Evaluating the Mechanism through Which Woolworth Is Working - Case Study Example

Executive Summary This report looks at evaluating the mechanism through which Woolworth is working. The paper has been divided into different parts where it looks to bring forward the strategic purpose of the organization. This is followed by an external and internal analysis to understand the manner in which the different factors are having an impact on their performance. The report then provides a complete description of the competitive strategy and the different strategic choices which they have while looking to work in different markets. The paper finally provides a conclusion and recommends different areas through which their operational efficiency can improve. On the whole the paper thereby provides the different important areas which will help Woolworth to improve its business and achieve better results. Table of Contents Executive Summary 1 Strategic Purpose 3 External Analysis 3 Internal Analysis 6 Basis of Competitive Strategy 8 Strategic Choice & Strategy Evaluation 10 Conclusion & Recommendations 11 References 12 Strategic Purpose Woolworths is a retail chain store which started operation in 1879 and since then has grown to become one of the largest chains of retail stores in the world. The organization has worked with the fundamental of providing products at low rates and ensure that middle men are eliminated so that customer gains. The business has been driven by values which are consistent and has looked towards ensuring that the overall business prospects are better improved. The organization has thereby identified the following mission, vision and value statement Vision: To provide quality products to its final customers at the lower rates possible and multiply the experience of shopping Mission: To improve the stock turns and optimise network efficiency so that customers can be better served and customers are provided value for money. Values: The organization is driven by value which guides them. They look towards being simple and honest in their dealing, at the same time look to be innovative and ensure that the different needs of the customers are better met. The organization to achieve the objective and ensure better functioning has interlinked both the strategic and fundamental objectives. This has helped to improve the manner in which the different resources are used and has maximized the overall fundamental through which different work is being done. As a result the overall working mechanism has been shaped in a better way and effective functioning is being witnessed. External Analysis External factors have an impact on the manner in which organizations perform in an industry. No player can perform in isolation which makes it imperative that the external factors and the manner in which it influences business is understood so that appropriate strategies to deal with it can be garnered. The manner in which external analysis impacts Woolworths is being explained through PESTEL analysis and Porter Five Force Model and is as PESTEL Analysis Political: Changes in government rules and regulations have an impact on the manner in which an organization works. Changes in policies of the government to encourage one stop shopping has ensured that different outlets like pharmacies, groceries and other are found at the same place. Woolworths has worked on large store retail chain format and has been helped by it. Thus changes in government rules and regulations impacts the manner in which different decisions are taken Economic: Economic situations impacts the manner in which business is done as Woolworths had to close its operation in UK during the economic crisis. Decrease in the purchasing power of people has a negative impact on Woolworth’s performance and needs to be accounted for while making strategies (Brassington and Pettitt, 2001). It is important that the economic situation is considered and policies are made based on it. Social: Changes in the social outlook and trend towards purchasing from large stores where all products are available under the same roof has helped Woolworth. In a similar manner changes in fashion and more people purchasing trendier products has helped Woolworth to develop their strategy keeping those in mind. Technological: Changes in technology has helped to ensure that Woolworth has been able to use technology to improve its business. This has helped Woolworth to ensure better procuring and management of inventories. This has also helped them to go online and carry out their business more professionally thereby ensuring better results. Environmental: Woolworths has looked towards being environmental friendly and tries to procure its products from suppliers who care for the environment and don’t harm the environment. This has helped to ensure that more and more people are able to associate with the product and has developed their brand name. Legal: Woolworths needs to abide with the legal requirements and has to procure the necessary license to carry out functioning. Not abiding to it could lead towards legal actions and Woolworths need to understand those and include those in their planning process so that the overall framework is shaped towards improving their business and garnering better gains. In a similar manner the other external environment which would help to understand the manner in which the business is impacted in Porter Five Force Model and is as Competitive Rivalry: The degree of competition is very high as there are many players working in the industry with the same business model (Chrisan, 2001). The organization also faces competition from the non organized sector which has further complicated the overall situation and made it difficult to work in the market. Threat of Substitute: The threat from substitute products is high as similar business model are seen in operational in different parts of the globe (Chrisan, 2001). This has multiplied complexity and customers have opportunity to purchase from different players in the market. Threat of New Entrant: The threat of new entrant is low as initial investment is very high. The risk comes from the unorganized sector which continuously is witnessing new players entering the market. This has increased the chances of new players entering the market. Bargaining power of suppliers: The bargaining power of suppliers is low as there are numerous suppliers supplying the same products. This has helped to keep the price low and ensure better quality products are supplied. Bargaining Power of Customers: The customers have a high bargaining power due to different alternatives available before them. This has increased the overall level of difficulty and has made it difficult to carry out business as customer switching to different products and players is very high. Thus, Woolworths has to consider the different external factors and the manner in which it is impacting their business so that better strategies to deal with it can be formulated. Internal Analysis The internal analysis looks into the different capabilities and resources that the organization has. This helps to understand the manner in which the organization will be able to use those resources and ensure differentiation from other players in the market. Since, the internal factors are controlled by the business itself it provides an opportunity to ensure better differentiation and provides an opportunity to improve the business. The internal analysis is as Inbound Logistics: Woolworths has looked towards developing their inventory management system in such a manner that they look to maintain minimum inventory. The organization has an auto ordering system where when the inventory falls below a certain limit the same is ordered so that no shortages prevail. The logistics has been managed in a manner to ensure better customer satisfaction and ensure quality services. Operations: Woolworths look to procure the products from suppliers who are consistent with their products and provide quality products. In addition to it some of the products are made by Woolworths themselves and are also supplied. The overall operational aspect has been developed keeping in mind customer needs and changing business environment. Outbound Logistics: The outbound