Executive Summary

Woolworths headquartered in Bella Vista in New South Wales, Australia is the most significant
and largest Australian supermarket retail chain. This chain is growing under the supervision of
Woolworths Limited which is its parent company (Woolworths, 2014). The report discuss in
depth internal and external analysis of Woolworths. First section describes the company
background and move forward towards the description of external environmental analysis. This
external analysis focuses on PESTLE and Porters 5 force analysis variedly. The next report
section demonstrates the internal environmental analysis of Woolworths focusing on its value
chain, resource, core competence and capabilities specification. The report concludes with the
immediately required recommendations for Woolworths to have marvelous future ahead.

Company Background
Presently, Woolworths is operating approximately 872 supermarkets all across the nation along
with the count of 156 supermarkets in New Zealand which is also termed as the next largest
foreign market of this chain. Woolworths has expanded itself in UAE and the markets of South
Africa. Reportedly, this supermarket chain is serving around 17 million customers daily. It is the
significant employment home to over 190,000 people (Woolworths, 2014). The Australian retail
supermarket industry has demonstrated that Woolworths proudly influencing its market share of
80% with another Australian dominant supermarket chain Coles. Since the foundation of
Woolworths in Sydney in the months of September in year 1924, it has been complimenting its
values and mission. On its foundation, it was named as Wallworths Bazzaar Ltd. The most
talking term is its worthy and attractive slogan The Fresh Food People since the year 1986.
In the year 1926, this chain received the tag of global initial supermarket chain and a variety
store introducing the use of a cash register and the technologically high receipt printing machine.
It also bagged the tag title by industry as the best selling superstore with cheapest price range
and money back guarantee (Woolworths Annual Report, 2013).

External Environment Analysis

PESTLE Analysis
Political or legal factors- They have straight forward effect on the retail
supermarket. This segment involves the regulatory functions, the legislating trading hours and
the efficient monitoring policies that are quite strict in Australia. All the defined segments are
taken care and controlled under the trade practices act (TPA), Australian competition and
consumer commissioner (ACCC), the commonwealth government, and the foreign investment
review board (FIRB). Slight changes have been implemented by the ACCC within the production
system of food having straight impact over the Woolworths development (Productivity
Commission, 2011).

Economical factors- It is constantly given due consideration by Woolworths. At

present scenario there is a down in the market and no scope for growth in Australian economy
which has a negative impact on the retail market mainly to the Woolworths. If it continues,
Woolworths may have a stagnant growth. A little bit possibility is seen in rise of fuel prices and
unemployment ratio and it can also decrease the wages of the employees (Christen, Johnson &
Kagermann, 2008).
Socio-cultural factors- With the dynamic nature of human beings not a single
product can exist for a long period of time, along with great change in the technology there is a
sensation among the Australian supermarket industry. Now a days people are bothered about
their health issues and demand more of low fat, organic and genetically modified free food
products. Woolworth has decided to increase the 33% women workforce in its board level by the
end of the year 2015. A step forward taken in the year 2009 by Acquisition of Macro Whole
foods which added to the advantage by setting off threat present in the market (Woolworths,
2014). People in the present era hold less time and complex lives where going out and shopping
is almost impossible, so they need fast and efficacious services. Woolworths dynamism proved
its worth by initiating a new concept one stop shop and extended its product range and
working hours also got deregulated. These facilities maintained a strong bond among the
company and its valuable customers (Woolworths Annual Report, 2013).
Technology factors- Woolworths has used technology at its every phase of
development. Furthermore, Woolworths has been the initial retail store starting up the machine
producing receipt and in 1991 subscribing GEMMnet Global Electronic Marketing and
merchandising Network (Trevena et al., 2014). With the new trend of shopping online, the
company is on the job of improving the portal of shopping site and increasing the efficiency of
online distribution and supply. Media has the power to attract the customers. There is a need of
technical advancement in the coming time, which can be done by cutting acute unnecessary
expenses (Woolworths, 2014).
Environmental factors- Australia is known as the driest inhabited continent with
smallest permanent wetland areas. This nation is one amongst the most urbanized nation of the
world. Thus, Woolworths has the potential to make its worth expanded but with limited
resources. It had 21 million population in 2008 with wide mix of religions, cultures and
ethnicities (Productivity Commission, 2011). Over 12% of Australian population is 65+ years of
age that can increment over 25% by 2051. Moreover, 85+ age group can quadruple over 5% by
2051. Thus, Woolworths need to put in efforts to produce/supply more of healthier and organic
food choices (Woolworths Annual Report, 2013).

