2012. Endogenous entry, product variety, and business cycles. Journal of Political Economy, 120(2), pp.304-345.

Camara, E., Montreuil, K.R., Knowles, A.K. and Gagnon, G.A., 2013. Role of the water main in lead service line replacement: A utility case study. Journal: American Water Works Association, 105(8).

Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and Consumer Services, 19(5), pp.526-536.

Bustinza, O., C. Parry, G. and Vendrell-Herrero, F., 2013. Supply and demand chain management: The effect of adding services to product offerings.Supply Chain Management: An International Journal,18(6), pp.618-629.

Flax, J., Bick, G. and Abratt, R., 2016. The perceptions of supplier-buyer relations and its affect on the corporate brand. Journal of Brand Management, 23(1), pp.22-37.

Gupte, J. and Doyle, J., 2014. Woolworths becomes a'health destination'. AJP: The Australian Journal of Pharmacy, 95(1125), p.4.

Jie, F., Parton, K. and Chan, C., 2015. Australian beef supply chain integration: case studies of the two largest Australian supermarkets. International Journal of Supply Chain and Operations Resilience, 1(2), pp.121-138.

Keith, S., 2012. Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of Regional Food Studies, 2, pp.47-81.

Kownatzki, M., Walter, J., Floyd, S.W. and Lechner, C., 2013. Corporate control and the speed of strategic business unit decision making. Academy of Management Journal, 56(5), pp.1295-1324.

Long, B.S. and Helms Mills, J., 2010. Workplace spirituality, contested meaning, and the culture of organization: A critical sensemaking account. Journal of Organizational Change Management, 23(3), pp.325-341.

Meissner, J. and Strauss, A., 2012. Network revenue management with inventory-sensitive bid prices and customer choice. European Journal of Operational Research, 216(2), pp.459-468.

Mogre, R., Lindgreen, A. and Hingley, M., 2017. Tracing the evolution of purchasing research: future trends and directions for purchasing practices. Journal of Business & Industrial Marketing, 32(2).

Nenycz-Thiel, M., 2011. Private labels in Australia: A case where retailer concentration does not predicate private labels share. Journal of Brand Management, 18(8), pp.624-633.

Perakis, G. and Roels, G., 2010. Robust controls for network revenue management. Manufacturing & Service Operations Management, 12(1), pp.56-76.

Potts, T., 2010. The natural advantage of regions: linking sustainability, innovation, and regional development in Australia. Journal of cleaner production, 18(8), pp.713-725.

Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production Economics, 171, pp.241-249.

Sotgiu, F. and Gielens, K., 2015. Suppliers Caught in Supermarket Price Wars: Victims or Victors? Insights from a Dutch Price War. Journal of Marketing Research, 52(6), pp.784-800.

Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (pp. 1-29). Springer International Publishing.

Yazdifar, H. and Askarany, D., 2012. A comparative study of the adoption and implementation of target costing in the UK, Australia and New Zealand. International Journal of Production Economics, 135(1), pp.382-392.

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