Woolworths Limited was started in the early 1920s by five founders, although its significant rise was seen in the 1970s. Dealing with foods, fruits, and vegetables the company was the largest provider of those products in the late 1980s. Having originally started in the Australian market, the organization website report (2010) indicates that the company expanded further and became a significant producer, distributor, and seller of fresh fruits in New Zealand market. In the 1990s the company decided to extend its operations and entered petroleum industry where it saw significant results from selling petroleum products both in Australia and neighboring New Zealand.
According to Research (2012), the company today is one the most popular and trusted food and vegetable retailers in the Australian and New Zealand market. It has over 3200 stores in the Australian market, where it has over 800 supermarkets operating in Australia and about 150 in New Zealand. These stores retail and supermarkets mean that the organization boasts over 30% percent of the market share in food and vegetable industries. Woolworth extends its operations from food industries to production and distribution of petrol, liquor products, normal merchandise, and hotel services all over Australia and New Zealand.
The company strategy and objectives is classified into four key areas as follows;
Political and legal factors: Woolworth’s operations are significantly affected by the government policies that run the food and fruit industry. There is set supermarket opening and closing hours that affect operations of the company throughout (Biddle 2016, p. 3). Quality assurance and consumer group’s organizations will significantly determine quality and prices of food products in the industry hence affecting the general output of the organization.
Technology: Development of informatics and technology, have forced the organization to integrate systems that will assist in tracking inventories. Supply chains management has also been developed as supply and distribution to the retail store has been made effective. Web sites and online shopping facilities have also been set up so as to take the opportunity of e-commerce.
Economy: Retail companies have been significantly affected by the relatively slow growth of the Australian economy over the past years. Inflation and economic factors made the company increase the wage bills as the employees needed more resources to handle the economic situation in the past years. Being a company that deals with petroleum products the enterprise has occasionally been hit by the fuel price fluctuations. It is also critical to understand that Woolworths does not base it capital budgeting decision on rates of exchange over the last two years as the Australian economy has been stable.
Demographic factors: Due to rapid changes in population size, the company has been forced to shift its operations so as to adapt to those given demands. Woolworths has been popular for studying age, sex, and densities and applying the research in developing their marketing strategies (Biddle 2016, p. 3).
Social, cultural segment: There have been development changes in customers, attitudes, and beliefs where people have begun to understand the importance of positive feeding behaviors. Low fats foods are normally favored by people who are in weight reduction programs.
Bargaining power of buyers: The food retail market is full of homogenous products with less differentiation thus giving customers a significant bargaining power. Switching costs from one store to another is also low thus making companies offer special services and products so as to maintain their competitive advantage.
Bargaining power of suppliers: The supplying power in this market can be described as high to moderate as it depends on the reputation name of the supplier. A supermarket supplier who has a strong brand name will normally have a high bargaining power.
Substitute’s threat: Being a company that deals with multiple types of products, Thornton (2017) denotes that Woolworths has a moderate threat from online retails, groceries, direct fresh foods retail, and pharmacies. The main threat of substitutes is derived by accessibility and convenience of the product to the customer, as he is more likely to buy a product that is easily accessible and conveniently closer to him.
Threat of new entrants: Huge capital and number of distribution networks needed to start a food retail business many entrepreneurs are normally discouraged. Supermarket industry has complicated regulations and policies to start thus discouraging new entrants.
Competition rivalry: Due to a huge number of supermarkets in the industry, the competitor rivalry can be classified as high and intense.
In his study, Graulich (2015) denotes that the company has over 150000 employees in their books and over 3000 retail stores countrywide. It is human power is exemplary as it has a well-structured and abled human resource in all of its departments. Its innovators and the brand name is what separate it from other fresh food distributors across the market.
It’s an organization well structure, run, and organization where it has come up with processes and policies to make decision making swift and fast.
The organization is formed by solving customer problems effectively and maintaining its reputation for consumer satisfaction (Mialon 2016, p. 2). This has made the organization differentiate itself from its competitors and maintain its brand across the industry.
Woolworths has established long-term partnership and relations with its suppliers thus proving to be a strong internal point in the organization.
The main company principle of operation is based on the coordination of duties through contraction where the organization assigns contracts to companies for distribution of their products. It also extends its operation to subcontracts by offering them the raw resources to the contracted, plan and organizes their activities. Their operation is also characterized by their strategy to buy goods from their suppliers rather than purchasing from an open market so as to reduce inconveniences that may be caused by delays and poor quality. To reduce wastes, Mialon (2016) denotes that the products are subjected to strict quality check controls, where poor quality goods are rejected and returned to their suppliers.
Serving millions of people the company has a responsibility to customers, shareholders, and community (Sacks 2016, P. 1). This responsibility makes it important for them to develop operations strategy that bears in mind all the three parties. Woolworths has a strategy that aims at providing quality services to consumers, and increasing shareholders share while maintaining their responsibility to the community in general. Operation strategies in the organization are based on the following tactics and ideas
In handling many locations throughout the industry, the company has to devise ways to deliver quality goods efficiently and in an effective manner so as to ensure that customers’ needs are met and satisfied at optimum costs. Jacka et al. (2017) also denotes that to improve operations, faster decision making and responsibility the company has integrated the following process management features;
With an aim to improve their efficiency the company also came up with technological advancement to assist in inventory tracking. Radio frequency gadgets have also been developed so as to follow the movement of goods from one point to another (Vakharia & Janardhan 2017, p. 14). The gadgets have also assisted in the monitoring of temperatures movements and variations, especially for the perishable products. The electronic measures that the company established have played a huge step in the organization goal of cost reduction. The tracking systems of inventory have ensured that the company is well aware of the available goods and their dates of expiry so as to reduce waste that may come from spoilt produce. It has been seen as a huge step from the traditional way of recording inventory on inventory books.
