Strategic Management Analysis Of Woolworths Group

Business Environment Analysis

The organization Woolworths Group Limited, established in 1924 is the 2^nd largest retail organization of Australia and caters primarily to the retail needs of the people of Australia (Woolworthsgroup.com.au, 2018). More importantly, although the organization is the 18^th largest retail organization of the world yet for the year 2016 it incurred a financial loss of more than $1.235 billion (Woolworthsgroup.com.au, 2018). This can be attributed to the ever increasing business competition which the concerned organization is facing in the retail business industry of Australia. This report will focus on the business environment in which the organization Woolworths Limited is operational and also the strategic direction that they need to follow.

  Hanson et al. (2016) have stated that the fortunes of an organization depends greatly on the effectiveness as well as efficiency with which it is being able to resolve or mitigate the threats offered by the business environment in which it is operational. Furthermore, the fortunes of a business enterprise also depend greatly on the efficiency with which it is being able to exploit the business opportunities presented by the business environment (Prajogo, 2016).  

Threat from New Entrants	Woolworths has been in business for more than 80 years and enjoys a positive brand image (Woolworthsgroup.com.au, 2018). The organization offers a plethora of products or services to the customers which are much appreciated by the customers. In addition to these, the large number of supermarkets that the organization owns also ensures a steady sale of products offered by the organization (Chimhundu, Kong & Gururajan, 2015). Thus, it can be said that the organization faces a very low level of threat from the new entrants.
Threat from Substitutes Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	The organization is currently facing a high level of threat from its various substitutes like Coles, Amazon and others (Zakaria et al., 2014). It is pertinent to note that these organizations are not only using cost leadership and other business strategies for the sale of their products but also taking the help of digital marketing strategies to reach out to a much larger customer base (Grimmer, Miles & Grimmer, 2015). In addition to these, it is seen that the quality of products and price charged by them is better than that of Woolworths (Medlin & Ellegaard, 2015).
Bargaining Power of Suppliers	As opined by Lewrick et al. (2015), if the bargaining power of the suppliers is high then this can adversely affect the business prospects of an organization. The organization in order to reduce the bargaining power of the suppliers takes the help of multiple supplier system. This not only ensures that the organization gets timely supply of raw materials but at the same time reduces their bargaining power as well.
Bargaining Power of Buyers	The number of options which are available to the customers in the contemporary times has increased in a substantial manner because of the increasing number of retail organizations in the business market of Australia (Wei et al., 2018). Sutton-Brady, Kamvounias and Taylor (2015) are of the viewpoint that if the bargaining power of the customers is high then this can adversely affect the prospects of an organization. Thus, it can be said that the high bargaining power of the customers is adversely affecting the business prospects of Woolworths.
Industry Rivalry	The organization is facing a high level of competition from organizations like Coles, Amazon, Wesfarmers and others. It is pertinent to note that these organizations use different kinds of business as well as marketing strategies for the process of their business which has helped them to attain competitive advantage in the business market of Australia (Leiblein, Chen & Posen, 2017).

As opined by Davcik and Sharma (2016) a stable political environment is one of the most basic requirements of the contemporary business organizations. It is pertinent to note that Australia has one of the most democratic governments of the world. In addition to this, it is seen that the nation does not experience any major political struggles or strikes (Wei et al., 2018). Moreover, the national government of the nation takes active initiative for the promotion of commerce and trade. Thus, it can be said that the political environment of the nation is an ideal one for the business operations of the concerned organization.

Australia has one of the most stable economies of the world and as a matter of fact the individual per capita income of the people of Australia is one of the highest ones of the world (Leiblein, Chen & Posen, 2017). More importantly, the economic recession which adversely affected the majority of the nations of the world has very less impact on the national economy of the concerned nation (Lewrick et al., 2015). This ensures the fact that the people of the nation have the necessary capital to purchase the products that the concerned organization offers.   

The core competencies of Woolworths are listed below-

• Quality:The organization is known for the high quality as well as diversity of products or services offered by it. As a matter of fact, the customers can get the best quality branded products of different organization under one roof of the Woolworths supermarkets (Woolworthsgroup.com.au, 2018).
• Communication:The organization conducts regular seminars, events and other kinds of marketing campaigns with the objective to convey the relevant message regarding the products and the strategies followed by them to the stakeholders (Woolworthsgroup.com.au, 2018). This has enabled it to maintain an effective relationship with the stakeholders.
• Teamwork:The organization has segregated its entire workforce into different teams so as to enhance their efficiency. This has contributed in a substantial manner towards the growth of the organization.
• Problem Solving:Woolworths takes into effective consideration the perspective of the employees for the resolution of various problems that it faces (Woolworthsgroup.com.au, 2018). This has not only helped it to earn the trust of its employees but also to improve their performance as well.

