This report is to portray the generic strategies, general culture, and structure of the most dynamic supermarket of Australia, Woolworths. It is a public company that services in the food and groceries and liquor retail industry are making it emerge as the largest retail chain company in Australia. Woolworths initiated its ventures by opening the store in Sydney, Australia in the year 1924. After long time, the organization came to the top most level in 2012. Presently, the organization is well known as the biggest supermarket chain in Australia. It deals with 28 million customers every week which accounts 31 percent of aggregate market share. The company operates various diverse brands that are primarily named as BWS, Safeway supermarkets, Big W, Tandy, and Dick Smith. This supermarket is the retailer’s organization in terms of stores, sales, various supermarkets, and revenues. The company has around 3200 stores, 840 supermarkets in Australia and around 156 supermarkets in New Zealand. In 2015 fiscal year, the company made a total of $15 billion in sales. This was a 3% increase from its previous year’s total revenue. However, the 2016 fiscal year was a bad year for Woolworths. The supermarket industry went down from $2.628 billion to $2.146 billion. This was because of the company’s exit from the hardware sector and the underperforming Big W stores. Additionally, it was also affected by the interests and tax policies from the Australian food and petrol where the net sales dropped from $2.97billion to $1.76 billion. The decrease happened due to the lower prices and a decline of items per basket (Danieltrifkovic, 2016). This marked Woolworth’s first loss in its 23 years operations as a public company.
Organizational culture is really alluded as the specific collection of standards, principles and values which are fundamentally shared by the groups in the firm and that control the way they connect with each other. While, organizational structure is a method which includes implicit and explicit institutional policies, standards and strategies made for delineating how various work obligations and duties are controlled, associated, and facilitated (Bell, 2014).
The fundamental goal of this report is to highlight the hierarchical culture and authoritative structure of Woolworths. The report will likewise demonstrate Porter’s generic business strategies which have been executed by Woolworths.
Each company’s profitability and achievements rely on its organizational structure and its competitive positioning. Porter assimilated two theories to clarify the company’s profitability. The first one to start with is five forces theory that decides the organizational structure or attractiveness and the second is the generic competitive strategy that layouts the organization’s positioning within the industry (Sitkin, Cardinal and Bijlsma-Frankema, 2010). Porter described three effective generic strategies to overcome the competitors of the industry, namely, cost leadership, differentiation, and focus strategy. Here is the Generic business strategy of Woolworths:
According to Porter’s Model, if a business firm needs to accomplish a sustainable cost leadership, it requires to perform over the average in the industry by expecting that the organization has the capacity to command the industry’s average price. For accomplishing the overall cost leadership, an organization needs to perform and embrace various low-cost production strategies, for example, low-cost supplies, accurate inventory management and an improved distribution channel (Sitkin, Cardinal and Bijlsma-Frankema, 2010). Organizations would also need to adopt the low advertising, promotional costs and the various operations that cost the organization.
The generic business strategy of Woolworths is cost leadership. In this leadership strategy, organization’s primary focus is on keeping up the low costs of goods and services. Woolworths is known for its low prices and quality foods, which is the principle selling point of the organization. Woolworths always try to keep its prices low by cost reduction in its business operations. The organization uses information technology to expand its operational efficacy and efficiency. This generic business strategy of the organization shows other business operations of the organization (Tuan, 2011). As one of the Woolworths goal is to keep the price low, it in some cases minimizes the wages and spending in different business areas. To minimize the prices, it is important that the firm keeps up a high sales volume and large-scale operations.
By differentiation strategy, a firm can create products and services that give unique qualities to the purchasers and furthermore helps them in positioning themselves differently in the industry. By a successful execution of an accurate differentiation strategy, retail suppliers can gain customer loyalty and organization can command a premium price for the items. The differentiation strategy is distinctive to the industry and structure. A firm based on this distinctiveness can embrace a product differentiation strategy, for example, new features, clarity, quality, enhanced values, and so forth. By implementing differentiation strategy, organizations can generally target price insensitive buyers (Ul Haq, 2014). To make the differentiation strategy sustainable, a firm needs strong innovation and creativity to its products so it can be hard to conceal by the competitors.
Woolworth’s present business strategy is differentiation strategy. With the usage of this strategy, the firm is currently focusing on creating a high differentiated product line to become a pioneer in the industry. The organization is using ‘Fresh Food People’ as its mantra. Woolworths is right now extremely effective with its differentiation strategy (Ul Haq, 2014). The organization is currently concentrating on giving the fresh food to the customers that have helped it in gaining a substantial portion of the market share.
The focus strategy enables a firm to limit the competitive gap to gain advantage. In this strategy, a firm chooses a segment of the industry that can empower them to choose and adopt either a cost leadership strategy or differentiation strategy. The choice of one of these strategies exclusively relies upon the perception of the customers in connection to the product within the segment. Focus strategy is a marketing approach in which a corporation substances on the possessions on entering or developing in the narrow market or industry segment (Wileman, 2008). This strategy is generally utilized where the organization comprehends its segment and has the range of items to fulfil its needs.
Conversely with other retail industry, stores of Woolworths serve on rich business that is inspired by high quality, customized service, fresh and quality products. To attract and hold this segment of customers, the specified organization undertake a focused differentiation strategy by offering fresh and quality food. Furthermore, the management of the organization attempts an incorporated way to deal with its strategy and business planning that guarantees the significant targets throughout the organization. The focused differentiation strategy of Woolworths helps it in accomplishing the efficiency, quality, and responsiveness to the customers (Wileman, 2008). As the business has upsurges its brilliance, and customer approachability, it is firmly connected towards attentive differentiation strategy.
