International Business Strategies For Machinery And Equipment Purchases – Woolworth UK Expansion

Background of the company

Discuss about the International Business for Machinery and Equipment Purchases.

Woolworth is one of the renowned supermarkets. It is Australia’s largest supermarket. This report is going to provide a background of Woolworth and UK. Additional analysis is given to reflect analysis of UK. The recommendations are provided to enter the UK market. The different strategies have been discussed to enter the market such as competitive, international and marketing strategies. The marketing and research and development considerations for the company to expand in the UK market are explained. The marketing considerations discussed by defining 4Ps of marketing, distribution channels, and marketing strategies. The recommendations regarding the production of Woolworth in the UK are defined. These recommendations are helpful in improving production of the company. The internal human resource management issues found in the company are also explained and considerations are given to better face off them. The solution of human resource management issues can help in the better expansion of the company in the UK. The company focuses on growth and ensures that it put customers first. It innovates to meet new and demanding challenges of the customers. It also aims to create customer value by executing the lean retail model. It also implements new pricing and value strategy which includes lower pricing and better range of products.

Woolworth is a major Australian supermarket chain. The company makes available clothing, general merchandise and wide range of food products. Woolworth has 995 stores worldwide. It includes various segments like supermarkets, food, petrol and hotels. Woolworth is owned by Woolworth limited. It provides high quality products at reasonable prices. The company ensures that it delivers quality, consistency and value for money. Woolworth meets expectation of customers with increased reliability. The company includes functions such as production, processing, packaging and marketing of products. Woolworth also offers fiscal services. It uses refined technology to persuade customers. It has also enabled a new merchandising system to enable electronic data receipt. The company has also launched a W-rewards loyalty program for customers. Woolworth was established in UK in 1909. The chain was country’s largest buyer of candy king pick and mix sweets. It had more than 800 stores in UK. In 2008, the trading of shares in company was suspended and stores of Woolworth were closed. Now the company can make a comeback soon in UK. There is positive scope of company’s expansion in UK. Woolworth has already online business in UK (Moriuchi & Takahashi, 2016). The customers can purchase 1000s of great products.

Additional Analysis

Woolworth is expecting to expand in the UK market as the country has a large consumer base. The country offers base with a powerful investment and financial services sector. The country has most rewarding and interesting markets for the companies who want to enter or expand in the market. The gross fixed capital formation of UK includes land improvements, machinery and equipment purchases and construction of roads, railways, schools, hospitals, offices, commercial and industrial buildings. The net acquirements of valuables are also considered capital formation. The gross capital formation of UK was 322,430,000,000 in 2016.

The Global competitiveness report 2017-2018 assesses the competitiveness of the landscape of UK and provides exclusive awareness to the drivers of productivity and prosperity.  There are 12 pillars of competitiveness used to rank economy of the UK such as infrastructure, health and primary education, higher education and training, institutions, macroeconomic environment, goods market efficiency, financial market development, labor market efficiency, goods market efficiency, technological readiness, business sophistication, market size and innovation. All of these pillars are used to measure different part of UK’s economic competitiveness. The UK scored 5.51 out of 7 points as per the global competitiveness report of 2017-2018. This report was prepared up of over 110 variables. These variables are structured into 12 pillars.  

The CAGE (Cultural, Administrative, Geographic and Economic) framework helps the company to identify and evaluate the impact of distance on retail industries. The cultural distance includes different languages, religious and social norms. It is the most important segment for the Woolworth to operate in the country. The administrative framework covers the administrative and policy frameworks which will be faced by Woolworth those in the UK. The country has efficient government policies and a few institutional weaknesses which are efficient for the Woolworth to operate in the UK. The geographic framework the country has strong transportation and communication links and not major changes in climates (Cumming & Zahra, 2016). The economic framework shows that country has enough natural, financial and human resources and infrastructure. The development of the infrastructure of UK has been another advantage for Woolworth to expand it’s business in the UK. The country supports companies to expand the business by providing finance to ease the pressure of payment.

The goal of Woolworth is to offer the customers memorable shopping experience every time. It aims to deliver quality products and services to customers through price, fresh food and human resource strategies (Adeleye, White, Ibeh & Kinoti, 2015). The main strategy of the company is to increase competence and be cost effective. The company makes use of competitive, international and market entry strategy for the entry mode:

Recommendations for entry mode

The competitive strategies include:

Cost leader: The cost leadership strategy allows Woolworth to earn above the average returns even in the existence of competitive forces. It is an united set of actions intended to produce goods and services at lower costs in context to it’s competitors. The company also have implemented scale-up/ costs down policy to reduce costs related to production. There are some other strategies to reduce operating costs such as ‘just in time’ strategy. This strategy is used in handling products in the supply chain to reduce costs of waste and storage by making and arriving products to the retailers at the time when it is requisite (Felgate & Fearne, 2015).

