Strategic Management of Woolworths Limited Free-Sample-Myassignment

Question: Identify a Corporation with Product or Service Portfolios that Span Multiple Business Units. Answer: Introduction Every business encompasses some risks like external and internal factors that can affect any organisation severely. To avoid maximum risks, a company should incorporate strategic management in its business that helps it in finding, analysing and determining the best possible opportunities in the market (Davies and Ellison, 2003). It depicts and controls the macro and micro environment of the company consistently that affects an organisation positively as well as negatively. In this report, we are analysing the strategic business management of Woolworths Limited which is one of the largest companies in Australia. The company deals in many segments and expanded its stores in New Zealand and Africa (Woolworths Group, 2016). In this study, we will be discussing various other business units of the company with its product and service portfolios. Along with this, revenue centre of business units and external environment of the company will be detailed. Lastly, for improvising its market condition, suggestions will be given to illustrate its market opportunities profoundly. Exploration of Corporation Corporation is any unit or organisation that works or engaged in some productive activity to achieve a definite goal and objective. It is formed with group of people or entities that helps in assembling the resources for the success of the organisation (Lamb, et al. 2011). Woolworths is one of the top positioned and largest companies of Australia in supermarket and grocery retailer industry. Its headquarter is in New South Wales, Australia established in 1924 and has captured the New Zealand and African market conveniently (Kotler, et al., 2015). Its largest segment is food and retailing department in Australia that generates the highest revenue among its other units. Every business has a unique corporate identity due to different logo, slogan, massage, vision or aim that differentiates its image from its other competitors. Corporate identity is essential to ensure the customers remembrance for a fixed identified product or brand (Janet, et. al., 2015). Along with this, it ensures the goodwill of the company all around the world in front of its competitors. Besides that, Woolworths gives multi-option retailing choices to its customers and committed to provide excellent services in low prices and high quality. It has a single logo for all of its stores in Australia (Woolworths Group, 2016). It operates online and offline services in the Australian market with profound knowledge of local customers requirements. The company has a vision ' to deliver to customers the right shopping experience each and every time'. The company also believes in customisation of the products to reach its targeted audience and possess various its own brands like Select, E ssential, Macro (Woolworths Group, 2016). However, the company covers all age group products, but focuses to gives better options for high income earners and working class families. Product portfolio is the options or diversified product lines of the organisation which are offered of their customers (Baack, et al. 2013). In addition to this, services portfolio is the classification and collection of financial or non-financial services involving product sales delivered to its respective consumer (Knox, 2015). Woolworths has the largest geographical coverage in Australia and offers enormous and different product and services to its customers (Woolworths Group, 2016). It deals in major brands like Woolworths/Safeway Supermarket, Big W, Dan Murphy's, Dick Smith Electronics, BWS, Smith Powerhouse and Tandy (Woolworths Group, 2016). Mainly, Woolworths has 7 department divisions and offers its product/service in Supermarkets, food retailing, petrol, liquor, general merchandise, home improvement and hotel and gambling. Investigation on Business Units Strategic Business Units (SBU's) are the diversified businesses owned by the same organisation delivering various other products and services in the market. SBU's are the entities which are operated separately financially as well as functionally from the group of the company (Baack, et al. 2013). Strategic Business Units have its own share of profits and losses and has own different brand for its products sale. Market condition highly affects the strategic business units of a company but administered by the associated management by adopting the changes and analysing the threats rightly. These Units has their own vision, mission and set of objects. They are independent in nature so that businesses can be carried out with controlled efficiently and flexibly administered too (Knox, 2015). Identification of business unit Woolworths has various business diversifications and deals in various products. In supermarkets and food retailing sector, Woolworths, Countdown, Food for less, Flemings are some popular stores of Woolworths Group (Woolworths Group, 2016). Furthermore, separate business unit for petrol is Caltex Woolworths, in liquor BWS and Dan Murphy's, Big W in general merchandise and Masters in home improvement along with ALH Group in hotels and gambling business. Thus, the company holds the majority market sectors in Australia and deals in pretty much all goods and hospitality services from home furnishing to entertainment business (Woolworths Group, 2016). For now, the present report is focused on the grocery and food retailing sector categorised as Supermarket. Product Line and service Line Product line is the range of products that are categories in same manner such as same price range, aforesaid utility products, identical target audience, related or complementary products (Armstrong, et al., 2014). Product line helps a company to differentiate its product and to ensure the wide range of options for their customers. In case of Woolworths, product ranges from fresh food items, fruits and vegetables to ready-to-make food items with recipes, packaged food from its own brand as well as other local brands (Knox, 2015). Apart from this, the company also offers stationary