This report presents the background of the company and the retail industry. It also discusses different factors like political, socio-cultural, economic, technological, demographic and global. It also evaluates porter’s five force models like the bargaining power of buyer and suppliers, threats of substitutes and threats, and rivalry among competitors. This report also illustrates the tangible and intangible resources, capabilities, and competencies of Woolworths.
Woolworth’s company is leading grocery supermarket, which was developed in New South Wales, Australia. This was established by Woolworths limited. The corporation was founded in September 1924. It has captured about 80% of the Australian marketplace. After 1924, interest of consumer is gaining with high amount of branches was initiated in Australia. Under 1985, Woolworths has captured giant Safeway of American supermarket. Woolworths is implementing the logo of green apple in the year of 2017 (Woolworths, 2018).
The retail industry in Australia continues to keep its momentum, driven by social and economic progress. The significant factors in the enlargement of retail industry are the robust growth of economic, increasing population and purchasing power. Australia is very resilience market. In addition, sudden collapse and rise in the retail sector are common in Australia. The overall size of Australia is $122USD in 2013. During the earlier period, low-interest rates have provided a relief to retail areas. In addition, the purchasing power of the customer was boosted and thus, declining retail industry has rapidly started increasing (Mordor intelligence, 2018).
Political:
The political circumstances impact on industry of retail in Australia and also affect the productivity of Woolworth limited to the higher extent. For illustration, the federal government in Australia has currently recognized the competition strategy that prevents from the major key market participants like Woolworths and Coles in avoiding the rivalry. The gaining dominance of the market among retailers creates complexities for small retailers in order to sustain in retail industry (Robson, 2015).
Economic:
In Australia, economic market situation is declining that has an impact on the Woolworth’s productivity effectively due to declining activity of economy in marketplace of Australia. In spite of declining situation, the economic indicators like fluctuation in exchange rates of currency with weakening Australian dollar has negatively impacted Woolworth’s retail operations at international level (Hill, Jones, and Schilling, 2014).
Socio-culture:
The social factor is influencing the retail industry of Australia due to changes in lifestyles and attitude of people. Furthermore, changing societal concern has made alterations in Woolworth’s supermarket. People are highly worried regarding their physical condition and fatness in modern times. Therefore, Australians demand for making simple cooking, low-fat food, GM-free food and organic food. The women involvement in human resources has boosted in current periods. Thus, Woolworths can impact over its customers by considering these facts (Hitt, and Duane Ireland, 2017).
Technological:
Woolworths has implemented advanced technology. It has invested in an automatic machine to enhance its supply chain with the distribution system. This technique is beneficial to save the cost. It has gained its range of services and its online channels to deal with the customers. But, Woolworths need to personalize its websites in order to get competitive benefits (Barney, 2017).
Global segment
Woolworths has enlarged their process in the business of New Zealand with India for keeping its enlargement in retail industry and take advantage of its market strength.
The population of Australia is 24,806,930 in 2018 with there is an integration of religious and ethnic groups because of its strategy related to immigration. In Australia, that individual who is over 65 years constitutes about 12% of population and estimated is 25% of enlargement by 2051. The group who is more than 85 years is experiencing greatest growth rate as amount of people in this age group is predicted to increase about 5% in 2051 (Ginter, Duncan, and Swayne, 2018).
Physical factor
The physical factor is influencing the act of Woolworths and whole retail industry in specific area across Australia. An assessment shows that Woolworths can be highly impacted due to physical factors as Woolworth’s petrol and winemaking businesses are creating an unfavorable threat in an organization and it can influence the productivity of corporation (Wheelen, et. al., 2017).
Bargaining Power of Buyers:
In Australia, the retail industry facilitates almost the same products that have low switching costs amid stores and hence, the bargaining power of buyer is higher. But, at the same time, it is low with those stores that may customize the offering as per the specific market (Meyer, Neck, and Meeks, 2017).
Bargaining Power of Suppliers:
In the retail industry, bargaining power of suppliers differed as it is relied on brand recognition of suppliers and the size of retail industry. Hence, in Australian retail industry, the bargaining power of supplier is high to moderate (Rothaermel, 2015).
