The Practical Will-to-good in Everything We Do - Case Study Example

Marketing Principles Student’s Name Institution Date Executive Summary The retail industry in Australia has experienced positive growth since last year due to the result of the wealth effect. The stable housing market supported by household credit development and low-interest rates has encouraged several consumers to spend consistently with their perceived values by the increase of their asset. Local retailers such as Woolworth have diversified into online markets and have mostly benefited from the decline of the Australian dollar against the U.S dollar as prices in foreign online stores have shown an immediate increase. Woolworths is a highly dominant organization in the retail industry of Australia and has a huge market power in this economy. Their business operations are done mainly with a self-interest purpose. Regulation policies such as patent laws have enabled (Hubbard, Garnett, Lewis, & O'Brien, 2014). Woolworth’s investors within this market to secure exclusivity rights for the production of goods for a particular period. Barriers such as licensing restriction discourage have discouraged other similar companies from conducting business operations within a particular geographic area already controlled by Woolworths. Woolworths has consistently battled for leadership across various retail brands in Australia. This paper will critically assess the marketing strategies of Woolworths by their principles and also their current strategic practices. The nature of the industry of Woolworth and also other important information based on the environmental and situation analysis of the organization will also be addressed. Further, it will also consist of significant information concerning the competitive landscape of Woolworths and the entire retail industry in Australia and also formulate important recommendations and conclusions that will assist the organization effectively. Table of Contents Executive Summary………………………………………………………….………….………...2 Table of Contents…………………………………………………………….………….…….….3 Introduction………………………………………………………………………...…….……….4 Industry Overview………………………………………………….........................…….……….4 Organization’s background……………………………………………………………….………5 Environmental Analysis…………………………………………………………………….……..6 Situational Analysis……………………………………………………………...………….…….7 Competitive Environment Analysis……………………………………………………………….9 Portfolio Matrix Analysis…………………….…………………..……………………………….9 Recommendations………………………………………………………………………….…....11 Conclusion……………………………………………………………………………………….11 Appendices….……………………………………………...………………………………….…12 References…………………………………………………………………………………….….13 Table of figures Figure 1.1 SWOT Analysis………………………….……………………………………………7 Figure 1.2 BGC Matrix………………………………………………………………………….10 Introduction Woolworths began its business through the establishment of their first store in Sydney in 1924.This store was mainly a bargain basement outlet. In 2012, the organization had become the largest supermarket chain in Australia and also New Zealand with over twenty-eight million consumers a week accounted for thirty-one percent of their market share. Woolworths mainly operates several brands that are primarily Woolworths/Safety supermarkets, Big W, Dan Murphy’s, BWS and also Dick Smith Electronics. Woolworths Australia is one of the largest supermarket chains in Australia. Woolworths has mainly focused on the provision of quality services and products to their consumers through the process of utilizing various product promotions, pricing strategies and also human resource management strategies (Plunkett-Powell, 2014). Woolworths is one of the largest retailers in both Australia and New Zealand concerning revenues, sales, and the number of supermarkets, geographic coverage and also stores. It has eight hundred and forty supermarkets across the Australian region, one hundred and fifty-six supermarkets in New Zealand and also over twenty retail stores in India. These retail stresses are a joint venture agreement with the large Indian supermarket chain Tata. Woolworths ahs listed a significant financial performance with a three prevent average growth rate in EBIT since 2006 until the present day. Industry Overview Woolworth currently offers an excellent quality of fresh products to their consumers who increase the value to their customers on a consistent basis. Woolworths is one of the major retailers that have dominance in the grocery industry of Australia. Their dominance has enhanced their ability to comprehend the vital importance of the need of resources (Smith, & Taylor, 2004). The Headquarters of Woolworths is in New South Wales, Australia and has operated as a retailer through intermediaries such as supermarkets, popular merchandise stores, petrol stations, and also a series of hotels and liquor stores. The retail products mainly comprise of grocery cries, beverages, electronic products and also petroleum. The enterprise mainly focuses on New Zealand and Australian markets, however; it has also established other subsidiaries in China, Africa, Hong Kong and also India. Woolworth has made significant economic contributions to over one hundred and eighty thousand team members across the regional and metropolitan \areas of Australia. It has consistently contributed to the economy with annual estimates of more than over ninety-six billion dollars and over six hundred and fifty full-time jobs in Australia. In the retailing industry in the country, Woolworths and also Coles have dominated this segment. These companies have experienced substantial growth over the last four decades. Their combined market share has doubled to a combined market share of over 70 percent of the whole country’s supermarket sector. The profit margins of Coles and Woolworths have also increased to over 40 and 24 percent respectively. An increase in growth remains a significant possibility for these two conglomerates. Due to their significant market power, they can determine the prices, entry barriers and establishment of expectation within the grocery sector. This factor puts pressure on the rest of other areas involved in the food chain in Australia. Farmers have become more vulnerable due to these restrictions and policies imposed by these two