Strategic Management Issues In Woolworths Company For IGA

Problem Statement

Write about the Strategic Management Issues in Woolworths Company for IGA.

The retail industry of Australia has only a few large retailers operating as supermarket stores including Woolsworth, ALDI, Coles group, IGA, Foodworks, Macro Wholefoods, and SPAR. However, there is large number of small retailers operating in the country. These retailers give a huge variety of choices of groceries and food items to customers and the retail industry as a whole contribute over 4% to the GDP of Australia. Woolworths is the largest retailer in Australia but with increasing growth of the supermarket, the retailer is facing strong competition from its major rivals. The margins of most retailers in the market are in similar range (Bluschke, 2016). Te only differentiation that these stores can create for consumers are service delivery and retail efficiency. To sustain and build a long term competitive advantage, Woolworths needs to enhance its service efficiency through innovation. If the company can use technological innovation to bring system excellence, service efficiencies can be improved in the stores. Lean principles focus on building efficiencies in the organization and can be used for addressing retail challenges. This research would explore various challenges that are faced by the retailer Woolworths and identify opportunities for making changes through lean practices such that efficiency of the retail processes can be improved (Ambernathy, Dunlop, Hammond, & Weil, 2000).

The aim of this research is to explore the strategic challenges faced by Woolworths and identification of opportunities for improvement through lean practices. TO achieve this aim, the following objectives have to be achieved:

• To explore strategic management challenges faced by Woolworths Company
• To analyse the challenges to identify opportunities for improvement
• To explore the opportunities to apply lean practices to eliminate wastes and increase efficiencies
• Application of lean principles to retail scenario for identifying opportunities for improvement in efficiencies

A number of studies have been conducted to study the ways retail organizations develop, grow and succeed. Several theories have been developed with these studies that include cyclical theories, conflict theories and environmental theories. Cyclical theories have identified common retail development patterns. Wheel of retailing is one of the cyclical theories which explain the evolution of retail in three phases including entry into retail business with lower prices and margins, emerging into a retailer with high end prices and services followed by competition from new retailers (Oracle, 2015). The theory uses the concept of opportunistic buying, undercutting the existing players and establishing self retail in the market. At the end of the cycle, retailers upgrade their stores or add new product lines with increased prices that enable retailers to work with higher margins (Diamond, 2004).   For such a growth path to sustain, strong leadership is needed in an organization as it grows as retailer expands through enhancements in their merchandize quality and quantity. With these advances, the cost of operations also increases and thus, makes way for the entry of new low cost retailers in the market.

Research Aim and Objectives

Retail life cycles which is another model for studying retail growth among cyclical theories identifies four stages of retail store development including innovation, growth, maturity, and decline that all the organizations go through in its life span (Nielsen , 2013). The time span of each of this phase can vary. In the stage of innovation, investments are high and profits are less while are growth stage, retailer begins to expand along with others in competition till a point maturity is reached in the market and the industry starts t get saturated which is followed by  a decline. At this point, innovation is used to revive the market. At this point retailers look for expanding into new markets that have not been explored by the retailer (Dydacomp, 2014).

Retail Accordion is another age old cyclical theory in retailing which recognizes the tendency of tailers to alternate between specialization and diversification forming a cyclical pattern of growth and development (Stauss & Seidel, 2012). A retailer may be with one niche specialization and then diversify into new products and services. For instance, Amazon started as a book store but soon ventured into other products like apparels and electronics. After establishing itself as a consumer goods retailer, Amazon then diversified into live streaming of videos and recently, it has also started its grocery division (KPMG, 2015).

Environmental theories of retail evolution explore the interplay between the internal and external environment of an organization. External environment is composed of political, cultural, demographic, legal, technological and economic aspects. Depending on the variation sin the environment, retail industry matures or goes through a process of innovation which changes the environment giving way to new opportunities (Motorola Solutions, Inc., 2013).

