Organizational Strategy and Leadership - Woolworths - Case Study Example

Organizational Strategy and Leadership Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Table of Contents Table of Contents 1 Executive summary 2 1.0 Introduction 3 1.1 Background Information 3 1.2 Outline 4 2.0 Analysis 5 2.1 Generic Business Strategy 5 2.1.1 Generic Business Strategy Used by Woolworths 7 2.2 Organizational Culture 8 2.2.1 Woolworths’ Organizational Culture 9 2.3 Formal organizational structures 10 2.3.1 Woolworth’s Formal organizational structure 11 3.0 Recommendations 12 4.0 Conclusion 13 References 14 Executive summary The modern business world is coupled with many market forces. This is due to the changes experienced in the trading patterns in the world. Some of them include globalization and internationalization which has increased the level of competitiveness in the market. One of the major challenges in today’s business organizations is to remain competitive. This has given rise to the need of integrating emerging business strategies such as adopting appropriate generic business strategies, establishing a good organizational structure and cultivating a good organizational culture in an organization. One of the companies which has been able to adopt these strategies is Woolworths’ Australia, the largest retail store in Australia. The report will take an analysis of the three trends with respect to their use in Woolworths. Giving an overview of the trends, a generic business strategy is a business operations mechanism which an organization adopts in order to ensure that it is able to remain competitive in the market. An organization uses such a strategy to position itself in the market. An organizational structure gives the outline of the leadership in an organization. It illustrates the command structure in an organization. Lastly, an organizational culture is a set of organizational behaviors which are implicated in the organization’s employees and products. Taking an analysis of Woolworths, it is clear that he three trends are very important in the success of an organization. This will be illustrated in this report. 1.0 Introduction Organizational culture, organizational culture and generic business strategies are common terms in the modern business world. An organizational culture is a behavioral pattern associated with an organization (Krynke, 2010, p.1). An organization structure is an illustration of an organizations leadership lineage while generic business strategies are business strategies which organizations. In the modern business world, it is inevitable to come across the above business strategies. Precisely, it is inevitable for a business organization to remain competitive in the market without assimilating them into their practices. The following Research paper will take a deep insight into the three practices, taking a reference to the business practices of Woolworths Australia. 1.1 Background Information The ways of doing business in the modern world are nowhere comparable to the one which were used in the yester years. The market is liberalized, the market is global, the market is bigger and organizations are going international. For this reason, it is of utmost importance that business organizations have the ability to stay at pace of the changes. It is no longer enough just to provide a customer with a product which he/she wants, organizations need to go a step further of ensuring that they provide utility to the customer in addition to giving him/her value for money. In order to survive in the competitive market, organizations have had to integrate the use of various business theories in their practices. Some of them include cultivation of a good organizational culture, restructuring their organizational structures and adopting generic business strategies. Generic business strategies are operational mechanisms which businesses use in order to assert their presence in the market. They are aimed at ensuring that businesses are competitive in the market. An organizational structure illustrates the leadership and management in an organization. It shows the flow of commands from the top leadership to the junior staff. On the other hand, an organization culture describes the general conduct of the employees in an organization (Krynke, 2010, p.1). It involves the values which the organization upholds. All the three elements are important in the success of an organization as it will be seen later in the paper. The research paper will analyze generic business strategies, organizational culture and structure with reference to the business practices of Woolworths’, the largest retail store chain in Australia. 1.2 Outline The first chapter of this research paper gives and introduction to the research topic. The second chapter analysis the three business practices namely organizational culture, organizational structure and generic business strategies with reference to Woolworths Australia. The third chapter gives recommendations on the use of the above business practices at Woolworths. The fourth chapter is a conclusion of what is covered in the report. The references section at the back gives a list of the sources used in compiling this report. 