Porters 5 Force Analysis

The bargaining power of the buyers in the Australian supermarket is very
immense/high and also has homogenous product range which has lesser switching price between

vendors because of which stores cannot give offering in a more valuable way (Alam, &
Majumdar, 2011).
Woolworths has to keep in mind the bargaining power of the suppliers, size
of the market and the suppliers brand name because power varies accordingly. For instance, the
suppliers of Coca Cola enjoy high power. Therefore, the power of Woolworths suppliers is
fluctuating from moderate to high (Productivity Commission, 2011).
Competitive rivalry within the supermarket industry of Australia is acute, thus,
Woolworths focuses on establishing fair relations with the competitors and neglecting negative
thoughts (Johnson, Christensen, & Kagermann, 2008).
The pace of new entrants can be analyzed with the media. This aspect can lead to
lower profit possibilities. Barriers like increasing land market price, government
regulations/restrictions, lower land availability, and big capital need. These barriers have been
rated over the moderate degree to say they hamper the quality (Woolworths, 2014).
The presence of industry substitutes affects the sale of the product. If there
will be available substitutes in the market then the product will be less demanding and some of
the substitutes include the grocery stores, fresh food small markets, non-affiliated petrol stations,
pharmacies, online stores and convenience stores. It is true that the customers can be made to pay
high for the products if there are aspects such as spacious parking, near residential area and
lesser number of queues. This force also fluctuates between moderate and high degree (Tadros,
2009).

Internal Environment Analysis

Internal environment is a framework and tool for auditing an organization and its environment.
In order to discover the internal story of this supermarket chain Woolworths, various analysis are
done in the form of value chain, resource, core competence and capabilities specification. The
firms internal demonstration will shuffle up the position in the market coupled with new
opportunities (Research and Market, 2012).
Resources
Woolworths hold complete faith on their efficient and trustworthy 190,000 employees working
within the distribution centers, support offices and stores where they are providing customers
with the best quality products, services and affordable prices. Both the resources of the company
that are intangible and tangible are very powerful which make the resources and companys
management to be effectual (Woolworths Annual Report, 2013). Furthermore, with the time span
of >10 years, 46% of its employees are still working with the company as effective education
and required training is provided to every employee. The best quality products, fresh food,

service longevity and strong name of the brand altogether make Woolworthss resources
proficient (Trevena et al., 2014).
Capabilities
The expertise and the skills of the whole organization are termed as its capabilities that are well
synchronized with the resources of the company. Woolworths is completely flying high in the
sky since its beginning from the year 1974. Woolworths has expertise in employing efficient
person with efficient talent at the right time. The capability of the company to achieve the target
of making at least 33 % women management representation in the board level by the end of the
year 2015 which is highly creditable (Clayton, 2010).
Valuable Activities
The study of the Woolworths activities is very vital as it increases the value of the company. The
companys operation is the most crucial part of any organization and adding to its worth.
Woolworth has its own farmer because of which they hold the potential to supply affordable and
fresh products from the ground level which helps is making the flow of operation easy and
effective (Trevena et al., 2014).
Woolworth uses inbound logistics by owning their own distribution channel with which they
provide products and services at exclusive discounts attracting many customers (Clayton, 2010).
The outbound logistics of the company is an exclusive factor of the company. Vendor quality and
its administration make sure that the customer gets the best quality and fresh product. They
provide full assurance to the customer (Trevena et al., 2014).
The customer service facility is also a contribution in retaining customers for a longer period of
time. The duty of the customer executives is to provide detailed information on time. In case, the
product is not up to the quality, either product gets replaced or money refunding is carried out.
Also this scheme is hitting hard from the marketing and sales perspective by the way of
spreading brand awareness. Thus, the Woolworths size and operational scope altogether taking a
hold of opportunities and hold off and prevent threats and giving fair kickback to its rivals
(Woolworths Annual Report, 2013).
Core Competency
Woolworths competency has allowed it to dominate the market. The exclusive channel of
supply chain is not only distinctive but also giving high competition in the market. The
company has extended its channel in big nations by cutting sum cost and using advanced
techniques (Johnson, Christensen, & Kagermann, 2008).
The branding and marketing strategies have created a cutthroat competition in the market. The
slogan of the company The fresh food people has develop faith in the brand name and also