Differentiation: In this strategy, the company develops unique products for the different customer segments.  It is employed by a company where it has a clear competitive advantage and can sustain an expensive advertisement campaign (Mudambi, Piscitello & Rabbiosi, 2014). The differentiation strategy includes the aspects of innovation, product level differentiation, price differentiation, branding, and packaging.

Niche: The niche strategy is used by Woolworth by targeting only those customers who can be related well to products and services. There are few things which are considered in niche strategy are unique needs, competition, market size, and communication. Woolworth tries to build a long-term relationship with a small set of customers (Flax, Bick & Abratt, 2016).

Transnational strategy: The transnational strategy is used by Woolworth to balance the aspiration for efficiency along with the need to amend to the local preferences within the UK. For instance, the company rely on the same brand name in the UK and provide almost same products and services (Filimonau & Gherbin, 2017).

Global strategy: The global strategy focuses on the requisite to gain economies of scale by providing the same products and services in each market. But it makes some modifications or adds some products and services to match the local requirements of the country.

Joint venture: The company can form a partnership with another company for the further expansion in the UK. It can help Woolworth to expand by doing a partnership with already established UK company (Swoboda, Elsner & Olejnik, 2015). The two companies can work together in a particular market. The investment is almost always on 50/50 basis. The risks and profits are also shared equally. These two companies stay separate from each other but work together on a particular venture.

Competitive strategies

Export: It is the most common strategy to sell products directly to the market. Woolworth can sell directly to the UK market. The company can establish a sales platform turn to agents and distributors to represent company further in the new market. The agents and distributors work closely with the Woolworth to represent it’s interest (Hernández & Nieto, 2015).

Acquisition: the company can acquire an existing local company of UK. It is the most appropriate strategy to enter a market. It is because the existing company have a significant market share and is a direct competitor to Woolworth or due to the government rules; it is the only method for the company to enter in the market (Lindsay, Rod & Ashill, 2017). It is a costly method and determines the true value of the firm in the foreign market. It requires substantial due diligence.

Woolworth identifies the need of customers, discovers and design products to satisfy customer needs. The company also estimates a price that a customer will be ready to pay. For the marketing considerations, Woolworth undertakes 4 Ps of marketing.

Woolworth is one of the leading retailers in Australia. The company offers maximum range of grocery items as a part of the marketing mix.  The product categories comprise fruits, vegetables, meat and packaged products. The company also sells magazines, DVDs and stationery items. The company provides a large variety of choice in each category. It does not leave a customer dissatisfied when it comes to choice. The company makes available various brands, local produce and international cuisines. The products of the company are tested and approved by the experts to maintain quality standards. The diverse range provided by Woolworth helps to cater all around needs of customers (Lauritsen & Perks, 2015).

Woolworth provides a range of premium brands in the food chain, so the prices are kept modest for the premium range. The company also serves the customers preferring low prices.  So, the company maintains similar or higher prices as per the range of products (Spillan & Ling, 2015). The company also maintains a reward program which offers discount or gifts for the points gathered. It also provides shopping cards which track purchases and offers fuel discounts.

Woolworth operates 1000 stores in Australia. A place is a location where products and services are bought. It is considered as the distribution channel. A good place has a role in good strategy. Woolworth needs to be aware of consumers and produces goods as per their availability. It has been observed that customers pay as a premium for the certain product locations in the market. Woolworth can be successful in increasing sales if it is built at a certain famous popular place (Methner, Hamann & Nilsson, 2015).

International strategies

The promotion programme of Woolworth communicates the values as well as benefits of it’s products. It also influences the target customers for purchasing products. The promotional activity of Woolworth includes fundraising, weekly specials, memberships, and rewards card system.

The distribution is considered an important aspect of every retail company. The company considers distribution channels an important aspect to appropriately deliver it’s products from manufacturers to the end consumers. It can affect the store’s profit and price competitiveness if the company pays less attention to it’s distribution channel. It is recommended to company to have the best suppliers to provide the best product and delivered to the end customers (Bronnmann & Asche, 2016). The company is also advised to implement a strategy which makes let suppliers come to Woolworth instead of a company approaching it’s customers. This strategy can be successful as the suppliers compete with each other to become most trusted suppliers of Woolworth.  The suppliers provide the most affordable price that company charges from it’s customers. No changes are required in the distribution of Woolworth for it’s expansion in the UK. The company is already established and recognized so it gets the advantage in every country from suppliers (Watts, Little & Ilbery, 2018).

