Woolworths Group Limited Company is an Australian based company that deals with several businesses. The businesses include Australian food, New Zealand Foods, and Endeavor drinks. The most prominent venture in the Australian food is the Woolworths Supermarkets. There are 995 Woolworth’s supermarket stores across Australia. The supermarkets together with Coles Stores account for about 80% of the market share in the country. Woolworth Supermarket falls under the retail industry (Woolworths Group, 2018). In the recent past, the company has been facing challenges in its operations. The primary problem has been competition from upcoming retail stores in Australia. Aldi a German-based supermarket has been the main competitor of Woolworth stores (Martin & Rice, 2017). An analysis of Woolworths Company is essential to help in improving operations and coming up with strategies to overcome competition from rival stores. Therefore, the paper will analyze different aspects of the supermarket to help improve the company’s operations.
The macro environment is the external force that exists in the environment a business operates. Woolworth Group Company experiences various macro-environmental factors in its day to day operations. One of the macro environment factor affecting the company is the political and legal environment. The company is regulated by various laws in the country that shape its operations. For instance, the government governs the hours that the supermarket operates, the licenses the company should possess to operate in the country and trade practices. Australian Competition and Consumer Commission (ACCC) is one of the government body in the country that governs the competition in the industry (AFN, 2015). Woolworth compliance to the regulation helps in conducting good business practices to ensure healthy competition in the industry. The company also operates within the law of the country.
Another macro environment factor affecting the company is technology. Technology is advancing each day. Therefore, the company needs to work on improving its operations through the use of technology to stay relevant in the industry. The company has been adopting and using technology in its daily operations (Claessens, 2015). For instance, the company has an online website that enables its customers to shop online. The technology helps in efficiency for the customers as they can place orders and delivery is made at their doorstep (Cameron, 2015). Therefore, technology is helping the company improve in their operations.
The global segment is a macro environment factor affecting the company. The company is expanding to other countries worldwide to grow and increase market share. For instance, the company has stores in New Zealand and India which helps in targeting more customers. The economic segment is also affecting the company. There has been slow growth in the Australian economy which has become a threat to the industry (Glass, 2018). The growing unemployment rate and inflation continue to affect the Australian economy. Such factors, therefore, pose threats to the company.
Lastly, demographic and socio-cultural segments affect the company’s operations. An increase in the population in Australia is a demographic segment that would make the company change and improve its operations. In the year 2008, there were 21 million people in the country, and the number has been growing steadily (Frue, 2017). The growth is attributed to many immigrants settling in the country. The different people in the country may force the company to change its operations such as changing products sold. Such changes will enable the company to gain more customers and cater to their different needs. The socio-cultural segment is also changing the company’s operations. The population’s taste and preferences are changing in the country. For instance, people are health cautious especially the foods they take, the lifestyle and obesity issues. Such changes are making the company change products in the stores to low-fat foods, Genetically Modified free foods and provision of organic foods (Glass, 2018). Therefore, the demographic and socio-cultural segment is impacting the company.
The retail industry in Australia is thriving and growing fast. The industry is at its growth phase in the life cycle. There has been an increase in retail stores in the country which is increasing the competition. Growth in the profits made in the industry has also been observed. Companies opening stores in the country include Aldi a German-based outlet that is bringing competitiveness in the country (Marseglia, 2016). As competition and profitability increases in the country, it is essential to analyze Porter’s Five forces analysis in the industry.
The first force in the Porter’s Five Force is the suppliers bargaining power. Suppliers bargaining power is the ability that the industry players have on regulating prices of their goods and products. In Australia, the retail company varies with the brand name and the recognition of the company to the consumers. For instance, brands such as Coca-Cola have high power in regulating their prices in the retail stores. Analysis of other brands makes the retail company have moderate to the high bargaining power of suppliers (Hanlon, 2016).
Bargaining power of customers is another force in the five forces analysis. Customer’s bargaining power is the ability the consumers have in lowering the prices of commodities in the market. Australian supermarkets provide similar products in their stores making consumers have minimal impacts in determining prices of goods (Martin, 2017). Therefore, the industry possesses a high customer bargaining power in the country. The next force is substitutes in the industry. The retail industry in Australia has various substitutes to the products offered to the consumers. For instance, supermarkets have other substitutes such as pharmacies, petrol stations, grocery stores and online shops. Such substitutes make the industry have moderate to high substitutes for consumers (Muditt, 2017).
Threats to the new entrants in the industry are moderate. The industry has several barriers that would not attract new players in the market. For instance, there are government regulations on operations in the country, high land rates and prices and the high capital requirement to start the business that may pose a barrier to new entrants in the company (InsideFMG, 2017). There can also be challenges in finding a consistent supplier of goods as most supply to the existing retailers in the industry. Such barriers may make the industry unattractive to the new entrants. Lastly, competitive rivalry in the industry remains intense. Players in the industry maintain high competition which may make the industry unattractive to any person wishing to join the industry (Pash, 2017). An analysis of the retail industry in Australia makes it unattractive to new entrants, but it is attractive to the end consumer due to affordable prices maintained as a result of intense competition.
An analysis of Woolworths Company’s resources, capabilities and core competencies is essential to determine the strengths and weaknesses in the operations. The effectiveness of existing strategies is evaluated in the process. The comprehensive analysis also helps in determining opportunities in the market and determining areas requiring improvement (Rice &Martin, 2017).
There are various resources at Woolworths Company. The resources include human resource, products, logistics and skills which form the tangible and intangible resources of the company. There has been effective management of the employees working in the company, nurturing of new skills introduced in the company, improvement in services offered to customers and the building of a brand recognized globally. For instance, Woolworths Supermarket has 995 store outlets where 115,000 employees are provided with job opportunities (Woolworths Group, 2018). Such a population and stores show that the company has strong and well-managed resources that help in providing quality services and products to customers.
