Strategic Business Management - Woolworths - Assignment Example

Name: Tutor: Title: Strategic Business Management Course: Institution: Table of Contents Title: Strategic Business Management 1 Table of Contents 2 Strategic business management individual assignment 3 Introduction 3 Sustainability 3 Profitability 5 Growth 5 Strategies available 6 Differentiation strategy 8 The focus strategy 11 Customer reward programs 12 New market entry strategy 13 Bibliography 14 Strategic business management individual assignment Introduction Woolworths has grown since 1924 when it was started in Sidney. Every company has the desire of achieving certain specified organizational objectives. Every company has a purpose of existence that is spelt in the mission and vision. The set objectives seek to achieve the organization goals. Woolworths since its formation in Australia it has grown with the guidance of set objectives to achieve the current position in the market. Strategic goals are responsible of attaining the growth and sustainability for the company. Without having a clear vision of what it wants in the market Woolworth would not have reached where it is in the market. The strategic goals are responsible for acting as the driving force in the daily operations of the company. Curving out a unique position in the market is very important for the growth of the company. Some of the strategic goals pursued by Woolworths are discussed in the following section of this paper. Sustainability Woolworths like any other company would not like to see its resources being depleted. Human resources, natural resources, and technology are all important at ensuring the perpetuity of the company. Company has to be in position of attracting highly qualified staff and offering them the deserved salary and allowance. The goals of sustainability are very important in making the company attain organization objectives (Barney, 2007, p.57). The organization has to ensure that there is continuity in activities that it engages in. the growth prospective have to go beyond a year or two, but consider a generation. The company has to focus on strategic long term attainment of goals. While the company pursues other short term goals it cannot overlook the importance of long term goals. The resources in the company have to sustain the daily operations of the company within and without the company. Sustainability policy ensures that the company is not overwhelmed by functions or operations that can lead to its demise. The organization uses available strategies to ensure attainment of sustainability. Strategies have to be refined and adjusted to fit into the perspective of attainment of strategic goals set by the company within a specified time period. Goals have to attainable and measurable at the same time. Differentiation, diversification, and value-added services are all focused towards attainment of sustainability. The strategic goals of a company are interdependent and do not stand out alone. Sustainability is supported by growth, profitability, and achievement of a competitive edge in the market (Cole, 2004, p.78). It is the goal of many organizations to achieve market leadership in the market. Woolworths aims at achieving sustainability through a number of strategies that comprise of cost leadership, differentiation, and focus strategy. Woolworths is committed to achieving growth through retailing that is responsible. It is not good for the organization to engage in activities that will harm it and the community. The company is to take a role in environment conservation activities that involve suggestions of safe refuge disposal and use of packaging material that can be recycled (Cousins, 2005, p.403-28). Sustainability is very important to every company. Woolworths is committed towards sustainable farming. The company partners with suppliers to ensure sustainable of bio-diversity. Energy conservation by use efficient methods assists in attainment of sustainability. The company plans to establish its presence in places in Africa. The business model is simplified to ensure attainment of biodiversity. The company targets to improve its sourcing capacity. Profitability Every organization is in the business of making profits. No organization can operate without realizing profits. Companies will adopt cost leadership in order to make more profits than competitors. Woolworth is able to realize high profit margins due to the large customer base that it enjoys. Strategies that are employed in the company have to sustain it in achieving its objective goals such as growth. Growth Since inception of any company, it is the aim of the management to see the company grow. The growth measured through increase in customer base and repeat purchases. The sales of the company increases and the suppliers have to gain confidence with the organization. The expansion strategy of the company has to focus on realizing growth. When the organization is able to meet the needs of the customer then, it is slowly realizing growth. The customers have to be in a position to identify with the brand identity of the company. Woolworths and Coles control about eighty percent of retail food sales (Anderson, 2006, p.115). Market dominance is important for the company since it provide power of authority over the customers. Market leadership comes after the attainment of substantial growth in the market. Provision competitive and quality service is one of the key aspects that has propelled Woolworth to the top. Strategies available Brand identity Woolworths has strategic goals that have to be accomplished using suitable strategies that can be implemented in the company. Attainment of a competitive edge for any company is not an easy task. New product development and innovation are important factors that ensure a company realizes growth and profitability. The strategic goals of Woolworths include growth, sustainability, profitability, market leadership, and meeting the current needs of customers. The company has some strategies that it can desire to implement but it has no necessary support mechanism. Peter Drucker (1954) is widely known as the person who takes part in the development of management practice. He introduced the idea through which companies are able to measure against the market potential. Productivity, financial