Evolution theory which is an environmental theory believes in the process of survival and natural selection and states the organizations adapt to the changing environment to sustain the markets. With change in the environmental factors like political, legal, economic, technological and social paradigms, structures of retail also change. Institutional theory on the other hand identifies organization as a part of its environment and thus, is believed to be interdependent with the environment. As per this theory, the cultural and economic norms of the environment are reflected in the decisions of a retail organization (IBSCDC, 2009). These norms can exist both at task and institutional levels. At task level, norms are linked to performance while at the institutional level; actions are constrained by culture or morals. For example, decisions about merchandize assortment and inventory management are governed by task related norms while promotional activities are governed by institutional norms such as community practices (Frei & Harker, 2000).

Conceptual Framework

Conflict theory addresses the concerns of an organization that is newly innovation and in the process; it challenges the status quo which requires a major shift in the market as well as in the organizational culture. A continuous shift happens between actions; reaction and synthesis as the retail come with a competitive advantage as an action and then takes actions that would reduce the competitive advantage which is a reaction (IBM, 2010). This reaction eventually results into modification in the operating methods of the organization. A continual adaptation follows along resulting into synthesis and evolution of innovative formats that establish themselves over time. The theory identifies four stages of innovation in a retail organization that include giving shock to market, giving defensive retreats, acknowledgements, and adaptations. Initially, a retailer is hostile to the threats faced in the industry but as soon as it moves to the stage of innovation, the process advances to the final phase of success (Gupta & Kumar, 2014).

This research involves examination of the strategic challenges that are faced by Woolworths Company such that specific solutions can be come up with for resolving those challenges. This requires a general investigation of the challenges faced by the organization in depth such that specific areas that present the scope for improvement can be identified. As the research needs to go from the exploration of general issues to identification of specific solutions, a deductive reasoning would make a suitable approach for this research.

Choice of a research methodology largely depends on how the knowledge is perceived and believes in its existence. Here, an understanding of epistemology that identifies ways people think about truth and ontology that describes the way things are would be useful for identification of an appropriate methodology. Objectivists believe in existence of truth that can be proven by facts while interpretivists believe in existence of collective interpretations that emerge from believes of different people that can be brought together to explain a phenomenon. In the current case, there is an existence of a truth which can be explained by observing the patterns of retail data such that research can find out what realities exist, what challenges are faced and how these can be tackled. Thus, a positivist approach to research would be taken involving exploration of the observable facts.

As this research needs to investigate the challenges faced by the retailer Woolworths Company, it would need an understanding of the perspectives of the people who deal with those challenges and they would include the employees of the organization who would need to be interviewed. The research would take a mixed approach to research as the phenomenon that has already been studied earlier with some useful findings can create a foundation which can further be used for refining the primary investigation. The research would explore the past research as a secondary research and would analyse the patterns in the existing data to identify challenges, scope for improvement through lean approach and explore the solutions that have already been used to assess their effectiveness (TCS, 2015). Based on the analysis of the secondary data obtained in the literature review, a primary questionnaire would be developed for conducting a survey on the employees of the organization for the primary quantitative investigation.

Research Methodology

The research would be conducted in two parts including secondary qualitative data collection through study of past literatures and researches from journals, research reports, books, and other authentic documents followed by a primary research for which the data would be collected from the employees of the organization for understanding the challenges they face and how they deal with them (The University of Reading , 2001).

A sample of 31 managers working for the Woolworths Company would be taken including those working at senior and mid senior level positions from different departments. These departments would include strategy department, service delivery, ecommerce sales, logistics, and merchandizing. One senior and two mid-senior level managers would be taken from each department for conducting the survey. The sample size has been decided on the basis of the organizational structure and its division into department such that representatives are chosen from each department.

The research is a mixed research which includes secondary qualitative data in the literature review that would analyse using a narrative approach to identify possible themes or codes for the primary research on the retailing challenges, solutions and possible gaps that leave a scope for improvement. The analysis results would then be used for creating a primary survey questionnaire which would be used for the primary research which would include collection of the research data from 31 managers and analysis of the same. The survey data would include the qualitative data resulting from the open ended questions and the objective coded data that would result from the objectives questions asked to these respondents (WEF, 2017).

A descriptive statistical analysis would be used to analyse the quantitative data which would deliver insights on the challenges faced by retailer and the solutions that have been proven to be useful. It would also include exploration of the gaps that still exist in the company and are required to be improved through the practice of lean (The University of Reading , 2001).