conglomerates. Organization’s background Woolworths was founded in 1924 with the first store opening occurring in the Imperial Arcade based in Sydney. Their opening advertisement asserted that every city needed Woolworths, and therefore the population needed a convenient place where good things were highly affordable. This enterprise was founded by Stanley Edward Chatterton, Ernest Robert Williams, Cecil Scott Waine and Percival Creed. Woolworths is an Australian organization with a highly extensive interest in the retail industry throughout Australia, and New Zealand Woolworths is highly known for their brands such Dick Smiths Electronics and also Dan Murphy's. The strong market capitalization of Woolworths and sales are the essential elements of the growth of this company. The main competitor of Woolworths is Coles. Since the Australian supermarket is in the development stage in the product lifecycle. Woolworth must assess their new strategy to maintain their marketing and leadership position (Howes, 2015). Woolworths has maintained their leading position in Australia for over eighty years and has a highly important brand recognition that means they have a strong market force. However, the debt of Woolworths has also increased rapidly that it has become a huge concern for the investors. Also, the highly logistic expenses have made Woolworths suffered from several instances of pressure. Since the demand for the daily utilizing products is predicted to have developed continuously since 2009, Woolworths can make considerations on their expansion efforts on their product manufacturing line and their several exports to China. Environmental Analysis Most of the customers of Woolworths are individual clients that have a strong bargaining power. These customers enable the company to decrease their prices. The organization has, therefore, developed frameworks of delivering low priced products for their clients. Woolworths has discovered that their critical competencies lie in the employment and use of experienced employees, more values for their customers and also more in-store services. Woolworths has more efficient workers compared to their chief competitor, Coles. They have resisted using young employees compared to Coles and have mainly hired middle aged experienced individuals and have focused on developing and training their workers (Gans, King, & Mankiw, 2011). In 2011, they invested sixty Million dollars in learning and development strategies throughout the company. Woolworths has also had a point of view that success in the retail sector is driven by focus. They have sourced their best talents from foreign nations as quality and innovative services to their customers are critical to their success. Also, the political conditions in Australia have significantly influenced the ability of Woolworths to perform at a higher standard compared to their competitors. The federal government has launched competition policies that have prevented large independent players such as Coles and Woolworths in eliminating competition. Their increasing market dominance has made small retailers struggle for market share in the industry. Situational Analysis The situational analysis will be based on a SWOT evaluation of the organization Strengths This is the leading organization in the retail industry of Australia. The leadership position has increased their ability to exploit the potential opportunities of the market through their resources. Weakness The external environment has affected the abilities in the Australian market compared to the New Zealand market. The Australian government has limited the strategies of Woolworths by restricting the higher prices for products. This policy has negatively affected the company (Kobel, Këllezi,& Kilpatrick, 2015) Opportunities The retail industry in Australia has depicted a stable development in potential and the factors such as technology advancement has increased the efficiency of the supply chain. Also, the changes in lifestyles of the consumers have impacted the abilities of retailers and provided a means of growth (Chew, 2012). Threats Threats include fierce high levels of completion in the industry. The intervention from the government is a huge factor that has affected the growth of Woolworth in the Australian Retail Industry. Competitive Environment Analysis Spulber, (2007) stated that the presence of highly intense competitors in the Australia retail industry such as Coles and Myer has limited the market share of Woolworths. This situation has contributed to the high level of concentration. The intensity of competition has currently forced Woolworths to create effectively consistently and competitive framework for the sole purpose of differentiating themselves from their competitors. The brands of Woolworths such as Dick Smith have faced high competition. This competition is due to the substitute products being offered to several major supermarkets and therefore, the organization has made the effort of developing innovative and competitive strategies to attract and maintain the grasp of their customers (Bartholomeusz, 2016). Portfolio Matrix Analysis The portfolio matrix analysis will be conducted through BCG matrix that mainly aims to identify the positive growth opportunities through classifying the products of the company to the growth rate and market share they possess. Through the process of optimizing cash flows in products beaming with potential, an enterprise can capitalize on the growth of opportunities emerged from the market share. In the retail sector, competition among companies is enormous. The established companies with high-quality services and product tend to attract several customers. Each enterprise studies the particular strategies that would promote their brand and as a result, earn their respective companies a higher net income (Fawzy, 2013). The BCG matrix is divided into four groups. These groups are the dogs, stars, cash cows, and question marks. The Dogs represent the operating losses encountered and becomes highly unlikely to add profitability to the business. The question marks entail potentially useful activities but do not openly reveal the risks. Various activities have lucrative opportunities that require maximum capital investments. The cash cows represent