2.0 Analysis 2.1 Generic Business Strategy One of the key determinants of the success of a business is its positioning in the market. With the emerging trends of globalization, liberalization and internationalization, business organization are more exposed to more market forces, key among them being competition. In order to ensure that an organization is able to withstand the market forces and remain competitive, it needs to establish a unique generic business strategy which relates well with the industry and market on which the organization is dealing it. There are four main types of generic business strategies namely: cost leadership, differentiation strategy, competitive advantage and the focus strategy (Martin,2006, p.486). As a byproduct of the four main generic business strategies, organization tend to integrates several aspects of each depending on the market to form an integrated strategy which provides a unique solution to the specific situation. Porters Generic Business Strategies (QuickMBA, 201O, p.1) The differentiation strategy focuses on the ability of an organization to produce various products and services which have different aspects hence creating value to the customer (Martin,2006, p.486). Differentiation strategy therefore encourages proliferation of products, which enables an organization to target a specific market, hence being able to create a value of money to the consumers. The focus strategy is a generic business strategy in which an organization focuses on a particular product feature, specific customer and geographical region among others areas of focus. In this strategy, an organization intends to make the most out of an area of focus (Martin,2006, p.486). In the competitive advantage, is one in which an organization is able to place itself better in the market as opposed to its competitors, hence getting an advantage over them(Martin,2006, p.486). Competitive Advantage (Advameg, 2012, p.1) Such an advantage is achieved by giving consumers more value for example by competitive pricing and after sale services. Lastly, the cost leadership strategy is one in which an organization aims at maximizing its profit and attracting a bigger market share from offering products and services at a reduced price as compared to other competitors (Martin,2006, p.486). 2.1.1 Generic Business Strategy Used by Woolworths Woolworths is among the biggest retail stores in Australia. In fact, it is the biggest retail chain store in the country by revenue and market capitalization. The main competitor to Woolworths in the consumer goods retail market is Coles supermarket. Other competitors in consumer products and other products are Wesfarmers, Myer PTY, Dick Smith Electronics Pty Ltd among others. In addition to this, Woolworths also faces competition from middle sized and small scale retailers throughout the country. In order for the organization to remain competitive in the market, it uses a competitive advantage generic business strategy with some aspects of a cost leadership strategy. The retail store gets is major competitive advantage from its size. As indicated earlier, the retail store is the biggest store in Australia. For this reason it is able to enjoy economics of scale and manipulate suppliers. It is therefore able to offer products at a lower cost in its stores (CorilisResarch, 2005, p.44). Moreover, the big stores are convenient for shopping, due the numerous products that they stock within one roof. I fact Woolworths is a one stop shop, whereby a customer can be able to get a wide range of products. The organizations has also integrated information technology in its practices by integrating online shopping and visa card and credit card payment systems in their stores. This has encouraged more customers to shop at their stores due to the convenience and value associated with it. Lastly, the organization offers free after sale services for instance transport and installation of components and machinery. The additional value attached to this move is also a vital aspect of the competitive advantage strategy which the organization utilizes (CorilisResarch, 2005, p.44). So far, the organization has been able to counter the stiff competition in the market; however, it must integrate more generic strategies in order to guarantee itself of sustainability. 2.2 Organizational Culture An organizational culture is a prescribed manner of conduct of an organization. An organizational culture describes the values of an organization and explains why an organization executes its procedures in the manner in which it does. An organizational culture generally describes the employee conduct and the nature of the products and services which an organization produces. So as to cultivate a good culture in an organization, the management must link up the goals and objectives of an organization together with its generic business strategy and coin them around the values which the organization upholds (Marcoulide, 1993, p. 210). In so doing, the desired culture will pilfer through the organization and over time becomes a culture and not just a practice. An organizational must always evaluate its culture and make necessary adjustments so as to ensure that the organization keeps up with