Strategic Management Woolworths Ltd

Question: Discuss about theStrategic Managementfor Woolworths Ltd. Answer: Introduction By the help of strategic management process, the managers of any organization can able to make any decisions on behalf of their owner to meet the organizational goals. When the company has high profitability than the other companies in same industry then it can be said that the company has a competitive advantage (Akbar Ahsan, 2014). In this research study, the researchers explain about the PESTLE analysis and Porters five forces analysis of the Woolworths Company. Main Context Company Background Woolworths Ltd. is a public company. It is founded in the year of 1942. It holds the 2nd position among the top 2000 companies in Australia. The company obtains their major income from the retail outlets and the supermarkets in Australia. This company operates their business by retailing food, petrol, liquor, and appliances for home improvement (Arli et al., 2013). They also operate their business in gaming and hospitality sectors. It has nearly 3000 stores throughout Australia and New Zealand. Around 200,000 employees are work in this company. In future, they want to increase the share of their customers by providing them good quality products at low price. External Environmental Analysis PESTLE Analysis Political Factors The political factors of a country always have a great impact on the organizational business. For this reason, the retail companies are also get affected. The better political situation always helps the company by providing them a better growth opportunity. If the political condition is stable then the foreign investors also show their interest in investing in the business which also helps the company to grow and develop. If the political condition is unstable then risk level gets high about the rate of return and business failure (Dos Santos, 2013). However, Woolworths is performing their business in a stable political market, so the risk of failure in business is very low. Economic Factors The economic factors like high rate unemployment, recession, etc. have a great impact on the financial performance of an organization. These economic factors affect the business and lead to a low sale. For this reason, the profitability level of the company also gets reduced. Woolworths Ltd. The company faces a great loss due to global financial crisis (Dos Santos, 2012). At that time they close their business operation in the UK which leads to huge unemployment. This financial crisis has a bad impact on the overall sales of the company. However, by the help of the Australia retail industry, Woolworths can able to maintain the stability within their business in other parts of the world rather than the UK. Social Factors The Woolworths Company can able to identify the changes which take place in the social context. That is why; they increase the availability of a variety of products with a price which can be easily afforded by their customers (Ferriz Ventura, 2015). Due to these social factors, the company offers low price on their various items in their retail outlets. Focusing on these social factors, the company has shifted their attention on healthy eating and tries to provide fresh grocery items which are a trade in from other countries. These changes help the customers to choice a healthy lifestyle. Technological Factors The technological factors help the company by enhancing the shopping experience of their customers. By the help of the RFID technology, the company can able to manage their inventory efficiently within the retail stores and also maintain the availability of the stock for their customers. Woolworths also adopt an innovative technology in their retail stores i.e. the self-service checkout (Leibold Hugo, 2015). However, every type of technology is not accepted by the customers. For this reason, the company should adopt those technologies which are related to the customer needs and preference. Legal Factors The policies which are related to the tax and recruitment of new employee are the general legal framework within the retail industry. The food license is a very important requirement for any retail company. The retail companies have to maintain the quality of their products according to the laws and regulations of the nation. At the time of opening a new outlet the company needs approval from the concerned government and also follows the legal requirements of that country. Environmental Factors The environmental factors basically depend on the environment-friendly activities of the company. Woolworths has invested an amount of their resource in reducing the carbon footprint of their organization and wastage of natural resource like water. Woolworths also perform some recycling activities to reduce the wastage in a landfill (Spillan Ling, 2015). The company also provides good quality food items to their customers to maintain the organizational sustainability within the environment. Porters Five Forces Analysis Bargaining Power of Suppliers Woolworths perform a business which is basically a Safeway supermarket. For this reason, they do not need to depend on the suppliers, for that reason; in their organization, the suppliers have a weak bargaining power. The Woolworths Company has a large variety of products to sell in their retail outlets in Australia and New Zealand. For these reasons, the bargaining power of the suppliers is weak in this organization. Bargaining Power of Customers Woolworths Company has a majority of individual buyers in their organizations. For this reason, the customer has a strong bargaining power (Methner et al., 2015). As the bargaining power of the customers is strong, so it forces the company to reduce the price of the products according to the customer demands. It becomes one of the major strategies of the Woolworths Company is deliver their products at a low price to meet their customer needs. Threat of New Retailers The threat of new entrants is not so important for Woolworths Company because the company has set up their business with a huge number of retail outlets and also provides the best quality products to their customers compare to their competitor organizations in this retail industry. The organizations who are trying to enter this industry may receive tough competition from Woolworths and also face high risk of losing their investment. Threat of Substitute Products and Services The Woolworths Company has faced tough competition in their supermarket business from Dick Smith. In most of the Australian supermarkets, they offer many substitute products. For this reason, the supermarket is come up with competitive and innovative strategies to build a good brand reputation and also to attract the customers. In the retail industry, viable price strategy is a very important factor. Rivalry Among the Competitors Woolworths also have some strong competitors in the retail industry of Australia. Those competitor companies are Myer, Coles etc. who restrict the amount of market share of the Woolworths within the industry. The competitor companies always force Woolworths to create effective and competitive strategies for their organization which helps them to maintain the differences from their competitors. Figure: Porters five forces model Conclusion Woolworths is one of the trusted brands in the retail industry of Australia and New Zealand. According to Porter's five forces analysis, it can be said that Woolworths has faced high threats regarding the substitute products within the market and tough competition from their competitors. 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