Threats of New Entry:
Retail industry offers the low price as this is not lucrative industry to enter due to low potential profit. The scare accessibility, government restriction, with regulation, massive requirement of capital, the high market price of land can act as a barrier to entry. It indicates that barriers to entry in the retail industry are moderate (Bettis, et. al., 2015).
Rivalry among Existing Firms:
The threat of rivalry is examined inside the Australian retail industry. Furthermore, there is intense rivalry between existing firms as there are certain major key market participants like Wesfarmers, Coles, Woolworths, and Asda that are competing to each other for higher market share (Bettis, et. al., 2015).
The threat of Substitute:
In retail industry, number of substitutes for customers is high like a convenience store, non-affiliated petrol pump, online and grocery stores, fresh food market, delicatessens, and pharmacies. In addition, consumers are also willing to pay premium rates for conveniences such as closer to home, easier parking, and no stand in line. Hence, the existence of substitutes in retail industry is moderate to high (Lasserre, 2017).
Competitive environment:
Woolworths need to focus on their strategic groups i.e. Coles supermarket, Wesfarmers and Asda as it has covered the larger retail market of Australia. The capabilities of these firms are a large number of stores, fresh and quality food, online channels and higher human resources. They follow effective strategies such as extend value leadership, deliver a better store network, focus on freshness, and delivers an effective store network with simplicity. The key threat from these strategic groups can be shifting customers towards their brand, declining revenues, and diversification (Michael, Storey, and Thomas, 2017).
expanding online retailing
Over the previous years, the prospect of the retailing industry has been redesigned considerably due to existence of mechanization, expansion of technology, supply chain, and changes in lifestyle of consumers. The retail industry is approaching in a different way such as, driven by digital commerce and development of the internet. Woolworth’s business put at the heart of consumer since last periods. After implementing online shopping for all business of Woolworths in New Zealand and Australia, a noteworthy increment in profit of Woolworths was demonstrated in the years. Furthermore, customers can access online shopping by downloading the existing function in iPhone and by influencing the promotion (Morschett, Schramm-Klein, and Zentes, 2015).
Growth opportunity in the health food sector
As per United Nations food and agriculture organization, the international population is expected to arrive at 9.1 billion in 2050 as it indicated that food production would be increased in the upcoming period. In spite of expanding the land used for production in the agriculture sector, the yield is growing and cropping amount is chosen in present farmland in order to attain 90% of grains in required production. But, result of increasing crop yield is the polluted environment with changes in climate has also impact on attainment. Woolworth’s fresh food future initiatives success facilitates an opportunity with regards to productivity, innovative farming and long-term sustainability (Trigeorgis, and Reuer, 2017).
Threats
In Australia, Woolworths is facing rivalry threat from other key retailers. Woolworths focus on low rate strategy as Coles and their key market participants use price rewind strategy in the retailing industry of Australia. Woolworths can face high rivalry from accessible international retailers as it should make plan regarding approach to other new markets such as Hong Kong, and India. Another threat for Woolworths is sluggish enlargement and volatile in the vagueness of Australian and expanding sickness associated with overwhelming alcohol. It would lead to declining the production of alcohol that limits their revenue and share of the market (Morschett, Schramm-Klein, and Zentes, 2015).
Internal environment investigation is significant to address the strength and weakness of the firm. The firm can use internal analysis to reposition in the market with a new offering product by its overcoming its vulnerability (Bettis, et. al., 2015).
Woolworths deals in more than 3000 stores in Australia with New Zealand and it has hired about 180,000 employees. It indicates that both tangible with intangible resources of company is strong. Woolworths has adequate management and human resources, a wider choice of product along with, innovation skills of product, image regarding quality and fresh food, strong brand recognition, well planned logistic management, strong liaison with vertically integrated businesses, and partnership and alliance management (Lasserre, 2017).
