Business Context Of Woolworths Limited Essay

Question:

Discuss about the Business Context of Woolworths Limited.

Answer:

Introduction

Woolworths is an Australian based Supermarket that is possessed by Woolworths Limited. The Company forms a duopoly market in Australia along with its principal competitor Coles. The business of the Company accounts for more than 80 percent of the market share in Australia. The report provides an overview of the business context as well as a background of Woolworths (Cameron et al., 2015). The report also highlights the products and services that Woolworths makes available to its customers. It also provides an overview of the evaluation of the strategy and prospects of the organization.

Business context and background

The store of Woolworths was first opened in the year 1924 in Sydney as a bargain vault opening. The founders of the company include Stanley Chatterton, George Creed, Percy Christmas as well as Ernest Williams. Percy Christmas established general goods operation in New Zealand in the year 1929. The company belongs to the retail industry and comprises of more than 140,000 retail trades. The retail industry is considered as the largest employer in Australia. The Company is located in the Brisbane city of Australia in Queensland. The business of the company employs more than 1.2 million individuals. It has more than 3,300 stores across New Zealand and Australia and approximately 850 supermarkets in Australia alone. Methner, Hamann & Nilsson (2015), stated that the market conditions of Woolworths face market analysis. The market condition of the Company illustrated a difference to its performance in the last year as well as evidence of traditional change inside the retail business that has misplaced its way over the last eight years. An abridged customer-first system has been established by the company that helps to compute the performance of the waiting teams. The company mostly maintained an apparent focus on meeting requirements of the customers by delivering negligible prices as well as enhanced shopping experiences. However, the business of the company is mostly threatened by its principal competitors that include Coles and Aldi (Mortimer, 2015).

Comprehensive description of the business

Woolworths feel proud of itself to work directly with the farmers as well as growers of Australia to make sure that best commodities are provided to the customers. It sources approximately 96 percent of all fresh vegetables and fruits along with 100 percent fresh meat from farmers as well as growers of Australia. This, in turn, makes Woolworths the Fresh Food People of Australia. The Food Group of Woolworths has initiated a new division known as Woolworths FoodCo. It is mostly responsible for enhancing new goods category, increasing the supply of fresh meat as well as processing facilities (Poelman, Delahunty & de Graaf, 2017). It is also accountable for developing strategic sourcing relationships with major industry partners of Woolworths. To deliver first enthusiastic capacity for ultra-fresh ready-to-cook and ready-to-eat meals in Australia, Woolworths has collaborated with high-quality food producer, Beak, and Johnson.

According to Hartmann et al., (2016), four interlocking components requires being considered to form a business model. The business model of Woolworths has been analyzed by making the use of these elements. The Company mostly possesses a feasible business model that leads to profitable business.

  1. Customer Value Proposition: The CVP illustrates how a company generates value for a particular set of clients. Woolworths meet requirements of the customers by putting low prices on the products. It also enhances shopping experience among the customers across all items. It also makes sure that the business provides consistent, high-quality products to the customers (Morioka, Evans & de Carvalho, 2016).
  2. Profit Formula: The benefit formula of Woolworths includes negligible prices along with small margin. It also makes sure high velocity of resources as well as high volume. It makes sure cost savings through competent supply chain management.
  3. Primary Resources: The major resources of Woolworths include responsible management and human resources. It also includes a broad variety of commodities and commodity innovation skills. It also includes collaboration as well as coalition management. The business model includes a robust relationship with vertically incorporated companies (Gupte & Doyle, 2014).
  4. Primary Process: The major process includes an insistent advertisement as well as promotional actions. The method also includes the adoption of best practices in functioning.

Strategy and prospects

The strategy and prospects of Woolworths have been evaluated by making the use of both SWOT and PEST analysis.

The SWOT inspection illustrates the strengths, weaknesses, opportunities, and threats of Woolworths.

SWOT Analysis:

Strengths: The major advantage of Woolworths is that is the market leader in the retail industry of Australia. The leadership position of the Company helps to exploit market probability through its powerful resources mostly technological resources as well as human resources.

