The Business Strategy Woolworth Limited - Case Study Example

Executive Summary Woolworth Limited which is a retail based company in Australia has looked towards developing their business by ensuring that they provide the customers with products at a lower price while ensuring quality. The report presents the business strategy that has been adopted by Woolworth and the manner the strategy gets reflected in their vision and mission. Further the report looks to analyze the situation where both the internal and external factors are evaluated so that the challenges which Woolworth has can be identified and the different mechanism which will help them to ensure effective strategy can be identified The paper thereby looks to highlight that Woolworth has looked towards a penetration strategy by providing customers with products at the lowest possible cost. The internal strengths and the external analysis show that Woolworth has been able to integrate the different factors and develop their business fundamentals. This has helped to provide the following recommendations and challenges for the company in the coming years Woolworth should look towards following a similar strategy of penetration but at the same time should look towards improving customer satisfaction by providing quality products Woolworth should ensure better agreement and should look towards development of the brand image by ensuring better customer satisfaction and using their internal resources in a better way. Table of Contents Introduction 3 Objective of the Report 3 Company Business 4 Business Strategy 4 Key Performance Indicator 5 Stakeholders 5 External Environmental Analysis 6 Porter Five Force Analysis 6 Life Cycle Analysis 7 Competitor Analysis 8 Internal Environment Analysis 10 Value Chain Analysis 11 Challenges Ahead 14 Conclusion 15 References 16 Introduction The manner in which different industries are witnessing competition has mad it imperative for the different players to look into different factors which will help to improve their performance and ensure increased sales. This report will look to understand the manner in which the different external and internal factors needs to be considered and looked into for helping the business to look into different avenues so that the business is able to get a better return. This will thereby help to understand the manner in which the different factors have to be looked into so that the environment is controlled which will help to improve the overall performance of the business. Objective of the Report The objective of the paper is to look into the manner in which Woolworth has been affected by the external and internal environment. It also looks to presents the manner in which company has adopted its strategy and the manner in which the strategy has been reflected in their vision and mission statement. It also presents the manner in which the external environment is having an effect on the business working and the challenges that the business has to face in the future. This thereby helps to understand the different directions that Woolworth needs to work on so that the performance gets enhanced and the different areas that have been considered by the business. Company Business Woolworth Limited performs in the retail industry and has looked towards providing quality products to the customers at the lowest possible rate. The company deals in various products from a broad range of groceries and non-specialized food lines, including fresh fruit and vegetables, bread and pastries, cigarettes, canned goods, toiletries, dairy goods, deli items, and cleaning merchandise. The company has looked towards penetration by providing the products at the most competitive rate and has looked towards increasing customer satisfaction by developing positive relationship in all direction. This has helped the company to grow and has even adopted a vision and mission statement which highlights the opportunity of growth Vision: Ensure customer satisfaction by delivering quality services Mission: To provide customers quality products at the cheapest possible rates The company has thereby been able to reflect their vision and mission statement in the strategy adopted by them which has helped the business to grow and ensure better reach for the customers. Business Strategy Woolworth’s has looked towards a policy of increasing their penetration level as the company looks to offer various products to the customers at competitive rates and the rates are normally lower than offered by normal retailers. The strategy of the company has been to offer product to customers and looks towards eliminating the middle man so that the products can be sold directly to the customers (Coughlan, Stern & Ansary, 2006). In this regard the company has looked towards adopting a policy where they look towards improved training facilities to the employees, improving the logistic network so that the products are readily available, build brand awareness, and look towards transparency while dealing with customers. The company has looked towards following the same strategy and based on this fundamentals has opened stores over different regions which has helped to ensure that the unique proposition strategy adopted by the company provides the required return the business is aiming at. Key Performance Indicator The different key performance indicator highlights the Woolworth has been able to build their business and develop their business based on their business strategy. The key performance indicator for Woolworth has been to offer product to customers and looks towards eliminating the middle man so that the products can be sold directly to the customers. The fact that the company has ensured that the requirements of the customer are understood and has developed their policies which ensures better customer satisfaction has thereby helped to ensure better opportunities of growth and has acted as a key performance indicator for the business Stakeholders Woolworth has looked towards ensuring that they strategy adopted by them look towards different stakeholders like the customers, suppliers, society, government, and others associated with the company. The ability to understand the different requirements of the stakeholders and being able to deliver quality services based on the requirements has ensured to develop a brand image. The company has looked towards different stakeholders and based on it looked towards providing quality services to them. External Environmental Analysis The external environment analysis has an effect on the performance of the business as it shapes the manner in which a business