It has been noticed that customers in the UK tend to purchase products by marketing strategies delivered through media including print media. The company can get the consumer attention by delivering commercial messages. It should be noticed that what is noticed that what is considered comic in one culture can be alleged as insulting at the same time.  The effective advertising requires accurate translation of messages when it is converted from one language to another (Jie, Parton & Chan, 2015). The company is recommneded to acquire more understanding of culture, custom, values and religious views which prevail in the UK.

The supply chain management is one of the complicated systems of Woolworth. The effective supply chain management provides good-quality products and services. The supply chain management enables products and services at low prices. The goal of the effective supply chain management is to moderate inventory along with making products available whenever needed. Woolworth is a growing supermarket and has a large number of suppliers supplying goods. However, the company faced many challenges with the supply chain management (Jie, Parton & Chan, 2015). The company faced issues with bulk order delivery of goods and lack of storage for the products. The production of the company also suffers from the unsuitable tracking system of receiving and ordering goods. The staff of company also suffers as they stand helpless for the inadequate delivery of goods caused by suppliers. The management also creates a problem for the staff as the company fails to offer high-quality goods and services due to the ineffective inventory management control and systems. The poor handling of stock results in dumping various products due to the expiration date and out of demand (Ochieng, et. al. 2014). The company can make use of recommendations given below to deal with these issues:

Market entry strategy

It takes too much time to continuously monitor inventory level. The latest ERP system with supply chain management functionality is able to characterise automated purchasing. The ERP software can be used to spontaneously place orders with sellers even when the inventory level falls below a definite level. The serious part of Woolworth’s supply chain management is to proactively sustain inventory levels. Automatic purchasing can free up staff of company to focus on other significant aspects of company (Li, Dai, Armstrong, Clarke & Du, 2014).

The standardization process is essential to overcome the challenges faced in the supply chain management of Woolworth. Using a standardized ERP system can be helpful in increasing efficiency and save time and cost. The other benefit of standardization can result in sharing a classification of tools which can increase accuracy, encourage staff and improve communication.  

There are some issues which are permanent in the supply chains such as waste, mistakes, and fraud. The biggest problem found in company’s inventory management is integrating various software with physical inventory. It is seen that there are always products which are forgotten or disappear. The increased transparency in supply chain management can easily reduce baffling inventory and financial losses (Penrose, 2017).

The decision for the supply chain management depends on the precise and timely data along with information.  The availability of real-time reports all the times can enable valuable understanding into the supply chain health of the manufacturing company. The ERP software enables users and management to immediately access inventory, purchasing and production data for the acute decision-making process (Vahlne & Johanson, 2017).

The out-dated inventory management contains overuse of spreadsheets and manual lists. The updated ERP software provides inventory features which enable real-time visibility of precise inventory levels (Phan & Vu, 2015). On the other hand, the traditional software has limited scalability whereas modern ERP software has infinite flexibility which can match to the growth of Woolworth and it’s exclusive needs.

The smooth functioning of supply chain system depends on the outstanding performance of the vendor. The performance of vendors needs to be supervised and assessed through vigorous metrics offered through ERP systems. Within a few seconds, the management of Woolworth can evaluate vendor cycle times and error rates (Richter, Sinkovics, Ringle & Schlaegel, 2016). This data is important during vendor re-negotiations.

There are various uncontrollable factors and variables with supply chain management of Woolworth. It is seen that different mangers along the supply chain management of the company are unaware of the expenses. A centralized financial data identifies when and where the company spends money exactly. It will reassure cost related communication and strategies for combining expenses and streamlining processes.

The efficient supply chain management requires an proficient returns management system. The company should be able to handle returns efficiently so that it can quickly re-process products. Better handling of the supply chain can result in reducing waste and identifies consistent problem factor of products (López?Duarte, Vidal?Suárez & González?Díaz, 2016).

As staff stands helpless for the insufficient delivery of goods, the ERP system can work well with just in time manufacturing and inventory management to reduce inventory costs and enahnce inventory. Hence, there will be less overhead costs and fewer mistakes of fulfillment communication. It also reduces costs of the warehouse (Zarkada-Fraser & Fraser, 2015).

