Woolworths Limited - Retail Leader in Australia
Woolworths Limited - Retail Leader in Australia
Woolworths Limited - Retail Leader in Australia
A Case Study
Source: ALAM, Q. & MAJUMDAR, N. A. 2011. Woolworths Limited: Retail leader in Australia. Cases in Business and Management. 2nd ed.: Tilde University Press, Victoria, Australia.
Spokespersons
Kamrul Hassan
Australias Retail Industry Woolworths History Overview of Woolworths External Environment Analysis
Bahauddin Arafat
Internal Environment Analysis
Q&A
Cont.
Key players : Woolworths Ltd., Coles Group Ltd. and others, e.g. ALDI, SPAR Australia and Macro Wholefoods etc.
All other retailers selling 24% Mass Merchants Frankins 2% 1% Aldi 3% Metcash/IGA 17%
Market Share
Woolworths 31%
Coles/Bi-lo 23%
Woolworths History
1924 - First store opened
1930-40s Rapid growth 1970s Largest retailer for Fresh fruit and Vegetables 1980s Market leaders 1990s Entered Petrol
Overview of Woolworths
Today over 3,000 stores
Employs over 180,000 people Serve over 13 million customers per day 31% market Share
Woolworths Brands
New Vision
Ambition
Socio-cultural Segment:
Fast-paced society
concern about health and obesity demand for low-fat foods, easy to cook food, organic and GM-free
food.
Increased participation of women in workforces
moderate to high.
Threat of New Entrants: the barriers to entry in supermarket industry are moderate. Rivalry among competitors: The rivalry between competitors in the supermarket industry is intense.
Intangible Resources:
Brand image and reputation efficient management and human resources innovation skills market recognition for quality and fresh food
Capabilities:
Capabilities refer to an organizations skills in coordinating its resources putting them to productive use. Industry leading supply chain Deliver Fresh Food
Core Competencies:
World-class supply chain
Core Competencies:
Branding & Market Position
Value Chain
Outbound logistics
Marketing & sales Customer Service
SWOT Analysis
Strengths
Strong Financial position Wide range of product Better supply chain management Brand image & Reputation Market leader with market share 31%
Weakness
Operating cost is more because too large Debt increase Higher overall cost Reduced Petrol margin
Opportunities
The potential to increased the customer base The potential to increase market share Growth opportunity in the health food sector Population increase & diversity The opportunity to use ICT to cut costs and pursue new sales opportunity
Threats
Slow growth and uncertainty in the Australian economy in recent time Recession and growing unemployment Increase in alcohol-related diseases and pressure from Government to reduce the business The growing dominate power of suppliers Technological advantage
Direct government interference in trading hours and close monitoring of the business activities buyers have extremely high bargaining power bargaining power of suppliers is high to moderate
What is a business model? Critically examine the principal features of Woolworths business model.
Business Model?
Business models describe, as a system, how the pieces of a business fit together, Magretta (2002).
MAGRETTA, J. 2002. Why Business Models Matter. Harvard Business Review, 80.
Business Model?
A companys business model explains the rationale for why its business approach and strategy will be a moneymaker. Absent the ability to deliver good profitability, the strategy is not viable and the survival of the business is in doubt, Thompson et al. (2010)
THOMPSON, A. A., STRICKLAND, A. J. & GAMBLE, J. 2010. Crafting and executing strategy : the quest for competitive advantage : concepts and cases, Boston, McGraw-Hill/Irwin.
Critical Examination of the Principal Features of Woolworths Business Model using the four-box business model framework of Johnson et. al. (2008)
Profit Formula:
Low prices, multi-option shopping Cost savings through efficient supply chain management & economies of scale diversification to increase profit High volume & low margin High resource velocity
Key Resources
World-class supply chain Efficient HR Wide range of products and product innovation skills brand image & reputation for quality and fresh food Online shopping platform Market experience Partnership and alliance management Strong relationship with vertically-integrated businesses
Key Process:
Industry leading supply chain Aggressive advertisement and promotional activities Continuous improvement in reducing price Innovation in Fresh Food Direct sourcing from Aussie Farmers Outside directors on Board to maximize shareholder value One-stop-shop concept: combination of petrol retailing with grocery retailing Product development & related diversification High standard of customer service
good business model begins with A profitable business is the best an insight into human motivations early indication of a viable and ends in a rich stream of business model, Johnson et al. profits MAGRETTA (2002). (2008).
Which important competencies did Woolworths use to add value to its strategic management practices to ensure its sustained growth?
Differentiation
Branding
Innovation
Integration
Conclusion
Achieved resilience and sustainability in
business model.
has identified its strengths, added value to
Conclusion
leveraged its capabilities to enhance the
flexibility of operations
Recommendations
Short-term:
Should offer organic and GM-free foods Should participate in CSR activities Should adopt a social media strategy
Recommendations
Long Term:
should increase R&D finance for researching alcohol-related diseases should diversify in new businesses
Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers.
Michael E. Porter
PORTER, M. E. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 86.
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