items, liquor, magazines and daily products/general merchandise in its Supermarket stores. However, in case of service line it is associated with the benefits and information sharing services comprised with or without product. The company offers services like insurance, hospitality and gaming along with home furnishing. In case of supermarket the company has limited product line including loyalty schemes su ch as credit card and rewards for customers and frequent shoppers club (Kenny, 2012). The company also provides online services with home delivery facility. Business Unit Revenue Centre Revenue centres of business are the stores that monitor and analyses all the financial losses and profits of the company. In addition they are the main financial data stores that keep on watch over supply chain management and operational management simultaneously (Armstrong, et al., 2014). In Woolworths, the companies supermarket and retail sector is the core business and all revenues are generated from this business unit. Further, it is responsible for reporting all the cost allocation and recording of other profit earning business units data collection. This centre is the main financial source centre of the company that is responsible for the direct sale of products and services to the customers or third party (Armstrong, et al., 2014). As a financial highlights company has a sale of $58 B all over the year 2016 which 1.2% from the 2005. Australian food and petrol sales are recorded at $39,410m with endeavour drink group at $7,589m (Google Finance, 2017). The earning before interest and taxes are $1,760m which is 40.8% less from 2015. Thus, the result shows the continuous declining in the sales and profits of the company in Australian markets (Woolworths Group, 2016). External Environment Analysis (PESTEL Analysis) Macro environment analysis is very significant for any business as it outlines the external factors that highly influence the growth of the company. These factors can not be controlled by the company but adoption and alteration according to the competition can ensure a business growth (Lancaster and Massingham, 2010). These factors also help the company in diversify their products with their competitors while following the rules and being unique with the concept. Macro environment embraces six basic factors called as PESTEL acronym includes Political, Economical, Social, Cultural, Environmental and Legal. This analysis represents challenges related the Australian retailing and grocery markets as follows: First, Political and Legal factors- As the Australian government has a direct influence in the retailing and supermarket industry, it monitors and controls the legislation and administration of supermarket industry (Valenzuela, 2013). Laws associated with Australian competition and consumer commission (ACCC), legislating trading hours, commonwealth government, the foreign investment review board (FIRB) and the trade practice act (TPA) are some legislations that affects the supermarkets and make it risky for the new entries. Sometimes government interference and disturbance discourages the existing and new market players of this industry. Woolworths is a popular brand in Australia, functions fairly stable in the Australian market. However, losses of the business and risk are not significant (Knox, 2015). Second, technology- the company incorporates highly information technology in operating and administration its functions. It adopts new technologies with the help of global electronic marketing and merchandising network (Hutt and Speh, 2012.). Its supply chain and distribution system is also based on IT which enables company for cost cutting. Moreover, according to competition and cut- throat rivalry online facility of Woolworth is its USP; it ensures its customers flexibility and home delivery advantages. Third, economic factors such as at the time of depression and inflation it impacts the supermarket industry. Additionally, higher unemployment also influences the supermarket profitability (Foxall, 2014). Global financial crisis and other major financial influences are less shown in the Australian market. In fact Australian retail industry market is the only market which is more stable and continues with the same pace even at the lime of global recession. Thus, Woolworths is not influenced by the global segment of the economic crisis but domestic market can influence it slightly (Kenny, 2012). Forth, Social and cultural factors- in dense competitive and highly replaceable market condition, the company has adopted the trend with significant profitability. People are shifting towards healthy and fresh food plus, people are choosing more focused healthy lifestyle. The company has adopted same policies in its supermarket offering wide range of fresh and healthy products to its customers (Knox, 2015). Moreover, customers are seeking for good marketing schemes and affordability of the products, which is also being initiated by the company as loyalty scheme and various price ranges for single product according to quality respectively. Fifth, environmental factor- the company is already emphasised to use Eco-friendly products as well as involved in activities to reduce the environmental harm. It also prioritises the slumping in the wastage of natural resources such as water and coal. Further, it aims in dwindling the carbon footprints of the company. Woolworths recycles and reuse its resources to minimise the waste and creates recyclable products for its customers (Knox, 2015). The company incorporates the corporate social responsibility for the better future of next generation. Substantial Competitive Advantage and its Factors Substantial competitive advantage is referred to the unique or diversified product, approach, process or design that can not be repeated by the competitors (Richter, 2012). It helps in the survival of the company in the competitive market and from safeguards its existence from rivals. In addition, the competitive advantage is an essential part to entice customers and offer them its product in its own price to gain maximum profit (Richter, 2012). The factors that influence the substantial competitive advantage of a company are innovation