The HRM The objective of human resource management is to manage labour and job designs so that staff can be effectively utilised. It also focuses on the employee’s quality of work life which is not practically safe and the pay is equitable. The HRM practices have important role in the success of company. Woolworth faced many challenges of HRM policies. The company faced challenge of lesser compensation and workplace strike. The HR manager faces constant issues regarding strike and unrest of employees due to less wages and unpaid bonus scheme. In the recent scenario it has seen that the violence between paid and unpaid workers is increasing considerably. It is a serious challenge to the HR manager of Woolworth (Adams, Nyuur, Ellis & Debrah, 2017). The unreasonable behaviour of management towards workers has created risk to the health and safety of workers. The production unit often changes the roster off schedule and sometimes workers are required to provide overtime to increase profits. It ultimately leads inconvenience to employees and causes health issues. The greater number of absenteeism is also a major HRM issue faced by Woolworth. The employees seek clarity regarding workload and the work-life balances. The amount of unrest is increasing which introduces greater absenteeism in the production unit of company. The health issues have created security problems (Rieucau, 2015). The lack of transparency caused a major strike in the production unit. There are also some causes which cause employees to strike such as lower rate of pay and conditions. The recommendations are given below which can ensure effective HRM:

The company has little concern for the safety of employees. The safety is a matter of concern in particular areas like supervisors of electrical appliances and workers working in stores. Woolworth has set guidelines to oversee the process of working in these segments (Pickles, Barrientos & Knorringa, 2016).

The company has to deal with high turnover as it moves for greener pastures. It has encouraged management to seek ways through which high turnover rate of employees can be reduced and the best talent is retained. The way to encourage employees to persist in the organization can be the facility of career development opportunities. The employees are also offered various benefits such as healthcare plans, retirement funding and scholarships (Sogn?Grundvåg, Larsen & Young, 2014).

Woolworth focuses on analyzing employees based on the current skills possessed by them. It allows management and employees to interact with each other. Woolworth engages employees in the administrative process which directly affects them. It helps to enhance participation of employees and job satisfaction (Ramboarison-Lalao, 2018). The management enhances the performance of employees through training and development.

The managers play the role of the identification of best performance of employees. The employees who perform extraordinarily can be rewarded. The awards are given for the extraordinary contribution made by employees. Such an aspect contributes extra to the company. Such recognition creates a desire to work hard as an individual and group both (Brewster, Boselie & Purpura, 2018). The awards can be provided to create career growth opportunities for the working of employees.

The company trusts on the best employees for it’s operations. To recruits, the best staff company promotes it’s job online and the desired applicants send their applications online. It makes recruitment easy and transparent. Woolworth also recruits on the basis of merit to ensure that it employs the best staff for the job. The company also promotes privacy act to deal with personal information of applicants.

Conclusion 

From the above report, it can be concluded that Woolworth has favorable conditions to expand in the UK market. To ensure that the background of the company is provided to suit the economic condition of UK. The analysis of UK is made which implies entry decisions along with the country’s competitiveness referring to the global competitiveness. The CAGE framework helps to identify the impact of distance on retail industries. The recommendations have been provided in the way of competitive, international and market entry strategies to make expansion in the UK market. The marketing and research and development considerations identify the need of customers and help to design products to satisfy customer needs. The 4Ps are helpful in considering market activities. The production problems faced by Woolworth have been explained. The recommendations are also given to improve supply chain operations of the company. The HRM issues faced by the company have been explained and the considerations are also given to resolve these issues. The evaluations discussed above can be helpful to the company while expanding in the UK market. The company can take preventive measures so that it does not get to face the past circumstances.

References 

Adams, K., Nyuur, R. B., Ellis, F. Y., & Debrah, Y. A. (2017). South African MNCs’ HRM Systems and Practices at the Subsidiary Level: Insights From Subsidiaries in Ghana. Journal of International Management, 23(2), 180-193.

Adeleye, I., White, L., Ibeh, K., & Kinoti, A. (2015). The changing dynamics of international business in Africa: Emerging trends and key issues. In The changing dynamics of international business in Africa (pp. 1-12). Palgrave Macmillan, London.

Brewster, C., Boselie, P., & Purpura, C. (2018). HRM in the International Organizations. In HRM in Mission-Driven Organizations (pp. 79-114). Palgrave Macmillan, Cham.

Bronnmann, J., & Asche, F. (2016). The value of product attributes, brands and private labels: An analysis of frozen seafood in Germany. Journal of Agricultural Economics, 67(1), 231-244.

Cumming, D. J., & Zahra, S. A. (2016). International business and entrepreneurship implications of Brexit. British Journal of Management, 27(4), 687-692.

Felgate, M., & Fearne, A. (2015). Analyzing the Impact of Supermarket Promotions: A Case Study Using Tesco Clubcard Data in the UK. In The Sustainable Global Marketplace (pp. 471-475). Springer, Cham.

Filimonau, V., & Gherbin, A. (2017). An exploratory study of food waste management practices in the UK grocery retail sector. Journal of Cleaner Production, 167, 1184-1194.