Due to the volatility of the market, Bottoms, Ciechanowski, and Hartman (2015) Woolworths is time and time again expected to make tactical and strategically moves so as to deal with threats and opportunities available. The company has been forced to make strategic decisions so as to cut costs, increase market share and increase revenue. One of the strategic decisions that have been made by the company is waste reduction so as to improve their profit margins. This decision is made by ensuring quality products and having tracking systems to reduce spoilt products. Due to this operational managers and supervisor have been given the role in making operational decisions so as to ensure that the set strategic goal is achieved. Supermarket accountants must upload everyday inventory so as assist the top management in making their decisions.
Subordinate workers are given the authority and responsibilities to the record amount, specification, type and condition of the food products every day and hand over the report to their supervisor or manager. The supermarket manager will then decide the amount to order from the main facilities depending on the information him or has received. The organization also has financial accountants who keep a record of activities, accounts, and reports each single day throughout the year. They then hand over the recorded information to management accounting department who analyses the data and apply the data to determine the risk and strategy management of the organization so as to assist in final decision making. The company also has policies that reward creativity and innovation. Employees are motivated to come up with viable ideas that will improve efficiency, customer satisfaction and cut the unnecessary costs.
Through supermarkets and retail stores the organization offer variety of products in food and vegetable industry. The products differentiate themselves from the competitors for having quality assurance on them where they have checked regularly and confirmed fit for human consumption. Woolworths believes in a combination of quality goods and customer full filling services for customer satisfaction. They believe that a customer should receive services and goods under one roof while shopping in their retail stores. The retail store’s shelves and tables are systematically arranged to simplify the accessibility. The product has banners that explain their prices, specification, amount and price hence saving customer time of ensuring about prices and type of the particular good. The shopping stores have customer service personnel who assist and advice customers who may be in need of assistance. The product/ service design of the company faces a challenge as it is a design that depends on customer participation, therefore, inhibiting any improvements of services that the organization might need to implement.
Woolworths, through Leonardo consultancy, came up with a process design with the objectives of the following.
The organization business process management developed by Leonardo consultancy brought about the improvement in methodology and operation guidelines, internal training of employees and all staff, improved accuracy in operations and governance, and mentoring programs and process efficiency improvements.
The main source of Woolworths is its reputation and brand name that assure that their products are double checked and confirmed fit for human consumption. It’s checking systems and updated inventory control systems that ensure and monitor expiry date makes it have the edge over the other firms in the industry (Ball 2013, p. 44).The supply chain of the company is regularly changed as the number of small high-value orders keep coming through their e-commerce platform. There has been a massive overhaul in the supply chain as more and more products are being posted and ordered on their website. Woolworths developed software to deal with complexities that were coming up from their new online selling platform. The software was to assist in planning and forecasting future demands while also keeping product life cycle, distribution strategies and also track delivery and transport systems. Restructuring of its distribution center that is in Mulgrave has assisted in improving picking rates while also proving significant in reducing distribution costs throughout its operations. Through the online platform and integration of the inventory control software and mechanisms, the company today can serve over 80% of the people all through the country regardless of their geographical position.
The company has strict and effective planning and control systems that aim at improving customer satisfaction while at the same time reducing costs without undermining quality (Gray et al. 2014, p. 10). Product quality and customer satisfaction can only be realized if the organization has effective control systems.
The organization uses lean production as their way of reducing all the wastes that may be avoided. Lean strategy follows the following steps
Woolworth has human resource planning resource also, where workers are assigned specific duties with different working schedule depending on their abilities and flexibility.
Woolworths consult TCS on its quality control and assurance, which is popular using the sigma six principles according to the Interim Report (2014, p. 8). To ensure performance and improvements, the enterprise uses sigma six methods that have the following steps
The sigma six strategy is recommendable as it has assisted the company to take a cost leadership position in the industry while also helping the enterprise to reduce its costs of operation thus putting them in a competitive position among their rivals.
Conclusion
Woolworths is a professionally run organization thus has a duty to its customers, shareholders and the general community. To attain its objectives, it has to provide quality products while at the same time minimize all the avoidable costs so as to increase their profit margins. The organization has a respected brand name and reputation throughout the industry due to a large variety and quality products that they offer. The huge customer base and ever-rising revenue point out that the organization must be doing something right both in service delivery and cost saving.
Woolworths, however, has some issues to solve so as to ensure their survival in the industry. The organization service design can be classified as unsatisfactory as the number of customer care relations in the stores seems low. Customer interaction with the organization is not good enough because of the few number of employees working in the stores. The situation should change so as to ensure that customers feel connected and part of the institution and not just as customers who will walk into a store and buy products. Employee’s communication system is also a problem as the hierarchy and process of communicating complaints and ideas is not effective enough.
Employee voice is not considered thus making them work like machines where motivations and innovations are limited. The human resource department needs to integrate a workable solution to deal with the staff situation, where systems are placed to promote the communication processes. Wools worth operations managers are doing an exemplary job in their decision-making procedures, process designs, supply chain strategies, planning and quality management; however they need to understand that in the next year’s operations strategies will need to expand further from a consumer focus to supplier focus.
References
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