resources, physical, worker attitude and performance, and public responsibility were intensely studied by this author. Theoretical perspectives and strategies used in organizational management are important in making Woolworth Company attain sustainable growth. Cost leadership strategy The cost leadership strategy adopted by the company is essential in making it to achieve a competitive edge over new entrants into the market. Generic strategies advocated for by Porter were meant to realize competitive advantage. It is the process of coming up with a strategy that will get sales away from competitors in the favor of the company. The cost leadership strategy is achieved over a period of time. Profits are increased through reduction of costs while offering average prices in the industry. It is only well-established companies that can use cost leadership strategy without hurting their profitability. Woolworths has efficiently used this strategy to remain a market leader. The increasing the market share through via charging prices that are lower while at the same time realizing a profits on the sale made. Cost leadership come with minimization of costs of business through exploiting economies of scale (Adner & Helft, 2003, p. 171-6). Large and established companies who have a sizeable market share can use cost leadership strategy without hurting the performance of the company. The company has to possess the required capital for investing in technology which brings down costs. The Japanese Kaizen philosophy of realizing continuous improvement has successfully been used in the reducing. Cost leadership can be used as a market penetration strategy where the competition is not very stiff. The company can enter the market through offering lower prices for products (Nag, Hambrick & Chen, 2007, p.935-55). These strategies are important in low-income areas where people value price most. Premium prizes can be used in the upper class market where quality is preferred over price. Differentiation strategy Woolworths has successful used differential strategy as one of its pillars of growth of sustainability and growth. Differentiation involves provision of a range of goods or services that are different from each other and meets customer satisfaction. The services and products have to be unique and independent from those of competitors. The nature of supermarket chains calls for having a variety that will attract customers to prefer shopping with a particular company due to loyalty. The strategy will involve features such as durability, functionality, support services, and brand image that customers hold important (Frank & Thompson, 2010). The company has o carry out extensive research, innovation, and development. It has to come up with high-quality services and products that are above those of competitors of offers a unique selling point. The organization has to carry out effective sales and marketing in order to make customers understand the importance of the differentiated offering. Organization applying differentiation strategy, have to remain steadfast with the processes of new product development. The organizations are likely to face stiff competition from others who are using focus differentiation strategy. Woolworths is a huge supermarket in Australia that can pride itself as having in place a workable differentiation strategy. Apart from provision of retailing services, the company engages in other group of services that include Merchandise (Big W), Petrol (Caltex/Woolworths), Hotel (ALH Group), Electronics (Dick Smith and Tandy), Everyday program, Consumer Electronics, and Homegrown. This can be referred as diversification. Woolworths has invested largely in different services that foster its growth. The risk factor due to economic crisis is reduced since a collapse of one sector cannot lead to the demise of the company (Paish, 2011, P.1). Woolworth’s multi-chain has a variety of products of different suppliers hence providing variety to its customers. Technology has been used in adapting to new methods of service provision. Application of Smartphone is being used in the retail business by Woolworths. The growth in the mobile phone industry has improved the application of features in the retail industry. Woolworths has been set pacer in application of technology in retail industry. Smartphone has boosted the online shopping experience that was initiated by Woolworths. Shopping has been enhanced for customers as they seek value added services. The internet has assisted in creating customer feedback system and provision of online services. Woolworths has the capacity and resources to invest in different technologies that will support variety of services that the company provides. The ability to offer extended selection through online services has enabled the company to cut a niche as one of the best quality service providers. Resources in the company give it an opportunity to exploit differentiation opportunities that aim at catering for market niches that had been hitherto neglected. The competitive advantage comes in when the company is able to read the trends and changes in the market and adjust accordingly (Achtenhagen & Raviola, 2009, p. 34-40). The Economies of scale which enables the company to offer diversity is important in creating value for the company. Many companies in the position of market leadership use diversification and differentiation to safe guard their interest in the market. In recent briefing, Woolworths supermarket has announced plans of doubling the own brand sales. The company aims at doing this through offering lower prices of increased products. The plan by the company shows the increasing demand for quality and value. The own brands will give Woolworths an opportunity to improve its market share. Woolworths possesses close to 850 products in its Homebrand. The product lines have been extended to create variety for the consumers. Mass Select brand carries almost one thousand products. Organic products averaged at about four thousand in number. The company looks at focusing on online shopping to take advantage of the increase of internet use. Concentrating on online growth will help to boost not only the market share but also the profitability of Woolworths. Own brands have been identified by customers