Primary Activities	Weak/ Strong/ Moderate	Under Armour
Inbound Logistics	Strong	Third Party
Operations/ Manufacturing	Strong	Third Party
Outbound Logistics	Moderate	Third Party
Marketing and Sales	Moderate	The organisation has a team which is entrusted with the work of marketing and sale of the products
After Sale Service	Moderate	The customer support team of the organisation takes care of this
Support Activities	Weak/ Strong/ Moderate	Under Armour
Firm Infrastructure	Strong	The organisation is well structured and boasts of a great culture
Human Resource Management	Strong	High employee engagement and attractive remuneration offered by the organisation ensures the effective management of human capital
Technology Development	Weak	There is a need for the organisation to integrate modern technology within the framework of their business
Procurement	Moderate	Third Party

Woolworths is facing a substantial amount of business competition in the retail business market of the nation of Australia from organizations like Coles, Wesfarmers, Amazon and others. It is pertinent to note that these organizations through the effective usage of different kinds of business strategies like cost leadership, e-commerce, omni-channel business strategy and others have been able to attain competitive advantage and a higher amount of revenue (Sakas, Vlachos & Nasiopoulos, 2014). In addition to these, the product line offered by these organizations is much more diversified than the ones offered by Woolworths. More importantly, Woolworths is still taking the help of traditional means of marketing whereas these organizations are actively using different digital marketing and promotion strategies which has enabled them to gain competitive advantage. Thus, the organization under discussion here has not only experienced a decline in the number of customers that it used to get in the earlier times but also in revenue as well.

Threat from New Entrants

In the light of the increasing amount of business competition that the organization Woolworths is facing presently in the retail business market of Australia the vision of the organization should be to offer the best quality cost effective products to the customers. The mission of the organization, on the other hand, should be to not only increase their customer base but also to enhance their annual revenue in a substantial manner. For the achievement of this mission the organization can take the help of two strategies, namely, cost leadership and product differentiation.  

Hanson et al. (2016) are of the viewpoint that the effective utilization of the strategy of cost leadership has become an imperative one for the organizations in the light of the ever increasing business competition. As opined by Sutton-Brady, Kamvounias and Taylor (2015), the usage of the cost leadership enables the organizations to offer the best quality products or services and that too at very reasonable prices. This is important from the perspective that the number of choices or options that are available to the customers in the present times has increased in a substantial manner keeping pace with the developments in the field of business. More importantly, the primary focus of the majority of the customers is to get the best quality products or services and that too at the lowest possible prices (Lewrick et al., 2015). The net result of this is the fact that they often conduct various kinds of market researches which enable them to select these kinds of products or services. Thus, it is likely that the effective utilization of this strategy is likely to help the concerned organization to not only enhance its customer base but at the same time to increase their annual revenue as well in a substantial manner.

Zakaria et al. (2014) have stated that the buying behavior of the customers have changed in a substantial manner in the recent times on the score of similar kind of products or services offered by different companies. The net result of this is the fact that the different organizations need to innovate as well as reconfigure the kind of products or services that are offering to the customers both in terms of quality as well as quantity to grab the customers. It is precisely here that the strategy of product differentiation gains prominence since it helps the organizations to offer similar yet different kind of products or services to the customers. These differences in the products or services can be in terms of quality, quantity, appearance and others. Furthermore, in the recent times it is seen that many organizations have been able to gain a considerable amount of success through the effective use of this strategy (Grimmer, Miles & Grimmer, 2015). Thus, it can be said that the organization Woolworths will be able to gain competitive advantage and also enhance their customer base through the active usage of this strategy.

Threat from Substitutes

Woolworths for the attainment of competitive advantage in the retail business market of Australia can take the help of omni-channel business. I believe that the effective use of this strategy will help the organization to offer both online as well as offline business services to the customers. It is pertinent to note that the majority of the contemporary customers feel more comfortable taking the help of online business services because of the effectiveness of e-commerce services. Thus, the use of this strategy will help the organization to capture these customers and thereby to earn a higher amount of profit. The second strategy that the organization can use is digital marketing. I believe that this strategy will help the organization to promote and market the products or services offered by it through the online platforms. The organization can not only convey the information about the existing services offered by it to the customers but at the same time can promote the new products or services that it would be launching in the future. However, at the same time, it needs to be said that the use of this strategy requires the organizations to take into effective consideration various factors and the prospects of various organizations have been adversely affected through the use of this strategy.

Conclusion

To conclude, the overall prospects of an organization depend to a large extent on the kind of business strategies which it is following for the process of its business. Furthermore, for the formulation as well as usage of business strategies the organizations need to take into effective consideration the business environment in which they are operational and also the level of business competition faced by them. In addition to these, the organizations at the same time need to ensure the fact that the strategies used by them are in synchronicity with the mission as well as vision of the concerned organization and also with the demands of the customers.

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