the trends in the market (Murray, 2012, p.1). The importance of enhancing a good organizational culture in an organization cannot be downplayed. This is due to the fact that it’s determines the level of productivity of an organization, hence determining the ability of the organization to meet the demands in the market. A good organizational culture also paints a good picture of an organization in the market. This in turn translates to an increase in the market share as more and more customers are lured to an organization because of its practices. Lastly, an organizational culture determines the sustainability of the organization. It is the desire of each business organization to remain competitive in the market. Therefore, an organization must establish the right organizational practices so as to cultivate a good organizational culture ( MontGomery, 2012, p.44). 2.2.1 Woolworths’ Organizational Culture The success associated with Woolworths retails store has not been achieved on a silver platter. The organization has struggled over the years in order to come up with the multi billion worth retain chain. This has been possible due to an appropriate organizational culture which the organization has cultivated in itself over time. Among the most conspicuous aspects of the organization’s culture is its value for safety, welfare and health of its employees, customers and general society (Woolworths, 2012, p.1). Woolworths has over time strived to ensure that the products which it stocks on its selves meet the consumer requirements standards. This has branded the organization as a safe store to shop in hence attracting a substantial number of consumers. The organization has used a famous slogan ‘Destination Zero’ in its market campaigns to indicate that it means no harm to the people, environment and the entire society (Woolworths, 2012, p.1). This has led to the cultivation of a safety culture in the organization. It is a practice by the organization to receive products from trusted suppliers in the country. The organization also has gone green in a bid to ensure safety to the environment. It has enacted energy conservation measures among other environmental conservation practices. Key among its practices is its support for Australian farmers. This is evident from its programs of assisting farmers to produce for the Australian community. Consequently, the organization stocks products from Australian farmers Another aspect of Woolworths’ cultures its emphasis on transparency in recruitment, employee retention and human resource development. Just as other business organizations in the world, the organization strives to ensure that it gets the best talent in the market to work for it. In addition to this, the organization aims at promoting talent in its employees by developing their skills and giving them a lot of exposure in its various departments (Woolworths, 2012, p.1). The organization also has high level of work ethics, hence being able to retain its employees, suppliers and customers. 2.3 Formal organizational structures An organizational structure is an outline which describes the command structure in an organization. An organizational structure describes the leadership and management structure in an organization. Due to the fact that the leadership of an organization has a direct effect on the organizational practices, it is therefore of great importance that an organization establishes the most convenient structure according to the kind of business which an organization deals in. because of this, there are various types of organizational structures (Krynke, 2010, p.2). As indicated earlier, their use is determined by the type of business activities in which an organization deals with. The various types of organizational structures include: traditional structures, divisional structures and matrix structures. Traditional structures are characterized by a functional division of an organization into various departments. These types of structures are rigid and have an authoritative command structure. Examples of the traditional structures include line structures, line and staff structure and a functional structure. Divisional structures are based on various divisions in an organization. They include the following sub structures: product structure, market structure and geographical structure. The matrix structure is a blend of the traditional and divisional structures. Other types of organizational structures include bureaucratic, network, pre-bureaucratic and team structure. As indicated earlier, an organizational structure must be in line with the activities of the organization. For this reason, an organization should establish a structure in which it is able to factor in increased productivity, efficiency, sustainability and profitability. Lastly, an organizational structure determines the type of leadership strategy which an organization uses (Hartlieb, Leber, Tuppinger and Willfor, 2003, p.171). Since leadership dictates the pace at which an organization moves, an appropriate structure which enhances speedy decision making should be chosen. 