operations are managed in such a manner that they have tied up with different players to ensure consistent supplies. This has ensured that they can penetrate the market even deeper and has thereby multiplied the overall fundamental through which business operations are carried out. The process has helped to control cost and ensure better timely delivery of products to its customers. Marketing & Sales: The business has looked at hiring the best talent so that customer needs are better understood and can be satisfied. The business has been developed with the fundamental of low cost products which are of the finest quality. Since, majority of the selling is impulse selling where customer choose the product after seeing them so the role of marketing professionals have multiplied as they have to ensure that the customer expectations are met (Berkman & Gilson, 2001). Woolworths has been able to ensure quality working mechanism in this arena and has been able to differentiate its services from other based on employee quality. Infrastructure of Firm: Woolworths has looked at procuring places which are at the busiest places so that more and more people can be attracted. The stores are opened at areas where there is easy accessibility so that more and more people can reach the store. This has been matched by ample parking space and big stores so that movement is easy. In addition to it Woolworth has used the best available technology so that business improvements can be made and the overall business fundamental is shaped on better grounds. Human Resource Management: Woolworths looks at hiring the best employees so that better services can be rendered (Berkman & Gilson, 2001). Since, service is an important element of the industry the organization has given stress on it and looks at having people with different roles and responsibilities so that overall working environment is better shaped and better results can be achieved. Technology Development: Woolworth has integrated technology in such a manner that it has ensured better supplies. Use of different technology in different areas ensures better inventory management, better use of resources, better human functioning and so on. The overall business has thereby improved and multiplied the opportunities. The business thereby has looked at having both the rare competencies and unique resources in the form of manpower. This has enabled them to function in a better way and has multiplied the overall business potential. The business function thereby looks at procuring materials from different suppliers. The suppliers are selected carefully after the different parameters which have been identified are fulfilled. This has helped to ensure better customer satisfaction as the middle men are eliminated. The consumer as a result gains because the products are available at a lower cost and has thereby enabled the overall business to be governed by principles which has shaped the working mechanism and has provided better results. Basis of Competitive Strategy Woolworth has identified different competitive strategy which has helped them to pursue their business in an effective manner. The different strategies have ensured that the different resources are used in a better way and have thereby helped to improve the business fundamentals in different areas. The competitive strategies adopted by Woolworths is as Corporate Strategy: The corporate strategy has been developed by Woolworth keeping in mind the vision, mission and objectives which they want to attain. The corporate strategy is aimed towards providing quality products to its consumer at the most competitive rates and multiplying the experience of shopping. The entire process has been carried out by developing the required fundamentals and having an integrated management system which helps the business to achieve the objectives. Functional Level Strategy: The functional level strategy which has been adopted by Woolworths is a hierarchical form of organizational structure where the different departments like human resource, finance, marketing, production and others work together so that the business operations can be carried out effectively. The functional level also ensure execution of the goals and looks at ensuring that the different needs at different levels are easily achieved. Business Level Strategy: The business level strategy for Woolworths is to be competitive through innovation and continuous development and change. This thereby requires focusing on the core needs of the business and working towards using the different resources in the most productive manner. The overall focus is thereby aimed towards satisfying the needs of the consumer and looking towards maximizing customer satisfaction. Generic Strategy: The generic strategy which is thereby identified is one where the business aims towards being competitive and looking towards providing products at the minimum rates possible. While looking to do so the focus remains towards ensuring that customer experiences are multiplied and the overall business effectiveness is improved. Strategic Choice & Strategy Evaluation The future direction for the organization based on the Ansoff matrix is as Market Penetration: Woolworth looks towards increasing its market share by having offers all places where they exist (Awni, 2008). This is matched by increasing their reach by having more stores and looking to have products for all section of the society. This has thereby aimed towards increasing the market and ensures more and more customers are being targeted and attracted. New Product Development: Woolworths looks towards increasing its product line and aims towards having more and more products in its portfolio. The aim here is to ensure growth through more products so that more customers can be attracted (Awni, 2008). The aim is thereby towards increase investment in new products and ensuring better operational aspect. New Market Development: Woolworth on this framework aims towards increasing its market share by having more and more stores at different locations (Awni, 2008). The fundamental is towards reaching places where they don’t have a presence and identifying the strategies through which they will be able to ensure newer market with new opportunities so that business growth and development becomes possible. Diversification: Woolworth looks at diversification strategy by having different offers in the markets. The business aims towards different kind of integration and diversification so that overall business fundamental is better improved (Awni, 2008). The mechanism thereby aims towards ensuring that business operational efficiency is improved and the gains for the business are magnified. The overall direction as highlighted from the Ansoff matrix shows suitability as the business models requires similar strategies so that growth becomes possible. The aim is thereby towards having better opportunities and using the same towards developing their business. Conclusion & Recommendations The paper thereby brings forward the manner in which the external environment is impacting the business and different internal factors which has to be used to ensure better productivity. It is seen that the business has core competencies in certain areas and focuses towards customer satisfaction. Further continuous innovation and increasing the market share is another aspect which has helped them. The business has been able to work on important areas and need to look at new market to improve its market share. The business fundamental has to be aimed towards managing their soft areas and developing ways through which the different resources can be managed in a better way. The overall business fundamental thereby has to be aimed towards improving their strengths and looking towards working on areas through which they will be able to ensure better results. References Awni, R. (2008). Strategic position indicating. Translated by SeyedAmir Poya seyfzadeh, Management Selected Monthly, 78, 70. Berkman, H. & Gilson, C. (2001). Consumer Behavior Concepts and Strategies, Kent, Boston Brassington, J. and Pettitt, M. (2001). Principles of Marketing, 2nd Edition, Prentice Hall Chrisan, P. (2001). Marketing: A Behavioral Analysis, McGraw – Hill. New York Read More