Industry Policies And Commitments On Marketing

About Woolworths Limited

Discuss about the Discuss about the Industry Policies and Commitments on Marketing.

The rising wave of globalisation in the present world is due to rapid advancement in technology, readily available information, and standardisation, innovation in managerial and operational activities of business, and sophisticated distribution methods and channels (Trompenaars and Hampden-Turner 2011).  In the last decade, many large and medium sized organisations have undergone both organic and inorganic expansion and have gone global (DeBacker et al. 2015). Globalisation is associated with many benefits but also brings forth various challenges. One of the many challenges includes cultural differences that hamper the business negotiations between the units performing internationally (Wach 2015). The cultural differences create barriers in communications due to different languages (Parsons and Wilkinson 2015). Technological innovation is the other major challenge for globalisation (Parsons and Wilkinson 2015). In order to establish a business overseas it must meet the technological standards of the chosen country else it will fail to attract the customer or gain competitive advantage. Hence, the management is responsible to understand the cultural differences and develop strategies that are acceptable in different cultures. The essay discusses in details about the four cultural influences that influence an organisation operating overseas. It further discusses how technology has changed the landscape for organisations operating overseas. For discussing the above subject, the essay focuses on Woolworths limited as an example. It is an Australian based company, which is also operating overseas. A literature review is performed to support the facts used in the essay.

Woolworths limited is the giant retail company in Australia (Arli et al. 2013). The company is made of number of businesses and it provides its customers with range, value, quality, and everyday low prices. It is the leader in market grocery sale and is one of the “biggest food retailers” in Australia.  The mission of the organisation is to provide its customers with “best shopping experience each and every time”. It aims to provide customers with “good quality merchandise” at cheaper prices. Its corporate objective is to have improved profits on shareholders’ funds (Trevena et al. 2015). This Australian Based company has its head office in Sydney. It has more than 3000 stores, hotels and petrol sites in Australia and New Zealand. The company is also involved in joint retail venture with the Tata Group in India (Minnema et al. 2016). The major brands of Woolworths limited are  Safeway, Dick Smith, Dan Murphy’s, Thomas Dux, Woolworths Petrol, Countdown (NZ), Foodtown (NZ), Fresh Choice (NZ), SuperValue (NZ), and Dick Smith (Mialon et al. 2016). The company has annual sales of more than fifty billion dollars and has been recognised to be one of the major contributors of the Australia’s economic output (Charlton et al. 2015). The company has been major source of employment for the people in Australia with more than 168,000 employees. It has employed 50,000 workers from the rural and the regional areas.  It has nearly two lakh members working in stores across Australia, Hong Kong, New Zealand, Shanghai and India (Parsons and Wilkinson 2015).

Cultural Influences on Business Operating Overseas

Overseas business not only deals cross borders but also cross cultures. Culture has profound influence on how people think, communicate and act. It also effects their transactions and negotiations (Stahl and Tung 2015). When taking a business at international level, it is not feasible to stick to the current business conducting methods. Establishing a business offshore must consider set of new variables such as rules and regulations, different currency, taxation, different holiday periods. The most important consideration is culture. The concept of culture is presented in different ways by different authors. According to Ferraro and Brody (2015), the term culture refers to “collective programming of minds that differentiates the members of a human group from another”. According to Leung and Morris (2015) differences in culture creates communication barrier between the business executives. For example the difference in culture between the manager of Woolworths Australia and the New Zealand division can create barriers that impede the negotiation process. Trompenaars and Hampden-Turner, (2011) argued that there is a great diversity in different cultures in the world. It is difficult for a negotiator irrespective of high skills and experience to fully understand all the cultures that are encountered (Stahl and Tung 2015). 

Both Australia and New Zealand has three main things in common. British have created the urban societies in both countries and were built on the invasion of a population that did not live in cites. In both the countries the migrants constitute 20% of the population and both countries are in same part of the world. However, despite commonalities the cultural differences between both countries is due to environmental and historical factors (Parsons and Wilkinson 2015).