in a product, information technology, managerial capacity and relation of company with its suppliers. The product innovation is very essential to grab the attention of the customer plus it reduces the competition between the products of other companies. Information technology ease and fasts the services of any company, it also provides uniqueness in the approach of the company (Proctor, 2014). Managerial capacity is the most vital element that influences the internal management for the company and appropriate response to the customers. Thus, an effective and strategic management in managerial level is very necessary to create a successful supply chain and operational flexibility. Lastly, suppliers are the core source of any products and hence, relationship with them matters for a companys longevity. Supplier with good profits and benefits supplies the good quality of material and supports the organisation even in the worst market conditions (Paley, 1999). Woolworth has a competitive advantage over its competitors in low price ranges offend by the company. The company aims to establish long term relationship with customers and provides high quality of fresh and healthy products in a single roof. To make the experience unique and different it uses many facilities such as loyalty points and credit card system. Woolworths has a very renowned name in the supermarket sectors of Australia which is itself creates competitive advantage for the company (Woolworths Group, 2016). Strategic Direction and Recommendations Strategic direction is matching and following the portfolio of the company by the strategic goals of the company (Bowersox, 2004). The company customises and modifies its functioning to match the portfolio with its strategic goals and objectives. It ensures the organisation that they are operating and function in the market as per their standards and they are persistently achieving their set aim in a reasonable time effectively (Paley, 2006). As a suggestion for future, the company should restructure its price strategy. Woolworths prices as per the standard are higher in Australia than other supermarkets. The main reason is the target market of the company that is higher earning income people and working class people only. They are maintaining the high price margin in the market that kept the price of the products expensive (Harrison and St. John, 2009). In the case of qualitative goods, they are also offering the same and homogeneous goods as other supermarkets are offering. As a long term survival, the company is failing in front of other global competitors due to higher prices and same goods (Kroenke, et al., 2013). Thus, the company is recommended to change its price strategy for longevity of the company. The prices should also be based on the competitors prices to attract wide range of customers. It has very good goodwill and sterling market share but it would not be stable for the long term. Apart from this, company should also search and approach for other major markets. It will help them to be in competition with global markets (Fresh perspectives, 2006). More ventures, acquisition, mergers and franchising are required to expand the core business of the company in new geographical reason. Moreover, the company should also keep a watch on cultural change and its adoption according to the situation. Conclusion In the end the above discussion shows the strategic aspects of Woolworths. The company is using low price strategy and aimed to provide products services for higher income earned section. The company offers wide range of products and deals in various strategic business units. The company is using Eco-friendly products and practice some activities to save natural resources of earth. Due to continuous external pressure and intense competition the company is advised to revise its price and expansion strategies. References Armstrong, G. et al. 2014. Principles of Marketing. Pearson Australia. Baack, D. W., et al. 2013. International Marketing. SAGE. Bowersox, 2004. Strategic Marketing Channel Management. Tata McGraw-Hill Education. Davies, B., and Ellison, L. 2003. The New Strategic Direction and Development of the School: Key Frameworks for School Improvement Planning. 2nd ed. Routledge. Foxall, G. 2014. Strategic Marketing Management (RLE Marketing). Routledge. Fresh perspectives. 2006. Fresh Perspectives: Marketing. Pearson South Africa. Google Finance.2017.Woolworths Limited.[Online].Available at:https://www.google.com/finance?cid=670430 [Accessed on: 11 April 2017]. Harrison, J. S., and St. John, C. H. 2009. Foundations in Strategic Management. 5th ed. Cengage Learning. Hutt, M. D., and Speh, T. W. 2012. Business Marketing Management: B2B. Cengage Learning. Janet, M. et. al. 2015. Factors Influencing Competitive Advantage among Supermarkets in Kenya: A Case of Nakumatt Holdings Limited. International Journal of Novel Research in Humanity and Social Sciences. 2(3) pp. 63-77. Kenny, G. 2012. Strategic Planning and Performance Management. Routledge. Knox, M. 2015. Supermarket Monsters: The Price of Coles and Woolworths' Dominance. Black Inc. Kotler, P. et al. 2015.Marketing. 9th ed. Pearson Higher Education AU. Kroenke, D., et al. 2013. Experiencing MIS. Pearson Higher Education AU. Lamb, C. W., et al. 2011. Essentials of Marketing. 7th ed. Cengage Learning. Lancaster, G., and Massingham, L. 2010. Essentials of Marketing Management. Routledge. Paley, N. 1999. How to Develop a Strategic Marketing Plan: A Step-By-Step Guide. CRC Press. Paley, N. 2006. The Manager's Guide to Competitive Marketing Strategies. Thorogood Publishing. Proctor, T. 2014. Strategic Marketing: An Introduction . Routledge. Richter, T. 2012. International Marketing Mix Management: Theoretical Framework, Contingency Factors and Empirical Findings from World-Markets. Logos Verlag Berlin GmbH. Valenzuela, F. 2013. Marketing: A Snapshot. Pearson Higher Education AU. Woolworths Group. 2016. Annual Report 2016.[Online].Available at:https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf [Accessed on: 11 April 2017]. Woolworths Group. 2016. Our Brand.[Online].Available at: https://www.woolworthsgroup.com.au/page/about-us/our-brands/ [Accessed on: 11 April 2017].