Capabilities are the ability of the company to utilize its resources to achieve goals and objectives. Proper organization and management of the resources also play a critical role in the realization of capabilities. Woolworths Company has existed since 1924 and has run its operations successfully. The success in managing the resources proves that the company has the capabilities of handling its resources (Cameron, 2015). It has succeeded in placing the right people in the right places as well as utilizing skills to bring out the best products and goods.
Woolworths Company has critical competencies in its operations. One competence is a world-class supply chain. The company’s supply chain entails detailed contracts that suppliers need to comply. For instance, a clear description of the products to be delivered is one. Quality and sizes, especially in vegetables and fruits, are well outlined in the contract (InsideRetail, 2015). Another aspect in the supply chain is a specified delivery time which needs to be followed. The supply chain strategy has, therefore, been effective in meeting the consumer demands and needs.
The next competence is branding and marketing. Woolworths Company has a slogan that is easily remembered and communicates to its customers. The slogan is “The Fresh Food People.” The slogan helps consumers view the company as one that provides quality, healthy and affordable products. Innovation is another competence in the company (Muditt, 2017). The company has developed innovative strategies to aid in delivering of quality products. For instance, the company started a petrol retailing idea to help in complimenting other products in the company. Lastly, integration is competence in the company. The company integrates its services to help in its identification. For instance, the company integrates smaller stores in its operations to help improve the shopping experience of its customer (Muditt, 2015). Therefore, core competencies included in the company have helped in achieving the objectives of the company.
The competitive threat to the company is the price rivalry. Price rivalry in the industry has led to low profitability of many companies. There exist several retail stores that deal with the same products. As more outlets sell the same products, pricing is crucial to attracting customers. Customers are attracted to outlets with affordable pricing, therefore, making it an essential element in the industry. Woolworths Company has managed to come up with a business model that has enabled its growth. The company continues to maintain high profits despite the competitive prices in the market (CGMA, 2013). Therefore, proper management of prices has helped the company manage its main competitive threat.
Woolworth’s strategies are aimed at maintaining affordable prices while providing quality products to the consumers. There are different business strategies used to ensure the objectives are met. One strategy is customer value propositions (CVP). CVP entails considering the customer in the company’s operations. The company ensures that the products are of good quality and with the most affordable prices in the market (Cameron, 2015). Another strategy used in the company is the pricing formula. The company’s pricing strategy entails low prices on the products, utilization of economy of scale, proper management of the supply chain, sales of high volumes while maintaining a low margin and maintaining a high resource velocity. Other strategies in the company are the fundamental processes and resources (Glass, 2015). Essential resources in the company are human resources, products, skills and brand name. Critical processes include advertising and marketing, improvement of the brands, provision of efficiency in the supply chain and provision of a variety of products. The strategies used in the company have effectively worked in achieving the goals and objectives of the company. So is because there has been an increase in revenues by 4.5% in the year 2017 (Woolworths Group, 2018). Despite the tremendous progress in the company, there is a need to come up with products that suit millennial. The company can include clothing in their stores to cater to millennial. Millennial is the target group that has the potential to grow the retail industry (InsideRetail, 2015).
Conclusion
In conclusion, Woolworth’s analysis is essential in improving operations and coming up with strategies to overcome competition from rival stores. Essential areas analyzed include macro-environmental factors, the retail industry, the company’s resources and core competencies and the company’s strategies. After analysis of the essential aspects, the company needs to come up with products for the millennial. Through having the improvements in the company, the industry will grow and make more profits in the future.
References
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Cameron, N., 2015. Woolworths details 3-year strategy to become customer-centric. [Online] Available at: https://www.cmo.com.au/article/574302/woolworths-details-3-year-strategy-become-customer-centric/ [Accessed 27 July 2018].
CGMA, 2013. Porter’s Five Forces of Competitive Position Analysis. [Online]Available at: https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html [Accessed 27 July 2018].
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Hanlon, A., 2016. How to use Porter’s Five Forces. [Online] Available at: https://www.smartinsights.com/marketing-planning/marketing-models/porters-five-forces/ [Accessed 27 July 2018].
InsideFMCG, 2017. Woolworths boss details grocery challenges. [Online] Available at: https://insidefmcg.com.au/2017/02/23/woolworths-boss-details-grocery-challenges/ [Accessed 28 July 2018].
InsideRetail, 2015. Woolworths reveals growth strategy. [Online] Available at: https://www.insideretail.com.au/news/woolworths-reveals-growth-strategy-201505 [Accessed 27 July 2018].
Marseglia, C., 2016. How to conduct a DESTEP analysis. [Online] Available at: https://claudiomarseglia.com/2016/05/13/how-to-conduct-a-destep-analysis/ [Accessed 27 July 2018].
Martin, M., 2017. Porter’s Five Forces: Analyzing the Competition. [Online] Available at: https://www.businessnewsdaily.com/5446-porters-five-forces.html [Accessed 27 July 2018].
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Pash, C., 2017. Hot competition is back in Australian supermarkets. [Online]Available at: https://www.businessinsider.com.au/hot-competition-is-back-in-australian-supermarkets-2017-10[Accessed 27 July 2018].
Rice, J. & Martin, N., 2017. Company results: how competition is transforming Australia’s retail sector. [Online] Available at: https://theconversation.com/company-results-how-competition-is-transforming-australias-retail-sector-72844[Accessed 27 July 2018].
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