As per Hofstede analysis Charlton et al. (2015) there is more components to culture than just language and religion. The nature and values of society are reflected in the language.  Firstly discussing about language, both in Australia and New Zealand there is a different version of English. People in New Zealand do not pronounce “I” sounds for example they pronounce “chups” instead of “chips”. The difference in male and female pronunciation is the feature of Australian English. On the other hand, in New Zealand the diagnostic vowels are pronounced in same fashion by both males and females. New Zealanders does not use idiomatic expression, rhyming slang, or profanity to the same extent as Australians (Parsons and Wilkinson 2015). On the other hand people greet Namaste folding their hands even in business meetings but in New Zealand people only shake hands (Carroll et al. 2015). The linguistic ties in business give competitive advantages. Business transactions are effected due to lack of ability to communicate by managers. It in turn effects the interpersonal relations as misunderstanding can end a negotiation between buyers and sellers including delivery dates, price, mode of payment, and shipping methods (Luiten et al. 2016). When buying office in Hong Kong, Woolworth needed interpreters to interpret the Australian regulatory legislations for manufacturers in China and the suppliers. It was necessary because there are different product safety regulations in different states and territories (Roux 2016). According to Trompenaars and Hampden-Turner (2011) Woolworth is burdened as it is mandatory to ensure compliance with the “Commonwealth regulations and regulations in place in each State and Territory in which it operates.” In addition, the chemicals too fall under the legal category. The food additives, natural toxicants, contaminates are regulated by the “Food Standards Australia New Zealand” (Sacks et al. 2015).

Language and Communication Barriers

The work culture-relationships greatly influence business at offshore. The relationship between employee and boss are different in India and Australia (Ferraro and Brody 2015). Unlike, Australia, there is a lack of cordial relationship between the employees and the boss in India. Meetings and business transactions are held in more formal manner in India and thus has high power distance. It greatly affects smooth running of business for Australian based companies as it is difficult to accustom to this culture (Leung and Morris 2015). The factor including “being on time, keeping promises and delivering results” is absent. India does not value time. There are often delays in the business transactions and negotiations. In Hong Kong and New Zealand the business negotiations occur faster than in India. This may affect the productivity and business efficiency of Woolworths. On the contrary, in New Zealand, punctuality is a part of culture. Not only business events even the social events start on time. The business productivity of Woolworths is high in New Zealand compared to Hong Kong, India and Shanghai (Roux 2016). India is more corrupt compared to any other countries. Therefore, Woolworth in India may suffer huge financial loss owing to its high level of corruption among public officials and politicians (Mathew et al. 2013). Business are materialised and in general are established based on the trust and mutual respect (Stahl and Tung 2015). Therefore, it takes long time to trust and build partnership for Woolworth in India.

Unlike India, Australia has equal opportunity employment in business. The employees have more sense of respect and appreciation towards the Australian employers. The employees in Woolworth experiences laid back attitude (Mathew et al. 2013). Employees are appreciated for their hidden skills in New Zealand. However, in India, the views and opinions of employees are not considered. Further, employees need high level of motivation. Due to higher level of bribery for promotions and jobs the true skills are always unrecognised in India and is difficult to motivate taff through increments (Minnema et al. 2016). In addition, the relationship between the “job and the level of pay” is strong in Australia but not in India (Warner 2014).  The employees in India are of corrupt minds and thus they want to earn more with little efforts, which is not beneficial for the company (Arli et al. 2013). The Indian employees tend to be judgemental owing to its traditional perception of gender, colour, caste, and sexual orientation. Moreover, employees in Hong Kong, Shanghai, and India can be recruited for cheaper price which is an added advantage for Woolworths (Wei et al. 2015).

Work Culture and Relationships

India is a religious country and the individual aspect of the Indian society is dominated by religion and philosophy. Religion greatly affects the business activities offshore. Therefore, different marketing strategy is to be implemented in India. The marketing strategy applied by Woolworth in Australia and New Zealand will not attract the customers India. For example in India, owl is considered unlucky or ill omen. Therefore, using owl in advertisements is called as culturally incompatible marketing (Charlton et al. 2015). Similarly, in Shanghai or Hong Kong animals are considered as lower forms of life (Warner 2014). Therefore, such marketing may lead to poor image of the company. India, cows and buffaloes are worshipped considering them as God. Therefore, it is restricted to sell mutton birds, fowl, wild pork, and fat lamb in India which might affect Woolworth negatively (Carroll et al. 2015). On the other hand, these are the main part of Maori cuisine in New Zealand and are preferred in Hong Kong and Shanghai (Wei et al. 2015). Due to increasing health consciousness there is a greater preference for green vegetables and other seasonal fruits and products in various states of world. Therefore, the selling of products vary with changing demands of the customers in different countries (Carroll et al. 2015). According to Arli et al. (2013) Woolworth is holding a dominant position in Australia, it seems to have strong appeal for growing overseas. However, it needs to defend against criticism as Wal-Mart is doing in America.

Technology affects every part of our lives. It is possible to communicate with people living overseas with few clicks. This technological advancement has changed the face and pace of business. Technology has opened new ways for business to collaborate and communicate beyond borders (Chesbrough 2013). Adopting the latest technology has made marketing easier. Woolworth could establish its virtual business offshore through Facebook and other websites. It helped it to promote its online business. According to Dunning (2013), E-mail communication have replaced the faxes, phone calls, and written memos. Smartphones with the power of internet has resulted in quick business transactions and negotiations. It is easy to store files, important business documents, and cloud computing system instead of using PCs making quick access of information. Woolworth has adopted the latest technology, which has helped it to create geographically apart teams, which are still working like single unified organisations. The organisation has simplified its business process and has thus gained greater productivity (Beh et al. 2016).

