Discuss about the Strategic Management Of Woolworths Supermarkets.
Woolworths Limited is an Australia based organization that operates its business operations retail and supermarkets industry. The organization is operating its business with huge retail interest across the Australia and New Zealand. In Australian market, it holds second position in terms of revenues and profits. In addition to retailing, it deals in other sectors as well such as petrol, hotels, liquor etc. Woolworths Supermarket is one of the most established and beneficial of Woolworths Limited. This supermarket chain was established in the year 1924. Primarily, it offers grocery products, health and beauty care products, packaged goods, vegetables, fruits, pet products and baby products. Today, the company owns 1000 stores in the country by employing more than 100000 people (Woolworthsgroup, 2018). Now, the company offers its products online as well and the name of its online portal is HomeShop. As mentioned in the first part, the company is facing some strategic issues which can affect the growth of company in competitive retail industry. So, this part recommends the strategic options which the company should use to resolve those issues.
However, Woolworths Supermarkets is operations its business successfully but still the organization f aces some strategic issues. Two of its major strategic issues are the higher prices of its products and slow growth of liquor business. Thee strategic issues and strategic options for Woolworths Company are stated below:
One of the major strategic issues which are confronted by Woolworths is related to the higher product prices in comparison to its competing brands. This is the major reason that the organization had been showing very slow growth because of its pries which had been determined for its products and services in the Australian market. There are some other supermarkets in the country like Aldi, Coles etc. which are operating their stores as “discounted stores”. These players are taking the advantage of Woolworth’s higher pricing strategy (Thomas, 2017). In addition to this, the government in Australia has also restricted the move in setting higher prices for its products in partnership with Coles that shows the major weakness to Woolworths in approaching higher level of growth. This strategic issue affects the brand image of the organization among the Australian population and they are switching to other discounted stores. In this way, it led the organization towards loss of brand image, customer base and competitive advantage.
In order to deal the issue of higher prices of products, there are two strategic options which are available to Woolworths Supermarkets. First option is to provide discounted prices and give them weekly offers. It can be done by keeping the existing pricing strategy. Moreover, the second available option for the company is to adopt the skimming pricing strategy for its products so that it can attract more customers towards its products and services (Flemes, 2016). In the first option, Woolworths can offer its products with its existing higher pricing strategy but it should offer some discounts and offers weekly and in any festive season. Another option is skimming pricing under which it can offer the products higher prices in the initial stage and then lower the prices over the time.
Resources
Along with its higher pricing strategy, Woolworths can provide the discounts to its customers. The company needs to manage its financial resources effectively. In addition to this, it can offer provide free products with the primary product. Discounts can be done on the basis of customer loyalty, product quality and they need be tied to specific promotions.
Acceptability
These offers and discounts should not receive any objection from Woolworth’s related stakeholders like suppliers, franchises, subsidiaries etc. The company needs to ensure that all the people related to organization are ready to accept the changes in product offering (Toptal & Çetinkaya, 2015).
Coherence
This strategic option would be beneficial for both the company and its customers. The customer will be attracted towards the company’s products as they will be able to purchase the products on discounted prices in festive season. There will be weekly sales in the supermarkets. It assists the organization to provide an effective shopping experience to its customers.
Effectiveness
Applying this strategic option will be very effective that it will allow the customers to buy the products on discounted prices. The weekend sale will attract major sales to Woolworths as most of the Australian people are free on the weekend. So they prefer to shop on these days. It will be effective to maintain the profitability of the company as it can earn profits on normal day by offering products on higher prices (Woolworthsgroup, 2018).
Sustainability
This option will lend the company towards sustainable competitive advantage as it will enable the organization to gain more customer base against its competing brand like Coles and Aldi Australia.
Resources
Under this strategic option, the marketers will set comparatively higher prices in the initial stage of products, and then it can lower the price over the time. In this case, the major resource is the demand from customers. As the demand of first few customers is fulfilled and competitive brands enter in the market, Woolworth needs to lower the price to attract price-sensitive customer segment (Huang & Sarigöllü, 2014).
Acceptability
Like the above option, setting skimming prices should not receive the complaints and objections from stakeholders and other people.
Coherence
Skimming pricing strategy will attract more customers towards company’s product offering. Price skimming will assist the organization to use different prices for the similar product range over the tome to produce more profits and revenues.
Effectiveness
In this, the company should conduct the market research and find out the pricing policies of its competitors. After satisfying the needs of first customers, it should reduce the pries according to the competitors’ prices (Toptal & Çetinkaya, 2015). It will be effective for the long-term growth of Woolworths Supermarkets in Australia.
Sustainability
This strategic option will allow Woolworths to gain a competitive advantage in Australian retail industry. The company will be able to operate its business with the sustainability.
In today’s competitive business world, it is very important to choose the most effective strategic option so that organization can overcome its strategic issues. Woolworths Supermarket will make strategic choice by using a process that includes steps like recognize different options, analyze the options, and select the most appropriate option and implementation. As Woolworths Organization is operating its business in supermarket industry so it will be better to use first strategic option so that company can make more profits (Peppard & Ward, 2016). It will lead the organization to long-term growth. Currently, company offers its products on higher prices than its rivals. Now by offering discounts and offers in a specific season, the company will be able to develop its customer base and revenues in Australian retail industry. Thus, the company should choose first strategic option for its product offerings.