created an image of supermarket proficient in the provision of fresh, high quality and healthy
products at affordable price (Woolworths Limited, 2011).
The emerging promotional schemes have uplifted the level of competition in the market by
laying down different schemes, promotions and refreshing projects like petrol retailing; new
idea program; re-fresh; and Facebook competitions. Certain advanced schemes raising the
competition level of the company includes everyday credit cards; Master cards; shopping cards;
and consumer rewards (Productivity Commission, 2011).
As a part of being skillful, Woolworth started in integration with other countries. In
consideration to this factor they have been supplying several inputs and services for boosting
the response and strength of the Australian market (Clayton, 2010). Macro category includes a
wide range of healthful products. Fresh brands includes all those food items which are freshly
made, collection of household products are categorized under Homebrand and the Select
category includes all high quality and closely checked products (Research and Markets, 2012)

Recommendations
After analyzing the internal and external environment of Woolworths, it is quite clear that this
supermarket chain is experiencing certain threats and weaknesses that need to mend immediately
specifically having great growth and making its service expansion to the Asia Pacific. The
following recommendations are most essential presently (Tadros, 2009)
Innovative product/service Woolworths must launch the fresh and unique
product line in its supermarket and not just focus on food items. Woolworths has very limited
product categories due to which diversification is not seen that is acting as a barrier for its full
growth. With product diversification, this chain will make itself profitable and enthralling not
just in Australia, but also in other operating and emerging markets because global population is
in need of purchasing several different items on reasonable prices and not just food (Rakowski,
2009).
Cultural Adaptability Because of lower cultural adaptability, Woolworths has been
closing its Nigerian clothing and food retail stores due to great loss. It is the need of the hour to
match the cultural needs specifically in wearing and eating section in African and Asian markets
(Research and Markets, 2012). Woolworths need to win the emerging markets through in depth
market research along with the introduction of products that are culturally acceptable. It has to
introduce flexibility in its CSR and employee diversity policies and must make investment in the
operating regions local talent to get their long term support (Clayton, 2010).
Enhanced and advanced CSR (Corporate Social Responsibility)
Now, wider population in developed as well as developing nations are aware about the healthy
grocery items and organizational impacts over the community and environment. They demand

CSR focused organizations that are superbly and legally working in supporting employee
diversity, hold sustainable production and manufacturing approaches, and work towards the
community welfare (Trevena et al., 2014). Woolworths must concentrate on implementing 100%
sustainable and socially respectable procedures and policies specifically the supply of genetically
modified free products and completely organic food items (Productivity Commission, 2011).
Social media marketing Woolworths has wider operations for which cost effective
marketing strategies are required. Woolworths must enter into social media marketing platform
on Google+, Facebook, and Twitter to expand internationally and to provide purchasing
convenience to its poor time consumers. Social media business is the craziest and most
successful digital marketing strategy that cant be ignored in current competitive time (Research
and Markets, 2012).
Frequent Shopper Club (F$C)/similar programs for customers
in all operating countries This is the major drawback of Woolworths that FSC is
available only in Tasmania and customers in other parts are making negative impression over
this. The customer loyalty and strong support base can only be achieved in all the existing and
emerging markets, if Woolworths provide these effective programs to all the customers equally.
This will also act as the competitive feature for Woolworths in its international business as
required (Alam, & Majumdar, 2011).

Conclusion
Woolworths is effectively cultivating a neat and clear focus over its management and process of
meeting the customer needs and demands. This has been made possible through the timely
provision of affordable products; comfort based shopping style; and greater product categories.
It background and future plans narrate its capability (Trevena et al., 2014). This supermarket
chain surely holds the good combination of more of positive and lesser negative features.
Woolworths is working towards introducing aggressive promotions. It has been maximizing the
customer service standards and the shareholder value. It is also efficaciously initiating itself
towards the procedures requiring re-engineering and stopping the unnecessary projects
(Woolworths, 2014).

References
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http://www.woolworths.com.au/wps/wcm/connect/webSite/Woolworths/
Woolworths Annual Report. (2013). Available Online:
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Available

at: