Strategic Evaluation of Woolworths Ltd - Case Study Example

Strategic Evaluation of Woolworths Ltd. Author Name Institutional Affiliation Strategic Evaluation of Woolworths Ltd. Executive Summary Woolworth is an Australia-based retail company. Woolworth's deals in a wide range of product starting from clothing, food, home ware to digital products. In the Australian Retail Industry, Woolworths is ranked second after the Wesfarmers. However, it commands nearly 31% of the country’s retail markets.In Australia today, the Woolworths supermarket remains one of the top retail businesses based on sales revenues, geographical coverage, number of branches, and brand identityThe company runs over 3200 stores across New Zealand and Australia, with closeto 200 supermarkets in New Zealand and 1000 supermarkets inAustralia Key to Woolworths’ success story is its effort to invent, innovate, reorganize and implement sound strategies at business, corporate and global levels. As of today, the company hasalready gained asubstantial presence in the Australia’s retail industry; the company continues to expand in Australia and other parts of the world because of his awesome business strategies. At the corporate level, a growth strategy often points to thefact that a business increases the number of markets it serves or the number products it offers, either through its new ventures or current businesses.Based on the analysis, the organization is strategically positioned to even do better in the future. Section I: Introduction Pegged on the aspect of organizational management, this report mainly focuses on performing an in depth of an organization, and the specific organization picked for this analysis is the Woolworths. Woolworths is one of the leading players in the Australia’s Retail Industry. On performance records, the organization has attained substantial growth and expansion not only in Australia but also in the global retail market, and given the state of theretail business environment, a number of factors can be said to have contributed to the tremendous growth of this company. Key amongst these is the company’s strategy of doing business, and in this regard, this report is keen to unearth Woolworths’ all time and current strategies. In this manner, it will be possible to assess the current position and future possibilities of Woolworths in the business space. According to Cunningham and Harney (2012),   there are some specific tools of analysis often considered when evaluating an organization’s contemporary strategic positioning in a particular industry. Amongst these are environmental dynamics, which can be internal or external. The strategic evaluation of Woolworths is conducted at different levels: business, corporate, and global level. Section II: Background After the inception in 1924, Woolworths Ltd has remained relevant and operational in Retail Industry for 90 years. Through expansion, mergers, and acquisition, Woolworths stands out as one of the biggest and most reputable businesses in Australia. According to Pash (2017), this company control over 31% of the supermarket chain market share. Some of the principal brands that maneuver under Woolworths include but not limited to Dick Smith Electronics, Woolworth or Safeway supermarkets, Dick Smith Powerhouse, Dan Murphy’s, BWS, and Tandy. Of all these, the supermarket line of business has been the most successful ventures that the company has ever made. In Australia today, the Woolworths supermarket remains one of the top retail businesses based on sales revenues, geographical coverage, number of branches, and brand identity (Gray, 2014). The company runs over 3200 stores across New Zealand and Australia, with close to 200 supermarkets in New Zealand and 1000 supermarkets inAustralia (Dawson, 2013). Further, it is important to note Woolworths also command sound global presence. Apart from New Zealand and Australia, the company also has stores in other countries like India, China, United Kingdom, Kenya, and the United States among others. According to Smith and Cockburn (2013), Woolworths was ranked number 19 amongst the leading retailers across the globe. Section III: Strategic Analysis 1. Business Level Strategies Business level strategies oftenpoint actions and approach businesses take to deliver value to potential customers, in addition to gaining a competitive edge by utilizingtheir core competencies, in particular, individual service or product markets. Woolworths’ Business-level strategy is largely concerned its position in the retail industry, comparedto its relevantcompetitors like Perth and the porters’ five forces of competition.  A scrutiny of Woolworths’ role in the Australia’s Retail industry reveals that the organization has attained thesubstantial standard of theprevalent ladder in the industry, and the primary reason behind this ranking is majorly the strategies it put forth. The enterprise, for instance, has compelling growth strategies in place and based on its growth trajectory, using its portfolio, expanding its leadership in different market segments, enhancing shareholders value, keeping an ever growing business track record, and forecasting into future growth avenues, are its most important priorities. As Peng (2013) puts it, customers are the essence or driving stone of any ventures business level strategies. Certainly, it is them who the organization in question aims to serve. So an organization, through the senior management, must have a clear picture of what constitutes its customers’ needs and how to it plans to satisfy them (Knox & Knox, 2015).The Woolworths strategy towards its customers and employees speaks volumes on its success story. The company is keen to satisfy its customers and employees demands through paying attention to their specific concerns, acting in the same, and obtaining feedback. Through this initiative, it is has been possible for the management to innovate and remodel its approaches and services to ensure customers and other stakeholders are always satisfied. Woolworth’s strategy towards employees creates a favorable working environment and handsome compensation schemes for the work they do (Peng, 2013). In aneffort to gain a competitive edge over it industry rivals and outstanding leaders like Perth, Woolworth has been keen on four approaches to reaching out to customers. One of these is Cost Leadership. Woolworths strives to obtain a wide customer base through pricing strategy. This has been possible for the organization because of its internal efficiency in both operations and management, which enable it to have profits that sustainabove average returns and maintain substantially reduced prices to customers so that they but frequently and volumes. As an added advantage to this strategy, the company tends to have standardized products and services that are acceptable to most of their target markets. Therefore, through continuous effort to limit prices below that of their competitors, Woolworths has essentially been able to play as a market actor with cost leadership agenda throughout the retail industry. Three specific competencies of Woolworths in this regard have been (1) creating state of the art proficient facilities, making it extremely hard for its competitors to imitates. (2) Keeping its cost of sales, services, and Research and Development activities splendidly low, and lastly, (3) ensuring tight control over overhead and production costs. Differentiation has also been at the center of Woolworths’ business level strategies. Through packaging, focused differentiation, and technological applications. To separate its products and services, the company often uses unique packaging and service provision strategies. They have W-rewards Card systems, in which customers are rewarded and given a particular percentage of discount if they buy or subscribe to certain products or services amounting specified volumes. This has enabled the organization tocreate and maintain strong rapport with its customers, prompting repeat purchases. 2. Corporate Level Strategies Corporate level strategies of an organization touch on what it does and strategic decisions it makes to effect changes in the entire organization. Mergers and acquisitions, partnership, financial performance, allocation of resources, and human resource management often makes a substantial element of a corporate level strategy. All these aspects dictate the kind of business an organization trades in and specifics of its action plan. They largely depend on the objectives and missions of an organization. Woolworths’ primary mission is to provide sustainable and profitable development into the future. To achieve the Woolworths’ put forth four critical strategies and priorities. Extending leadership retail business of them. Maintaining good track record of continued growth in business is another (Robbins et al., 2013). Others key priorities in this respect include sustained portfolio action to upscale the shareholders’ value and contracting focused growth enablers. Woolworths tracks its mission through corporate strategies that blend different types and structures of businesses including retail hardware (such as Master Home Improvements, and Supermarkets (such as Woolworths, Thomas Dux, and Countdown). The company has also ventured in hotels and pubs (such as the ALH Group), Petroleum services (such as the Co-branded Caltex) and financial services under the brand of Woolworths. Although Woolworths’ has already gained asubstantial presence in the Australia’s retail industry, the company continues to expand in Australia and other parts of the world. At the corporate level, a growth strategy often points to the fact that a business increases the number of markets it serves or the number products it offers, either through its new ventures or current businesses. By being keen on its growth strategy, Woolworths’ has been able to upscale it sale revenues, market shares, and employees. One would definitely wish to understand how Woolworths has been able to grow to its current level of a multinational organization. According to Gray (2014), Woolworths’ management always applies four techniques: diversification, concentration, horizontal integration as well as vertical integration. Through concentration, Woolworths often focuses on aspecific line of business and increases the amounts of services or products it offers to different markets in addition to invading new and opportunistic markets. Through vertical integrations, the Woolworths has been on enhancing backward integration. It acquires small and upcoming companies in the retail industry to gain control over its own contributions by becoming a supplier on its own. On thesame line, Woolworths also tends to embrace forward integration growth strategy by performing the distributor role of its products. The company has over 200 retail stores across Australia alone. Woolworths has also been playing mergers and joint ventures with other prominent and promising organizations. Thishas enabled it to put its best feet forward through direct and indirect contributions of partnering organizations. In Australia, for instance, Woolworths merged with another company known as US Home Improvement to launch a new hardware chain store popularly known as Master Home Improvement (Chew & Gottschalk, 2009). The primary aim of this new venture was to tackle Wesfarmers’ Bunnings, which successfully colonized the Australian hardware market. Since merging with potential competitors eases the level of rivalry in industry, the Australian government has a chain of ‘watchdog’ organizations that evaluate the impacts of such business moves. The most expected outcome is that which allows theadequate provision of goods and services to the society. Those mergers that create amonopoly in the market are often discouraged. Woolworths has always been relevant in this sense, and most of thecorporate strategies have always lived the test of time. 3. Global Level Strategies Peng (2013) loosely defines a global level strategy as an approach that a firm takes to expand its presence across the globe. Woolworths’ presence is felt in nearly all the world countries. In addition to supermarkets, the company has been able to comb through others market niches at the international arena. One would wonder how this company has managed to put its face in different nations. In the subsequent analysis, this question answered in detail. First of all, Woolworths is keen on its brand image across. The idea of abrandiskey to development invention of a retail formula. According to In Bitzer,(2015), the whole aspect of branding entails a single mechanism, besides other factors like technology, corporate and business