Apart from the above issue, Woolworths Supermarket is facing the issue that its food and liquor business has not shown growth in the recent time. Due to this, there are changed in company’s management and leadership. As mentioned above, this company is operating its business processes in different segments like grocery products, fruits, and liquor and food products. During past few years, the company has not experienced a growth in the liquor and food business which has changed the management and leadership of company (Woolworthsgroup, 2018). Due to this, the company has appointed a new leadership team for Woolworth’s liquor and food segment. This issue has affected the overall sales and revenues of the company.
To resolve this strategic issue, the company can adopt two strategic option i.e. implementation of democratic leadership and focus on promotion and advertising of food and liquor business. By adopting democratic leadership, the leaders should involve all the people in the decision making process. In addition to this, the organization should make more focus on promoting its liquor and food business (Lasserre, 2017). It can promote these products to the customers as well who are coming to shop at supermarkets.
Resources
The company has already made the changes in its leadership and management resources. Now, it should use democratic leadership so that they can involve all the team members in decision making process.
Acceptability
The stakeholders of the company have already given the permission to hire a new management and leadership team. They need effective and training so that they can understand the processes of Woolworths (Bolton, 2015).
Coherence
By using this strategic option, the company will be able to develop a profitable corporate culture. It will fit in these segments of company perfectly.
Effectiveness
This technique will be very effective for making decision in the food and liquor business of Woolworths Limited. The team members will be able to give their opinion for the growth of these businesses (Ayers & Odegaard, 2017).
Sustainability
As mentioned above, the food and liquor business of this company are least profitable so company has changed its leadership and management. If the company will use democratic leadership option then it will be able to take the opinions from others who are working for the organization. These employees will assist to analyze the issues faced by the company (Patapan, 2017).
Resources
Woolworths needs to shift its focus from supermarket to its food and liquor business. It needs to create a marketing team that focuses on the promotion and advertising of these two businesses. It needs to make investment on advertising and promotion activities (Barton & Behe, 2017).
Acceptability
The acceptability will depend on the outcome of these processes. It should be able to increase the customer base (Meffert, 2013).
Coherence
Company thinks that it can generate significant revenues from its supermarket business so it does not want to make advertising investment on these two businesses.
Effectiveness
It is very true that focusing on advertising and promotion of liquor and food business will enable the organization to enhance growth of these two businesses. This strategic option will be effective for the company’s growth.
Sustainability
Advertising and promotion will increase the awareness of the businesses among the population of Australia. It will definitely lead the organization to gain sustainability and competitive edge.
From the above analysis, it can be stated that adoption of democratic leadership is the best strategic choice for the company. It will enhance the decision making process of the company that will eventually improve its business operations (Mitchell, 2015). However, the company can use second option also because it will enhance the brand awareness of its food and liquor business among Australian population.
Conclusion
Thus, it is hereby concluded that Woolworths Supermarkets can use effective strategic options to overcome its strategic issues. It is very important to recognize the strategic issues in an organization. If the company does not do this, it will become detrimental to the organization and reduce its competitive edge. In this way, the above chosen organization should use effective strategies and techniques so that it can increase its customer base in the industry.
References
Ayers, J. B., & Odegaard, M. A. (2017). Retail supply chain management. CRC Press.
Barton, S. S., & Behe, B. K. (2017). Retail Promotion and Advertising in the Green Industry: An Overview and Exploration of the Use of Digital Advertising. HortTechnology, 27(1), 99-107.
Bolton, S. (2015). Woolworths workers back at work. Green Left Weekly, (1065), 3.
Flemes, D. (2016). Brazil: strategic options in the changing world order. In Regional Leadership in the Global System (pp. 105-124). Routledge.
Huang, R., & Sarigöllü, E. (2014). How brand awareness relates to market outcome, brand equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132). Springer, New York, NY.
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.
Meffert, H. (2013). Marketing-Management: Analyse Strategie Implementierung. Springer-Verlag.
Mitchell, S. (2015). Woolworths to slash 400 jobs to ‘turbocharge’ cost cuts. Retrieved from https://www.smh.com.au/business/woolworths-to-slash-400-jobs-to-turbocharge-cost-cuts-20150505-ggui53.html.
Patapan, H. (2017). Democratic leadership. In Islam Beyond Conflict (pp. 77-88). Routledge.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. John Wiley & Sons.
Thomas, S. (2017). Woolworths’ nightmare in Australia. Retrieved from https://www.businesslive.co.za/fm/money-and-investing/2017-02-23-woolworths-nightmare-in-australia/.
Toptal, A., & Çetinkaya, S. (2015). The impact of price skimming on supply and exit decisions. Applied Stochastic Models in Business and Industry, 31(4), 551-574.
Woolworthsgroup, (2018). Australian Food and Liquor leadership changes. Retrieved from https://www.woolworthsgroup.com.au/page/media/Press_Releases/Australian_Food_and_Liquor_leadership_changes/.
Woolworthsgroup, (2018). Woolworths supermarkets. Retrieved from https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/Woolworths.
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