Productivity and Efficiency

Woolworth was not as efficient as other giant retail companies such as Tesco or Wal-Mart in implementing cloud computing. Therefore, it could not gain competitive advantage over the rivals. Mialon et al. (2016) argued that in the last decade Woolworth has become more responsive to the customers by reducing the cost and increasing its scalability and flexibility (Johnston and Marshall 2016).  In addition, it well connected to its customers using the Social media platforms such as Instagram, Twittter, and LinkedIn. Woolworth has generated new revenue stream in Hong Kong and Shanghai after establishing strong foot in New Zealand. The strategy it has applied is to stay relevant in customer’s mind through social media (Dunning 2013). It also indulges in solving customer issues in business interactions. As per Beh et al. (2016) the adoption of “Electronic Commerce” or EC technology has substantial potential to foster the business growth. The quantitative analysis by Chesbrough (2013) showed that there are several challenges while adopting EC. The nature of EC is very complex due to which   the challenges are not addressed.

The quantitative analysis on EC adoption by Woolworth showed that this step was influenced by industry, organisational, and environmental pressure (Johnston and Marshall 2016).  Arli et al. (2013) commented that EC adoption was one of the most outstanding market strategies of Woolworth as it was successful in satisfying the customer’s requirement on quality of product, its prices and diversification in New Zealand just as it did in Australia. Both in New Zealand and in Hong Kong Woolworth has ensured its product image as “The fresh food for people”. This food website incorporates personalised meal planning features. This website also offers its consumers with more than 2000 recipes and tips from nutritionists. This helped in earning greater value for its products such as “on-time delivery”, “Superior convenience”, “website security” and “exchange or return policies” (Ahmed 2016). It is the strongest aspect for Woolworth compared to its competitors Aldi and Cole.

Though Woolworth was successful in New Zealand with significant expenses spent on the rapid technological growth, it failed in Hong Kong initially due to low flexibility in meeting consumer demand (Dunning 2013). Eventually, Woolworth learned to estimate its ability appropriately. Hence, it slowly grew by learning and appreciating its customer interactions. It initially attracted the niche market such as shoppers who are time savers and later focused on the traditional online shoppers. Woolworth focuses on advertising campaigns for online shopping particularly emphasising on enjoyment of shopping and convenience and not on perceived risks (Ahmed 2016).  The information on convenience includes facility to shop from anywhere irrespective of time and save huge time and energy (Santos et al. 2015). The elements incorporated by Woolworth to retain customers for online shopping include events, design of products and emotion atmosphere experienced during web browsing. Trust element is the major factor for its success in E-commerce as it could meet their safety concerns such as misuse of private consumer data by hacking, and other online scams.  The real direct marketing opportunities for the overseas companies are signified by increasing acceptance of e-mail, which has become the major source of interpersonal communication (Dunning 2013). Other Sophisticated intermediaries adopts software applications to “track user behaviour” and “store user preferences” for making important recommendations to customers. In case of Woolworth, adopting EC has reduced the cost of product handling thereby reducing the product prices. This helped to flourish its market overseas (Arli et al. 2013). Therefore, information technology has played great role in effecting the “scale and nature of retailing”. Technology has changed the landscape for organisations operating overseas.

Conclusion

The report has discussed the cultural influences effecting the business operations of Woolworths outside Australia. When an organisation is operating overseas and is performing in few different cultures, it is necessary to bridge the gap. It is due to these cultural influences that Woolworths could not establish itself in countries like India and gain a competitive advantage. It should focus on the mature markets and dispose towards emerging markets such as Tesco or Wal-mart (Trompenaars and Hampden-Turner 2011). It is recommended that Woolworth should aim to secure a foothold instead of trading the stores in the long-term. It can later build a larger hyper-market. In order to emerge as number one or two in Hong Kong, Sanghai, and India it must develop strategies to overcome the cultural influences. It must establish itself in markets that have similar culture as Australia or with fewer cultural differences. The rationale for retaining it operating presence in these underdeveloped countries is to develop important insights into the “competitive behavioural dynamics” of the well established retail businesses. The small presence would help Woolworth to implement “acquisition strategy” by securing necessary networks into foreign retailers considering the issues of the family owned chains (Parsons and Wilkinson 2015). It can be concluded that technology is changing rapidly for organisations. The vital mechanism for organisation operating overseas is to adopt latest technology. In the world of globalisation, it is certainly true.