Flax, J., Bick, G., & Abratt, R. (2016). The perceptions of supplier-buyer relations and its affect on the corporate brand. Journal of Brand Management, 23(1), 22-37.

Hernández, V., & Nieto, M. J. (2015). The effect of the magnitude and direction of institutional distance on the choice of international entry modes. Journal of World Business, 50(1), 122-132.

Jie, F., Parton, K., & Chan, C. (2015). Australian beef supply chain integration: case studies of the two largest Australian supermarkets. International Journal of Supply Chain and Operations Resilience, 1(2), 121-138.

Lauritsen, B. D., & Perks, K. J. (2015). The influence of interactive, non-interactive, implicit and explicit CSR communication on young adults’ perception of UK supermarkets’ corporate brand image and reputation. Corporate Communications: An International Journal, 20(2), 178-195.

Li, Y., Dai, W., Armstrong, A., Clarke, A., & Du, M. (2014). Developing an integrated supply chain system for small businesses consortium in Australia: a service–oriented PHOENIX solution. International Journal of High Performance Computing and Networking, 8(1), 81-89.

Lindsay, V., Rod, M., & Ashill, N. (2017). Institutional and resource configurations associated with different SME foreign market entry modes. Industrial Marketing Management, 66, 130-144.

López?Duarte, C., Vidal?Suárez, M. M., & González?Díaz, B. (2016). International business and national culture: A literature review and research agenda. International Journal of Management Reviews, 18(4), 397-416.

Methner, N., Hamann, R., & Nilsson, W. (2015). The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104). Springer, Cham.

Moriuchi, E., & Takahashi, I. (2016). Satisfaction trust and loyalty of repeat online consumer within the Japanese online supermarket trade. Australasian Marketing Journal (AMJ), 24(2), 146-156.

Mudambi, R., Piscitello, L., & Rabbiosi, L. (2014). Reverse knowledge transfer in MNEs: subsidiary innovativeness and entry modes. Long Range Planning, 47(1-2), 49-63.

Ochieng, E. G., Jones, N., Price, A. D. F., Ruan, X., Egbu, C. O., & Zuofa, T. (2014). Integration of energy efficient technologies in UK supermarkets. Energy Policy, 67, 388-393.

Penrose, E. T. (2017). Foreign Investment and the Growth of the Firm 1. In International Business (pp. 33-48). Routledge.

Phan, T. T. H., & Vu, P. A. (2015). The impact of marketing mix elements on food buying behavior: a study of supermarket consumers in Vietnam. International Journal of Business and Management, 10(10), 206.

Pickles, J., Barrientos, S., & Knorringa, P. (2016). New end markets, supermarket expansion and shifting social standards. Environment and Planning A, 48(7), 1284-1301.

Ramboarison-Lalao, L. (2018). Understanding HRM in Religious Organizations: HRM Practices Within Two Churches of the Protestant Federation of France. In HRM in Mission Driven Organizations (pp. 115-144). Palgrave Macmillan, Cham.

Richter, N. F., Sinkovics, R. R., Ringle, C. M., & Schlaegel, C. (2016). A critical look at the use of SEM in international business research. International Marketing Review, 33(3), 376-404.

Rieucau, G. (2015). Getting a low-paid job in French and UK supermarkets: from walk-in to online application?. Employee Relations, 37(1), 141-156.

Sogn?Grundvåg, G., Larsen, T. A., & Young, J. A. (2014). Product differentiation with credence attributes and private labels: The case of whitefish in UK supermarkets. Journal of Agricultural Economics, 65(2), 368-382.

Spillan, J. E., & Ling, H. G. (2015, January). Woolworths: An Adizes Corporate Lifecycle Perspective. In Business History Conference. Business and Economic History On-line: Papers Presented at the BHC Annual Meeting (Vol. 13, p. 1). Business History Conference.

Swoboda, B., Elsner, S., & Olejnik, E. (2015). How do past mode choices influence subsequent entry? A study on the boundary conditions of preferred entry modes of retail firms. International Business Review, 24(3), 506-517.

Vahlne, J. E., & Johanson, J. (2017). The internationalization process of the firm—a model of knowledge development and increasing foreign market commitments. In International Business (pp. 145-154). Routledge.

Watts, D., Little, J., & Ilbery, B. (2018). ‘I am pleased to shop somewhere that is fighting the supermarkets a little bit’. A cultural political economy of alternative food networks. Geoforum, 91, 21-29.

Zarkada-Fraser, A., & Fraser, C. (2015). Integrating social and economic orientated marketing: A study of retail management. In Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 219-223). Springer, Cham.