perform and helps to understand the manner in which the external factors have an influence on their working. The external analysis looks into different factors which have been analyzed through porter five force model, lofe cycle analysis, and competitor analysis which will help to understand the manner in which the external factors have an influence on their working (Luther, 2011). Porter Five Force Analysis The five force model will throw light on the manner the external environment has influenced the working of Woolworth and the manner the company has been able to deal with it. This will help to deal with the uncertainties in a better way and will help to improve the performance. The external analysis is as follows Porter Five Force Model Rivalry among Sellers Intensifying competition as the presence of different retail players like Wesfarmers look to work on a similar strategy of providing products directly to customers at lower rates (SCRIBD, 2010). Potential of New Entrant The cost of entry for setting a large retail store like Woolworth’s is high due to the high cost associated with setting the business despite the support from the government to strengthen the retail network so that customers are able to get the products at the correct price (SCRIBD, 2010) Threat of Substitute The threat of substitute is very high as customers has an opportunity of purchasing the products from the nearby stores is high which reduces the dependence of big retail chains (SCRIBD, 2010) Bargaining Power of Suppliers The bargaining power of the suppliers is reducing due to the fact that the number of suppliers supplying the price has increased which provides an opportunity to substitute the products from one supplier to the other (SCRIBD, 2010) Bargaining Power of Customer The customers have a mixed bargaining power because the need for a particular product will make the customer purchase the same from the unorganized retail sector or from retail stores despite the prices charged which has reduced their bargaining power to a large extent (SCRIBD, 2010) Life Cycle Analysis The retail industry is witnessing a boom due to the increase in the number of retail players who are looking to supply similar products to the customers. The market in the retail industry has shown so immense growth that it provides a wide opportunity for the new players in the market. The retail industry is in the growth phase which has resulted in increased growth for the products. The life cycle growth chart for the retail industry shows the same (Wee, 2008). This shows the widespread opportunity that the retail industry presents and provides an opportunity for the different players to be able to use this opportunity to enter and capture a market share in the retail industry. Competitor Analysis Woolworth’s faces stiff competition from other players in the market who look to work on the same fundamentals as Woolworth’s and looks to supply products to customers at competitive rates. The degree of competition further intensifies when the unorganized sector or retail stores near the houses are looked into (Cateora, Mary & Graham, 2009). The manner in which the degree of competition is witnessed in the retail sector can we witnessed from the different retail players in the market Pep Stores Jet Stores Wesfarmer Woolworth Looks to provide products directly to the customers at the lowest rate and is aimed at all section of the society Looks to provide products directly to the customers at the lowest rate and is aimed at all section of the society Looks to provide products directly to the customers at the lowest rate and is aimed at all section of the society Looks to provide products directly to the customers at the lowest rate and is aimed at all section of the society The stores look towards providing different products belonging to different companies so that the customer requirements can be met and while looking to have products special consideration is given to ensure that the product is of high quality The stores look towards providing different products belonging to different companies so that the customer requirements can be met and while looking to have products special consideration is given to ensure that the product is of high quality The stores look towards providing different products belonging to different companies so that the customer requirements can be met and while looking to have products special consideration is given to ensure that the product is of high quality The stores look towards providing different products belonging to different companies so that the customer requirements can be met and while looking to have products special consideration is given to ensure that the product is of high quality The workforce looks towards dealing with the customers directly and after understanding their requirements looks to provide the required products to the customers The workforce looks towards dealing with the customers directly and after understanding their requirements looks to provide the required products to the customers The workforce looks towards dealing with the customers directly and after understanding their requirements looks to provide the required products to the customers The workforce looks towards dealing with the customers directly and after understanding their requirements looks to provide the required products to the customers The competitor analysis highlights that there is very little differentiation between the products and services offered by all the players. This makes the retail look to supply quality products to the customers at the most competitive rates. The degree of competition further intensifies when the organized sector is considered as the presence of large retail stores around house dwelling has an effect on the volume of sale generated by the retail stores (Krasnikov and Jayachandran, 2008). Internal Environment Analysis The internal analysis of Woolworth has been developed based on their internal strengths which have looked towards working on their strategies (Chew, Cheng & Petrovic-Lazarevic, 2006). The internal analysis is as Tangible resources Strong network coverage as Woolworth has more than 30% market share signifying presence in different places Huge product base due to the availability of wide range of products Ability to provide customers products at a lower rate and at the same time ensure maximum customer satisfaction Adding new products everyday to ensure that customers have a wider opportunity to select different items Intangible resources Strong brand power due to presence over different places Improved business development as the business