stable and profitable activities. Woolworths has used the BCG matrix theory to construct different operating models. They utilized profits gained from the cash cows group to include in the panel of stars and the group of question marks to increase the productivity of the company (Kotler, Burton, Deans, & Brown, 2015). BCG Matrix Question marks The company has low market shares and high market growth Her competitors do not know what to do with opportunities decide whether to increase or decrease their investment in the industry Stars Depicts High market share and high market growth The organization is doing well with the current opportunities Dogs Low market share and low market growth The company is highly weak in market, difficult to make profit but this is mainly for the small retail organizations Cash cows High market share and low market growth Woolworths is currently doing well in no growth market with limited opportunities Conclusion It is clear that the corporation has undertaken important strategies that have indicated that Woolworths is entirely focused towards the process of attaining a high level of growth in their operation. This aspect of development is supported by their solid commitment towards improvements of their customer services and also their employees. Woolworths has been faced with high levels of competition in the industry. This instance has been brought by the great threats of substitute products and services in the retail industry. Knox, (2015) stated that the influences of Woolworth on the local economy are highly significant. Their strategies have created employment in several areas of Australia. The population has spent more on their services and has translated to benefiting the economy. These impacts have created the funds need by the organization in the enhancement of their reputation, innovation and also the development of the retail industry (Evans, 2013). Recommendations It is highly recommended that Woolworths must aim at framing their strategy in a consistent manner with that of the political conditions of the country. The organization must aim at adapting the framework of fair price policies to their customers. The firm should also aim at performing regular innovations, and this factor must be integrated as a significant part of their strategy. Also, Woolworths must look towards enhancing their support from experienced and skilled workers through the process of additional development and training for their consumers (Robbins, Bergman, Stagg, & Coulter, 2014). Woolworths must also consider other cost leadership approaches that will enable them to cut down their operating costs. The strategy can be applied in managing products within a supply chain for the sole purpose of decreasing the costs of storage and wastage by developing and delivering commodities to retailers at the required time. Appendices The enormous control on the market by Coles and Woolworths has become a hindrance to small independent retailers and farmers who don’t have the necessary capital and economies of scale to existing together with these conglomerates. Customers will only benefit from this market situation temporarily due to lack of long-term food security. To ensure better business relations are enhanced, transparency and effective collaboration between the suppliers and retailers must drastically improve. This will provide the competitive food system will not be vulnerable at the expense of these strategies Further reading Joseph,C. What Are the Benefits of Competition Economics? Viewed on 25, May 2016.Available (Online) at: http://www.ehow.com/list_6853690_benefits-competition-economics_.html Producers without partnerships with supermarkets highly depend on support from consumers within their region. In terms of food affordability, Australia is globally ranked among the top five countries. This has enabled many Australians to increase their expenditure in the significant support of s diverse food system within the nation. The consumers could directly purchase the products from independent suppliers, and this would become an incentive for Australian farmers to challenge the dominance of the market by Coles and Woolworths effectively Further reading Zhou, KZ & Li, CB 2012, ‘How strategic orientation influences the building of dynamic capability in emerging economies’, Journal of Business Research, vol. 63, no. 3, pp. 224-231. References Bartholomeusz, S. (2016). Myer maintains momentum on its new strategy.Retrieved on May 25, 2016.(online) at:http://www.theaustralian.com.au/business/opinion/stephen-bartholomeusz/myer-maintains-momentum-on-its-new-strategy/news-story/bb41464177306e898af510baeb8e915b Chew, E. (2012). Knowledge Driven Service Innovation and Management: IT Strategies for Business Alignment and Value Creation: IT Strategies for Business Alignment and Value Creation. IGI Global Evans, V. (2013). Key Strategy Tools ePub eBook. Pearson UK. Fardon, R. (2015). Leadership and Management: The Practical Will-to-good in Everything We Do. Xlibris Corporation Fawzy, S. (2013). Learning Models for Innovation in Organizations: Examining Roles of Knowledge Transfer and Human Resources Management: Examining Roles of Knowledge Transfer and Human Resources Management. IGI Global Gans, J. King, S. & Mankiw, N. G. ( 2011). Principles of Microeconomics. Cengage Learning Howes, C. J. (2015). Organizational Performance: Key to Success in the 21St Century. Xlibris Corporation Hubbard, G. Garnett, A. M. Lewis, P. & O'Brien, A. P. (2014). Macroeconomics. Pearson AU. Knox, M. (2015). Supermarket Monsters: Prices of Coles and Woolworths' Dominance. Black Inc Kobel, P. Këllezi, P. & Kilpatrick, B. (2015). Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social Responsibility. Springer. Kotler, P. Burton, S. Deans, K.R. & Brown, L.(2015). Macroeconomics. Pearson Higher Education AU Plunkett-Powell, K. (2014). Remembering Woolworth's: A Nostalgic The History of the World's Most Famous Five-and-Dime. St. Martin's Press Robbins, S. R. Bergman, R. Stagg, I. & Coulter, M.(2014). Management. Pearson Australia Spulber, D. F. (2007). Global Competitive Strategy. Cambridge University Press Smith, P. R. & Taylor, J. (2004). Marketing Communications: An Integrated Approach. Kogan Page Series. Kogan Page Publishers Read More