Woolworth’s organizational culture considers the way people react to challenges in their working condition (Billett, 2010). The elasticity of the human resource of the firm partly depends on the outlook guided by the organizational culture.
The four types of organizational cultures that the Woolworths utilizes during its operations are:
Woolworth’s organizational culture has basically four segments and they help employee’s behaviour. They are:
The firm gives significance to the customers in its operations; the organization additionally perceives the spending of each single employee to the achievement of the business. In addition, the organization strives for greatness in every individual or group and entire firm (Chung et al.,2011). In terms of maintaining trustworthiness, Woolworths promotes the characteristics of fairness, impartiality, and honesty during the process of decision making.
Organizational structure decides how information transfers from one level to another in the organization. The effective organization like Woolworths characterizes its structure from each employee’s job and work and furthermore how it suits in the whole system. This structuring gives the firm alongside an obvious presentation of how it is formed and furthermore how it will move ahead in future to accomplish the targets and objectives (D. Broker, Mashruwala and Tripathy, 2014). Organizational structure can be considered by formal contexts and from informal contexts. At the point when informal organizational structure relates the social structure of the firm like behaviour, social interactions, cultures and connections in the organizational context, the formal structure can be known as the nonconcrete type of structure which is understood very effortlessly by management structure, leadership type, hierarchical relationship and a much more. It is realized that organizational structure considers the collaborations in various elements of the firm; it affects the behaviours and nature of workers, various organizational units, and the whole firm (Er?ulj, 2009).
The foundation of organizational structure is really the result of two constructs that are system organization, it is formulated by the imparting of insights of their performers and another is structural configuration, it depends on the first most concepts. The organizational structure can be preoccupied like the process of decision making structure between the individuals in the firm and in addition contended that the structure considerable impacts distinct scheme implemented by the firm (Gamm, 2011). Woolworth’s organizational structure considers the organization’s business performances. Its organizational structure even forces limits on how the business discourses its issues and difficulties. The very vast history of Woolworths in accomplishing and constantly developing on a worldwide level means that the company’s organizational structure has been so steady in forming competitive advantages and achievements (Hemmington, 2008). Woolworth’s organizational structure partners with the organizational culture for keeping up the reflective competitive advantages of the organization.
Woolworths has a progressive organizational structure that has two elements which are hierarchy based definitions and functions based definition. The hierarchy features relate to the vertical segment of command and the authority feature completely to the organizational structure (Beam Gehani, 2013). Orders and directives emerging from the top most level of Woolworth’s management are worked upon by middle managers down to the rank of file workers in Woolworths stores. Whereas, functions based definition features of the company’s organizational structure emprise the groups of workers fulfilling specific operations (Idowu, 2016). Woolworths has a section for the performance and operations of human resource management. The firm additionally has sections for the operation of information technology and different departments are there for the functioning and operations of marketing. There are few of the different functions based sections in Woolworth’s organizational structure. The real impact of Woolworth’s hierarchical organizational structure is the possibility of company’s managers to easily encourage the entire firm. New and trendy policies and furthermore planning of strategies set up at Woolworth’s headquarters are effortlessly transferred to the regional management down to the managers of stores. By all these ways and strategies, Woolworth’s hierarchical organizational structure achieves relevant checking and effective control. The drawback of the structure has negligible help for organizational flexibility (LIU and CHENG, 2012). The down levels of the structure cannot easily adjust business practices for the reason of the dependable interactions and additionally approval method containing the middle managers and furthermore business managers at Woolworth’s headquarters.
Woolworths organizational structure is perfect for the company’s type of business and in addition to worldwide chances of operations. However, the organization can enhance and develop in the method of applying or executing its convictions in the situation of its organizational culture. These beliefs are very ideal. But at present, the organization is constantly criticized regarding its failure to address workers contemplations about low compensations and salaries (Nicolas, 2009). The criticism primarily focuses towards the distinction between the conviction of respect for people in the corporate culture and in the accurate treatment of the workers. In this way, an appropriate proposal for Woolworths is to apply significantly more appropriate and applicable measures with a specific end goal to satisfy the respect for the individual components of the organizational culture.
Conclusion
From the above study, it has been found that Woolworth’s organizational culture considers the way people react to challenges in their workplace or working environment. The flexibility of the human resources of the firm partly depends on the mindset guided by the organizational culture. Therefore, when the firm requires reliable, steady, and productive yield, this culture should be adopted in its operations. The firm also gets clear lines of the process of decision making authority, quality strategies and standardized rules, even gets responsibility and in the meantime strong regulation. Woolworths performs and works as a market. The market culture has a strong accentuation on different external constituents like contractors, suppliers, and customers. The organization can be market culture oriented because the fundamental principles of this culture are productivity furthermore, competitiveness that are against hierarchy.
With the knowledge gathered from the above report, it has been found that Woolworths is represented as modernized and standardized Hi-tech organization because the firm needs to confront many challenges as well as changing landscapes. The entrepreneurial, and innovation, are the primary points to the organizational accomplishment profitability and even the activity of the firm is services and commodity oriented. Woolworths has a hierarchical organizational structure and this structure has two elements that are hierarchy based definitions and functions based definition. The hierarchy features relate with the vertical portion of command and gives the complete authority to the organizational structure. New and trendy policies and furthermore planning strategies set up at Woolworths company headquarters are effortlessly transferred on to the regional management down to the manager of stores. By all these ways and strategies, Woolworths hierarchical organizational structure achieves relevant monitoring and effective control.
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