2.3.1 Woolworth’s Formal organizational structure The organization uses an integrated organizational structure which has various aspects of linear, functional and divisional structures. This is in a bid to ensure that the organization is able to have a management’s structure which will enable it to live up to its goals and objectives. This integrated structure makes it easy for decision making, command structure and effecting operations in the organization. One of the key characteristics of Woolworths’ organizational structure is that it provides a framework on which there is a smooth flow of activities in the organization. The following chart gives the organizational structure for the organization. Woolworth’s organizational structure, (CorilisResarch 2005, p.5). The divisional and functional structure ensures that there is no conflict of interests in the management. On the other hand, the linear structure provides for a clear command structure. 3.0 Recommendations So far, Woolworths has been successful in the market. As noted earlier, it is the largest retail chain store in Australia. However, the management of the multimillion store must acknowledge that it is easy to get to the top, but very hard to stay at the top. For this reason, the organization can do with few recommendations. First of all, the organization must come up with a mechanism of enhancing its sustainability. Sustainability will ensure that the organization is able to withstand market forces. Various ways of doing this is devising more ways of giving more value to its customers. This may include offering other services for instance healthcare in clinics and pharmacy’s which will be located in the retail chain’s premises. Other services may include customer loyalty programs, whereby customers may earn points from their purchases from the stores and afterwards redeem the points for purchases in the stores. Another recommendation to the retail store is that it should adopt more cooperate social responsibility in its organizational culture. This will ensure that the organization is able to give back to the society hence creating a god image in the market (Nicole, 2011,p.149). This will ensure that the retail store is able to get a royalty following in the market which will enable it to withstand future market forces. 4.0 Conclusion From this report it is evident that the success of an organization is very much dependent on its organizational culture, its organizational structure and its generic business strategies. Depending on the type of business that an organization is dealing in and its strengths and weaknesses in the industry, a suitable structure and generic strategy should be identified. More often than not, a blend of several strategies and structures is important so as to cater for the unique circumstances which the organization is experiencing. As seen in this report Woolworths’ Australia has been able to remain on the top in the consumer retail industry because of its strategic organizational culture, which has enabled it to attract and retain its customers, a competitive advantage generic strategy which has enabled it to give more value to its customers as opposed to its competitors and a well structured organizational structure which has increased the efficiency of the leadership in the organization. This is a mark of a great company and other organizations should follow suit; establishing a sustainable generic strategy, organizational structure and organizational culture. References CorilisResarch, 2005. An Overview of Woolworths Australia, CorilisResarch. Pp.1-61 Krynke, Z.,, 2010. Organizational Structure and Culture: Do Individualism/Collectivism and Power Distance Influence Organizational Structure? , Institute for Industrial Engineering and Management, pp.1-13 Hartlieb,E., Leber,M., Tuppinger,J., and Willfor, R., 2003. The Analysis of Organizational Culture and Structure as a Basis for the Implementation of Knowledge Management, Innovation Service Network, pp. 171-180 Murray, A. (2012).How to Change Your Organization’s Culture. The Wall Street Journal [Online] Viewed on 12th September 2011, Retrieved from < http://guides.wsj.com/management/innovation/how-to-change-your-organizations-culture/ > Montomery, R, 2012. Value Line: Woolworths, Eureka Report, pp.34-44 Martin, K., 2006. Porters Generic Business Strategies Ch.5, Managing the Marketing Process, pp. 584- 586 Marcoulide, G.,, 1993. Organizational Culture and Performance: Proposing and Testing a Model, Organization Science, Vol. 4, no. 2. pp. 209-225. Nicole, C.(2011). Social Responsibility, crisis and sustainable Development. The Business Review, Cambridge. 17 (1); 149-158 Woolworths, 2012. Culture and Strategy, Viewed on 22nd September 2012 from < http://www.woolworths.com.au/wps/wcm/connect/Website/Woolworths/About+Us/Our+People/Culture+and+Strategy/> Appendix Woolworth’s organizational structure CorilisResarch, 2005. An Overview of Woolworths Australia, CorilisResearch. Pp.1-61 Competitive Advantage Advameg, 2012. Generic Competitive Strategies, Viewed on 22nd September 2012 from < http://www.referenceforbusiness.com/management/Ex-Gov/Generic-Competitive-Strategies.html> Porters Generic Business Strategies QuickMBA, 201O. Porter's Generic Strategies, Viewed on 22nd September 2012 from < http://www.quickmba.com/strategy/generic.shtml> Read More