Capabilities can be defined as the skills of the company in organizing their resources and implementing them for optimal utilization. It is found that Woolworth is operating the business successfully since 1924, which indicates it is capable to use right people in the right position. Furthermore, Woolworths has an understanding regarding how to utilize and develops the resources (Trigeorgis, and Reuer, 2017).
It is analyzed that competitive benefits and innovation of Woolworths have created via its supply chain. Woolworths has also emphasized on their financial prudence strategy and efficiency in order to manage the unnecessary costs (Bettis, et. al., 2015).
Branding and Market:
Woolworths has maintained positioning of its store by using “the fresh food people” slogan in order to generate the unique picture about quality and healthy product choice at affordable rates (Lasserre, 2017).
Innovation
Woolworths has executed different projects such as “refresh”, new idea initiative such as retailing of petrol.
Integration
Woolworths has vertically incorporated some of its supplies by manufacturing its own resources to gain its power of market and to respond towards the trends of private level (Lasserre, 2017).
Enterprise resource planning can be a suitable information system solution that will meet the needs of the company. This system is an automation process that contains the data of buyers, suppliers, and price. It also updates the core business process of Woolworths and tracks the resources of business such as raw material, cash, production capacity, payroll, orders and purchase orders. It would be also effective to share the data in across the entire business functions and manages connections with outside stakeholders (Trigeorgis, and Reuer, 2017). Instant messaging is another internal communication system that should be used by Woolworth to meet its needs. This system will enable the managers and their subordinates to directly communicate with each other. It is also suitable for avoiding the noise at the workplace and enhances the relationship with the team members (Morschett, Schramm-Klein, and Zentes, 2015).
Woolworths should use the ERP system in their business process as it will enable an organization to automate the business function associated with human resources, technology, and services. It will also help in product planning development, sales and marketing, and manufacturing through a single database, user interface, and application. It should be implemented in an organization as it will aid to assess business needs, lower buying expenses and manage human resources and payrolls (Rothaermel, 2015).
Conclusion
From the above interpretation, it can be concluded that there are different factors that affect the business of Woolworths such as political, economical, socio-culture, technological, physical, demographical and global. It can be summarized that there are certain industrial factors that create complexities to get competitive advantageous. These factors are the bargaining power of buyer and suppliers, the threat of substitutes and new entrants and rivalry among competitors. It can be concluded that the firm has certain tangible and intangible resources such as human resource management, brand image, and relationship with suppliers that aids to build capabilities and core competency of the firm.
References
Barney, J.B., 2017. Resources, capabilities, core competencies, invisible assets, and knowledge assets: Label proliferation and theory development in the field of strategic management. The SMS Blackwell handbook of organizational capabilities, pp.422-426.
Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating repeatable cumulative knowledge in strategic management: A call for a broad and deep conversation among authors, referees, and editors. Strategic Management Journal, 37(2), pp.257-261.
Bettis, R.A., Gambardella, A., Helfat, C. and Mitchell, W., 2015. Qualitative empirical research in strategic management. Strategic Management Journal, 36(5), pp.637-639.
Ginter, P.M., Duncan, W.J. and Swayne, L.E., 2018. The strategic management of healthcare organizations. UK: John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. USA: Cengage Learning.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Meyer, G.D., Neck, H.M., and Meeks, M.D., 2017. The entrepreneurship?strategic management interface. Strategic Entrepreneurship: Creating a new mindset, pp.17-44.
Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic management and entrepreneurship. Strategic Entrepreneurship: Creating a new mindset, pp.45-65.
Mordor intelligence., 2018. Australia Retail Market. [Online]. Available at: https://www.mordorintelligence.com/industry-reports/retail-industry-in-australia (Accessed: 17 August 2018).
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). USA: Springer.
Robson, W., 2015. Strategic management and information systems. UK: Pearson Higher Ed.
Rothaermel, F.T., 2015. Strategic management. UK: McGraw-Hill Education.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal, 38(1), pp.42-63.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. UK: Pearson.
Woolworths., 2018. About us. [Online]. Available at: https://www.woolworthsgroup.com.au/page/about-us (Accessed: 17 August 2018).
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