Weaknesses: The major weakness lies in the impact of the growth strategy that affects the capability to dominate the retail market in Australia. The government of Australia has restricted the move by Woolworths to augment prices. This, in turn, restricts the elevated development levels of the Company (Manzaneque Corona, 2014).

Opportunities: The factor such as computerization as well as development in supply chains and lifestyle of the customers acts as the significant opportunity for the Company in Australia. The Company looks positively towards these possibilities to embrace the multi-choice retailing.

Threats: The business of the Company faces major threats from its competitors. The intervention by the government also acts as the primary threat for Woolworths that hampers the development of Woolworths within the retail sector of Australia (Worsley, Wang & Ridley, 2014).

Another important analytical tool that helps to evaluate strategy and prospects of Woolworths is the PEST Analysis.

Political: The Australian retail industry has been most affected due to political circumstances. In other words, a competition policy has been presently launched by the Federal Government of Australia. This, in turn, restricts the key independent Supermarkets such as Woolworths and Coles to eradicate competition.

Economic: The economic market circumstances in Australia have declined that in turn negatively affected the performance of Woolworths. Besides this, fluctuations in the currency rates of exchange and declining of the Australian dollar have unfavourably distressed the global retail operations of Woolworths (Kew & Stredwick, 2017).

Social: The retail market has also been affected due to social factors. The organizations that operate across Australia requires accomplishing higher societal as well as community development due to current societal trends.

Technological: The role of the technical factor that affects the retail industry and particularly Woolworths is noteworthy as this can be recognized from the reality that Woolworths has reflected on the application of green refrigeration technology.

Conclusion

It can be concluded that the most imperative aspect of the business model for Woolworths is customer value proposition. As a result, to draw more customers, the Company delivers products at low prices. Woolworths has also launched price-based marketing crusade for a new customer value proposition. It can be finalized that the development of Woolworths is mostly supported by the powerful commitment towards the customers as well as the workers. It has been concluded that the market condition of the Company illustrated a difference to its performance in the last year as well as evidence of traditional change inside the retail business that has misplaced its way over the last eight years.

References

Cameron, A. J., Sayers, S. J., Sacks, G., & Thornton, L. E. (2015). Do the foods advertised in Australian supermarket catalogues reflect national dietary guidelines?. Health promotion international, 32(1), 113-121.

Gupte, J., & Doyle, J. (2014). Woolworths becomes a'health destination'. AJP: The Australian Journal of Pharmacy, 95(1125), 4.

Hartmann, P. M., Hartmann, P. M., Zaki, M., Zaki, M., Feldmann, N., Feldmann, N., ... & Neely, A. (2016). Capturing value from big data–a taxonomy of data-driven business models used by start-up firms. International Journal of Operations & Production Management, 36(10), 1382-1406.

Kew, J., & Stredwick, J. (2017). Business environment: managing in a strategic context. Kogan Page Publishers.

Manzaneque Corona, E. (2014). Comparison of marketing policies applied by the same company in different countries and analysis of the reasons for the differences.

Methner, N., Hamann, R., & Nilsson, W. (2015). The Evolution of a Sustainability Leader: The Development of Strategic and Boundary Spanning Organizational Innovation Capabilities in Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104). Springer International Publishing.

Morioka, S. N., Evans, S., & de Carvalho, M. M. (2016). Sustainable business model innovation: exploring evidences in sustainability reporting. Procedia CIRP, 40, 659-667.

Mortimer, G. (2015). Move over Aldi, Lidl may be next for Australian market. The Conversation, (15).

Poelman, A. A., Delahunty, C. M., & de Graaf, C. (2017). Vegetables and other core food groups: A comparison of key flavour and texture properties. Food Quality and Preference, 56, 1-7.

Worsley, A., Wang, W., & Ridley, S. (2014). Australian consumers' perceptions of environmental and agricultural threats: the associations of demographic and of psychographic variables. American journal of environmental protection, 3(1), 10-18.

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