as providing increased competition in the grocery sector while providing better quality at cheaper prices as compared to national brands. The figure below shows the suggested generic strategies that can be applied by Woolworths in achieving a competitive advantage. Differentiation and cost leadership are identified as major strategies that can be used in making the organization achieve the set objective. An organization has to use a combination of strategies in order to achieve competitive advantage. Cost strategy can be used with coast leadership to wage off competition from other players. Differentiation can be used in the market segment to provide a variety to the customers. The choice of the strategy will be decided by dynamics that exist in the market. If not applied in the right way, differentiation can cause confusion among customers as they may not be able to identify the right products being offered by the company (Dess, Dess, Lumpkin & Eisner, 2009). Woolworths has to maintain cost leadership in order to realize growth and profitability. Differentiation is important in ensuring there is sustainability in the retain company. The focus strategy will be very vital for Woolworths Company in its growth. Returns from the market segment that is considered a niche assures the company of steady realization of profits. The focus strategy Organizations that use Focus strategies concentrate on a specific niche in the market. They understand the challenges of the market and the unique needs that customer need to be met. Low cost or uniquely packaged products are offered in this market. Brand loyalty is achieved through unique service provision. The products exactly cater for the unique needs in the prevailing market. The market segment selected by the organization makes it hard for competitors to penetrate owing to the highly customized customer needs that have to be met in a special way. Woolworth’s supermarket chain has concentrated on particular market segments like online shopping (Hitt, Ireland & Hoskisson, 2010). The dynamics and intricacies of online shopping keep off some of the start-up companies that would have been interested in investing in the same area. Woolworth and other large companies are the few players who offer online shopping. Focus strategy through market segmentation has been used by many companies to gain growth, profitability, and sustainability. Segmentation is vital in the area of sustainability since the market segment comes to depend on the organization for provision of certain services. Virtual shopping has created a unique segment that require less stocking of goods since the company can get the goods directly from suppliers and deliver them to consumers who order them online (Burden & Proctor, 2000, p.90-97). Online retailing is being preferred to brick and mortar store. The expense of large store ownership is tremendously reduced and the customer has ample time of scanning through the goods available in the store at his convenience. The customer cannot waste fuel coming to the store only to be turned away when the required product is not in the store. The customer has the advantage of ordering a particular product to be brought from a specific supplier. The uniqueness and convenience of online shopping makes many customers to prefer it over brick and mortar stores (Baker & Saren, 2010, p.324). Advancement in technology has provided this opportunity of companies expanding into technology based shopping. Woolworths has got resources that can enable it focus on focus strategy. Implementation of the strategy has to take into consideration all aspects that surround business growth. The focus strategy looks at maximizing the importance of a market segment. Customer reward programs Customer reward program are mostly used in order to achieve brand loyalty. Bonuses and points are used to make customers to make repeat purchases. The choice to reward customer is important for making people come back to the company. This is strategy used by companies to ensure that they do not jump ship (Penfield, 2008, p.12). Customers will appreciate rewards given by the company as sign of appreciation. Customers want to identity with a company that appreciates them and struggle to keep them. Maintaining the customer base is important for the profitability of the company. New market entry strategy The prevailing markets over time they get saturated and it is upon the company to diversify into other markets which are new or introduce new products. Woolworths has outlining a strategy of enhancing growth the opening new stores that will see close to 10,000 jobs being created. Embracing online shopping is one Woolworth has rolled out a plan of opening at least 39 new supermarkets. Diversification into oversea market will cushion the retail leader from economic risks that may come with economic crisis (Becker, 2008, p.18). The future of Woolworths depends on how it will stimulate growth through innovation and product line extension. There is increased competition that calls for the company to use sophisticated method of retaining their current customers. Integrated performance management is vital part of the practices embraced by Woolworths. High performance in the company is propelled by this practice. Learning strategy employed by Woolworths has the purpose of providing a flow of leadership and retail talent at various levels. Skills and knowledge are focused towards attaining the goals of the business strategy. Bibliography Paish, M., 2011, Woolworths’ new CEO unveils his growth strategy, AFN, Retrieved on 28th May, 2012 from Achtenhagen, L., & Raviola, E., 2009, Balancing tensions during convergence: Duality management in a newspaper company. International Journal on Media Management, 11 (1), 32-41. Adner, R. & Helft, C.E., 2003, Corporate effects and dynamic managerial capabilities, Strategic Management Journal, 24, 171-179. Anderson, C., 2006, The long: why the future of business is selling less of more. New York: Hyperion. Barney, J.B., 2007, Gaining and sustaining competitive advantage, 3rd ed, Upper Saddle River, NJ: Pearson Education. Burden, R. & Proctor, T., 2000, Creating a sustainable competitive advantage through training. Team performance Management, 6 (5/6); 90-97. 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