culture for a retail business to stand out among its arch rivals. As with Woolworths, the branding serves as an important communication strategy with its potential consumers, especially, with respect to the values it creates for them. In the present context of globalization, Woolworths operates through a unitary format with one brand used for a single formula. Woolworths, recently in the United States of America and globally, applied the same approach, and expanded in fresh models but under a single brand. One brand used in multiple formats is currently a highly and extensively applied strategy of several clothing retailers in both international and domestic operations. Mango, Ted Baker, and Desigual, for instance, functions under one brand but different store formats. Further, the current advancement in technology and e-commerce, Woolworths always strives to improve its online presence as a strategy to reach out to world markets. Woolworth's online shops facilitate marketing adventure for a number of consumers around the world. They can place orders online so that the company agents deliver when fruitfully processed. Section IV: Suitability of Woolworths Current Strategies Coherently, just by examining and dissecting Woolworth's system, one can arrive at an exciting remark that they have a phenomenal technique. In general, the organization has accorded a great deal of thought toward enhancing its business in various angles. However, considering the current business environment, the company should consider changing certain aspects in their business, corporate and global business strategies. First, given that it has complete control over its work floor, it would be a simple for it reorganize its internal factors so that it meets the bar of other strong retailers like Perth. What ought to be reorganized in this respect is the reliability card framework, popularly known as the W-rewards. Unequivocally, this is an exceptionally useful framework to general society. The company rewards its clients with W-rewards when they purchase items, and they can be offered up to 20% markdown on specific stuff. The W-reward gather clients' details since they may require for future purchases at Woolworth's (Smith & Cockburn, 2013). Therefore, it is one important customer-focus tool at Woolworths. The reason the company should consider making changes to this Loyalty Card System is these changes will be of awesome advantage to the organization since it can fortify their buyer connections and on a long haul premise improve their customers’ base.Of the greatest significance about this is that Woolworths will not need to fork out cash to roll out this improvement and consequently can prompt such advantages for them which simply influence the entire change of their unwaveringness to card framework more sensible. Further, given the current development of product differentiation ideas, most Woolworths' competitors consider packaging and presentation of product a paramount step toward outstanding. Therefore, product packaging and differentiation should another wind of change for Woolworths. As Chew and Gottschalk (2009) point, Woolworths', especially for the lowly endowed groups, are somewhat more extreme than Shoprite for instance. By affecting these significant change, the company is likely to improve its market coverage even further. The analysis has demonstrated that Woolworths is, as of now, utilizing generic business techniques. The organization has done that by concentrating on offering garments as well as offering nourishment and a wide range of items as well. The company sells products from its own manufacturing chambers. Woolworths likewise makes use of differentiation strategy that distinguishes their items and administrations from those of their rivals. The organization stands out particularly with agreen approach to undertaking business. Hence, it faces few legal limitations. By integrating findings of this evaluation, one can easily determine that Woolworths has more inner qualities and shortcomings to confront. The organization is pleased that they have always been on top of their customers' priorities, giving them quality items at the lower costs. Through reduced pricing technique, Woolworths has been able to hold an upper hand over its significant contenders, and this gives it’s a better chance.However, Woolworths still needs more powerful procedures to win the market share over with these solid contenders. Conclusion The analysis solely focused on Woolworth's strategic approaches at different levels ranging from the business operation, corporate management, and global presence. In the first part, the analysis determines that the organization often take people (customers and employees) focused strategies the business levels. At the corporate standards, the organization focuses more on its growth into the future. However, with the global strategy, Woolworths tends to defend its brand image as it expands and invades different internal markets. The organization is strategically positioned to even do better in the future. References Robbins, S., Bergman, R., Stagg, I., & Coulter, M. (2014). Management VS. Sydney: Pearson Education Australia. Peng, M. W. (2013). Global strategy. Cengage learning Dawson, J. (2013). Global strategies in retailing: Asian and European experiences. Routledge. Knox, M., & Knox, M. (2015). Supermarket monsters: The price of Coles and Woolworths' dominance. Collingwood: Schwartz Publishing Pty, Limited In Bitzer, V., In Hamann, R., In Hall, M., & In Griffin-EL, E. W. (2015). The business of social and environmental innovation: New frontiers in Africa. Chew, E. K., & Gottschalk, P. (2009). Information technology strategy and management: Best practices. Hershey: Information Science Reference. Smith, P. A. C., & Cockburn, T. (2013). Dynamic leadership models for global business: Enhancing digitally connected environments. Hershey, PA: Business Science Reference. Cunningham, J., & Harney, B. (2012). Strategy & strategists. Oxford: Oxford University Press Gray. E. (2014, July 09). Woolworths’ Corporate Strategy. Retrieved September 06, 2017, from https://www.youtube.com/watch?v=eWRaVdEZt6k Pash, C. (2017, March 12). Australia's top companies for 2016. Retrieved September 05, 2017, from https://www.businessinsider.com.au/australias-top-companies-for-2016-2017-3 Read More