focuses on all areas and ensures availability of all type of products Having the advantage of purchasing in bulk quantity which ensures lower prices Capabilities Ensuring better services and products which are of high qualities due to increased bargaining power with the suppliers Ability to add products which the customers want which has helped to increase the volume of sales Being in business over a long period of time has helped to develop a brand image which has ensured a regular supply of customers to purchase the products Core Competencies Rare: Increased bargaining power to be able to extract the products at the lowest rate from the suppliers Non substitutable: The presence in industry for many years have made them understand the different business cycle better Differentiating factor: Ability to sell products directly to the customers have ensured that the role of middle man is limited Value Chain Analysis The value chain analysis will look towards understanding the core strengths of the business and based on it will help to understand the long term strategies which will help Woolworth to improve their business operations and achieve their business fundamentals. This helps to identify the primary activities of the business achieving which will ensure that the business is able to move on track and achieve its long term strategy (Doole and Lowe, 2001). Inbound Logistics: Woolworth has developed the logistic network to ensure regular supply of materials so that it can be delivered to the customers at the correct time. Also maintaining the inventory control system has ensured that the inventory doesn’t fall below desired level ensuring adequate materials. Operations Woolworth has used the latest technology to manage their daily operation. For example the use RFID has ensured that the errors are reduced and the business is able to charge the correct prices and maintain their operations effectively. Outbound Logistics Strong relation with the suppliers has ensured regular supply of products and managing the vendor management system has further ensured availability of all type of materials. Marketing & Sales Woolworth’s markets its store through in house promotions and also by providing products to the customers at the most competitive rates to ensure better relation and spread of mouth. Support Activities The supporting activities followed by Woolworth is as Procurement Woolworth looks toward bulk purchase and maintaining healthy relationship with the suppliers and customers to ensure a regular flow of materials. Technological Development Woolworth looks towards technological up gradation and using the best technology. In addition to it the required training program and hiring of employees is done so that the person is competent to handle the new technology (Ireland, Hoskisson and Hitt, 2007) Human Resource Management Woolworth looks towards having abundant employees so that the customers can be helped at every step and while hiring special consideration is made to the quality of talent that is hired (Kramar, Bartram, De Cieri, Noe, Hollenbeck, Gerhart and Wright, 2011). Firm Infrastructure Woolworth has ensured that the infrastructure is developed to allow proper display of products, movement of both customers and employees and maximum visibility so that customers after looking the products can purchase those (Koranteng, 1999). Challenges Ahead Woolworth despite being able to understand the market requirements and developing their strategies according to it faces different challenges which need to be addressed for better development of the business (Czinkota & Ronkainen, 2004). This helps to identify the following challenges for the business Low cost retail outlet Woolworth faces intensifying competition from other retail players like Wesfarmers and which makes it important for the retail player to develop strategy to deal with the competition as it is having an effect on the market share and making it difficult to retain customers. Improving the franchise agreement Woolworth has looked towards providing franchise to different people and needs to relook into it as looking towards a strategy of franchise has diluted their services and they need to ensure that the franchise agreement entered is such that it helps to maintain the same brand image Improving the marketing strategies Woolworth need to concentrate on right marketing strategies by developing loyalty programs, higher discounts, better advertisements and development of salesman skills so that customers can be provided with better products and services. This is an area which Woolworth needs to work on so that it stays ahead from other and is able to differentiate their services (Fletcher and Crawford, 2011). Conclusion The report presents the manner in which Woolworth has been able to develop its strategy and ensure penetration in the market. It also presents the manner in which the internal and external analysis has been dealt and based on it the strategy for the business has been developed. The paper highlights the strong internal resources and the ability to provide products to customers’ at the most competitive rates has ensured brand building. This finally helps to identify the road ahead and the different areas that Woolworth needs to work to improve the performance in the future so that the business is able to ensure better opportunities of growth. References Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Coughlan, A., Stern, W. & Adl Ansary, E. 2006. Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Doole, I., and Lowe, R. 2001. International Marketing Strategy. 3rd Edition, Bedford Row, London, Thomson Fletcher, R. and Crawford, H. 2011, International Marketing: An Asia-Pacific Perspective,PearsonAustralia. Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, 2007. Competing for advantage, Cengage Learning Kramar, R., Bartram, T., De Cieri, H., Noe, R., Hollenbeck., J, Gerhart., B, and Wright, P. 2011. Human Resource Management: Strategy, People, Performance, McGraw Hill: Sydney. Krasnikov, A. and Jayachandran, S. 2008. The relative impact of marketing, research and development, and operational capabilities on firms performance, Journal of Marketing, 72 (4) Luther, W. 2011. The Marketing Plan: How to Prepare and Implement It, Fourth edition, AMACOM Div American Mgmt Assn SCRIBD. 2010. Executive Summary since 1997, Woolwoth has grown. Retrieved on August 16, 2012 from http://www.scribd.com/doc/28080693/Executive-Summary-Since-1997-Woolworth-Has-Increased Wee, T. 2008. Life Cycle Analysis. Retrieved on August 16, 2012 from http://www.enviroliteracy.org/subcategory.php/334.html Read More