The qualitative data resulting from the open ended question responses would be analysed using conceptual content analysis approach which would help identify the challenges that are currently faced by the managers working for the organization and have not been identified in the past researches. This data analysis is expected to deliver some new themes on challenges and opportunities for improvements in retailing.

The selected respondents would be given a questionnaire to fill online for the survey such that the data would be collected in the real time through a web based platform from where the data would be downloaded for the analysis.  A primary survey questionnaire would be used for collecting the survey data that would identify if the challenges identified in the literature review are faced by the company management, if the discovered methods work to resolve challenges and explore if there were more challenges and scope for improvement. The data collected would be coded into SPSS file which would be further used for analysis. The questionnaire that would be used for the data collection would have both qualitative and quantitative data in the forms of objective questionnaire and the open ended questionnaire. While the objective section of the questionnaire would explore the views of the managers on the existing research findings to understand if they apply to the case of Woolworths, the open ended question would explore additional challenges and ways to tackle them that are used by the employees of the organization.

Woolworths was founded by Percy Christmas in 1924 in Sydney and is operating today with over 3200 stores in Australia and New Zealand, managed by over 180,000 employees serving 28 million customers across the globe. Over the years, the company became the largest retailer with 31% share in the Australian market. Major brands of the retailer include Safeway supermarkets, Dick Smith electronics, BWS, Dan Murphy’s and Tandy.  This research would explore the retail division of the organization to understand the strategic challenges that are faced by the organization today with an aim to identify opportunities for improvement in the organization.  The project would be completed in 3 months which would include identification of objectives, literature study, questionnaire development, survey, data analysis and reporting. A budget of $1200 is required for the completion of the research. The research would follow the schedule given below:

Research Activity	Milestone
Refining aims and objectives of the research	30 days
Literature review	15 days
Research methodology development	15 days
Questionnaire development	10 days
Submission of research proposal to Woolworths to get permission for survey	15 days
Survey of managers in working in Woolworths	10 days
Coding of research data into SPSS	20 days
Statistical analysis of quantitative data	20 days
Conceptual content analysis of qualitative data	15 days
Data Interpretation	15 days
Recommendations	10 days
Report development	5 days
Proofreading and editing	3 days

 

Reference List 

Ambernathy, F. H., Dunlop, J. T., Hammond, J. H., & Weil, D. (2000). Control your Inventory in the World of Lean retailing. Harvard Business Review.

Bluschke, N. (2016). „To E or not to Be“ Amazon’s role in the retail industry. Module Vienna University.

Diamond, E. (2004). Fashion Retailing: A Multi-Channel Approach. Prentice Hall Publications.

Dydacomp. (2014). Drive Your Retail Sales Growth With Operational Efficiencies eBook. Dydacomp.

Frei, F. X., & Harker, P. T. (2000). Value Creation and Process Management: Evidece from Retail Banking. Wharton Financial Institutions Center.

Gupta, S., & Kumar, N. (2014). Retail Analytics: Game Changer for Customer Loyalty. Cognizant.

IBM. (2010). Increasing Sales, Improving Efficiency, Working Smarter in Retail. IBM.

IBSCDC. (2009). Indian Organised Retail: In Search of the Right Model. IBS CDC.

KPMG. (2015). India’s e-commerce retail logistics growth story. CII.

Motorola Solutions, Inc. (2013). IMPROVE PRODUCTIVITY AND CUSTOMER SERVICE IN THE RETAIL STORE WITH AUTOMATED INVENTORY MANAGEMENT. Motorola Solutions, Inc.

Nielsen . (2013). Continuous Innovations: The Key to Retail Success. The Nielsen Company.

Oracle. (2015). Oracle Retail Markdown Optimization. Oracle.

Stauss, B., & Seidel, W. (2012). Complaint Management in Retailing. Springer.

TCS. (2015). A Lean Six Sigma Approach to Improving Efficiency in Retail Store Operations. TCS.

The University of Reading . (2001). Approaches to the Analysis of Survey Data . The University of Reading .

WEF. (2017). Shaping the Future of Retail for Consumer Industries. World Economic Forum.