References

Ahmed, F., 2016. Online grocery shopping in Jyväskylä: Business models & Demand.

Arli, V., Dylke, S., Burgess, R., Campus, R. and Soldo, E., 2013. Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).

Beh, L.S., Ghobadian, A., He, Q., Gallear, D. and O’Regan, N., 2016. Second-life retailing: a reverse supply chain perspective. Supply Chain Management: An International Journal, 21(2), pp.259-272.

Carroll, E.L., Baker, C.S., Watson, M., Alderman, R., Bannister, J., Gaggiotti, O.E., Gröcke, D.R., Patenaude, N. and Harcourt, R., 2015. Cultural traditions across a migratory network shape the genetic structure of southern right whales around Australia and New Zealand. Scientific reports, 5, p.16182.

Charlton, E.L., Kähkönen, L.A., Sacks, G. and Cameron, A.J., 2015. Supermarkets and unhealthy food marketing: An international comparison of the content of supermarket catalogues/circulars. Preventive medicine, 81, pp.168-173.

Chesbrough, H., 2013. Open business models: How to thrive in the new innovation landscape. Harvard Business Press.

DeBacker, J., Heim, B.T. and Tran, A., 2015. Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States. Journal of Financial Economics, 117(1), pp.122-138.

Dunning, J.H., 2013. Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge.

Ferraro, G. and Brody, E.K., 2015. Cultural Dimension of Global Business. Routledge.

Johnston, M.W. and Marshall, G.W., 2016. Sales force management: Leadership, innovation, technology. Routledge.

Leung, K. and Morris, M.W., 2015. Values, schemas, and norms in the culture–behavior nexus: A situated dynamics framework. Journal of International Business Studies, 46(9), pp.1028-1050.

Luiten, C.M., Steenhuis, I.H., Eyles, H., Mhurchu, C.N. and Waterlander, W.E., 2016. Ultra-processed foods have the worst nutrient profile, yet they are the most available packaged products in a sample of New Zealand supermarkets. Public health nutrition, 19(03), pp.530-538.

Mathew, T.C., Hicks, R.E. and Bahr, M., 2013. Work motivation, personality, and culture: Comparing Australia and India. Copyright 2013 International Association for Cross-Cultural Psychology ISBN: 978-0-9845627-3-2, p.204.

Mialon, M., Swinburn, B., Allender, S. and Sacks, G., 2016. Systematic examination of publicly-available information reveals the diverse and extensive corporate political activity of the food industry in Australia. BMC public health, 16(1), p.283.

Minnema, A., Bijmolt, T.H. and Non, M.C., 2016. The impact of instant reward programs and bonus premiums on consumer purchase behavior. International Journal of Research in Marketing.

Parsons, A. and Wilkinson, M.H., 2015. Retailing in New Zealand: Where Are We and Where To Next?. In European Retail Research (pp. 141-160). Springer Fachmedien Wiesbaden.

Roux, M.C.R., 2016. Hong Kong High DensCity: merging urban scale with human scale (Doctoral dissertation, Carleton University Ottawa).

Sacks, G., Mialon, M., Vandevijvere, S., Trevena, H., Snowdon, W., Crino, M. and Swinburn, B., 2015. Comparison of food industry policies and commitments on marketing to children and product (re) formulation in Australia, New Zealand and Fiji. Critical Public Health, 25(3), pp.299-319.

Santos, M.D., Svensson, G., Padin, C. and Høgevold, N.M., 2015. Corporate risk exposure by implementing sustainable business practices-an African case. International Journal of Logistics Economics and Globalisation, 6(3), pp.223-235.

Stahl, G.K. and Tung, R.L., 2015. Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship. Journal of International Business Studies, 46(4), pp.391-414.

Trevena, H., Neal, B., Dunford, E., Haskelberg, H. and Wu, J.H., 2015. A comparison of the sodium content of supermarket private-label and branded foods in Australia. Nutrients, 7(8), pp.7027-7041.

Trompenaars, F. and Hampden-Turner, C., 2011. Riding the waves of culture: Understanding diversity in global business. Nicholas Brealey Publishing.

Wach, K., 2015. Impact of Cultural and Social Norms on Entrepreneurship in the EU: Cross-Country Evidence based on GEM Survey Results. Zarz?dzanie w Kulturze, (16 (1)), pp.15-29.

Warner, M., 2014. Culture and management in Asia. Routledge.

Wei, X., Li, H., Yang, N., Wong, S.Y., Owolabi, O., Xu, J., Shi, L., Tang, J., Li, D. and Griffiths, S.M., 2015. Comparing quality of public primary care between Hong Kong and Shanghai using validated patient assessment tools. PloS one, 10(3), p.e0121269.