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Strategic Management. The purpose of this report is to provide a strategic analysis of Woolworths in its Australian retailing and grocery industry.

Extracts from this essay...

Introduction

DEAKIN UNIVERSITY MMM365- Strategic Management Supermarkets and Other Grocery Stores in Australia- G5111 Woolworths Ltd Group 15 Submitted by Duong Quang Hai - ID: 900024567 Henry Wee Chung Chong - ID: 210053462 Yin Xue - ID: 600162112 Due date: 17 January 2011 Word count: 3985 words Table of contents 1. Executive Summary 4 2. Introduction 5 3. Industry Analysis................................................................................6 3.1 Threat of New Entrants.............................................................................................6 3.2Rivalry among Established Companies...........................................................................................................................7 3.3 The Bargaining Power of Buyers..............................................................................7 3.4 The Bargaining Power of Supplier............................................................................8 3.5 Threat of Substitute Products.....................................................................................8 4. Company Situation Analysis 9 4.1 Size and scope of Operation 9 4.2 Objective and Strategy 9 4.3 SWOT analysis 9 4.3.1.Strengths 9 4.3.2.Weaknesses 10 4.3.3.Opportunities 10 4.3.4. Threats.........................................................................................................11. 5. Financial Analysis 12 5.1 Performance/Profitability 12 5.2 Capital structure and liquidity 15 5.3 Peer analysis 19 6. Stakeholder Analysis 21 7. Summary and Conclusion 24 8. List of References: 25 9. Appendixes....................................................................................29 1. Executive Summary The purpose of this report is to provide a strategic analysis of Woolworths in its Australian retailing and grocery industry. There are some external factors can be affected to Woolworths strategy. To be analyzed how these factors impact to Woolworths strategies we would use Porter forces five models as a framework for analysis. They are threats of new entrants and substitute products, rivalry among competing established competitors, threat of substitutes and bargaining power of Woolworths' suppliers and customers. This report also provides the company situation analysis which will be analyzed the internal environments of Woolworths. In this analysis, we will use SWOT analysis which includes the strengths, weaknesses, opportunities, and threats Woolworths possesses. Woolworths' scope of operations, size of business is also one of the internal analysis Woolworths has to analyze in order to grab opportunities and avoid threats. Besides, it is also given a brief analysis of Woolworths current strategy in order to response their competitor's strategies. This report also provides some recommendations for Woolworths in order for it to stay competitive in its retailing industry, such as establishing loyalty programs for its customers and managing its efficiency in order to sustain its core competencies for its long-term success.

Middle

9.16 Return on Equity 26.69 26.95 27.15 24.52 25.19 Gross profit margin shows us the percentage of sales to cover general expenses and operating costs (Hill et al, 2007). According to this chart, the Gross Profit Margin of Woolworth Limited holds an increase trend. With slight decrease between 2007 and 2008, this could be the result of many factors. Such as the Global Financial Crisis (GFC) that was in motion since 2007 and finally erupted in late 2008. However, worry not, as the following years showed Woolworth Limited adjusted to the GFC and steadily grew into an increase trend. This suggests that Woolworth limited recuperated from the GFC to maintain a strong market share and strengthen their defenses against the GFC. Net profit margin shows us the percentage of which profits are earned through sales (Hill et al, 2007). Similar to the Gross profit margin ratio, we see that the profitability performance in relation to this ratio also on an increase. A worthy mention is that the increase is very smooth and very stable. From this we can see that Woolworth Limited is able to maintain a very steady growth rate even throughout the Global Financial Crisis. Various factors on how Woolworth limited can achieve such feat can be that their Budget management is incredibly accurate. Only with a plausible forecast can a company that big to maintain their posture throughout the GFC. Return on assets measures the profit generated before tax by the available assets to the company (Hill et al, 2007). According to this chart we see another increase in trend. Nothing really stood out in this ROA chart, just very steady growth of profit generated as well as remained in a positive growth trend Return on equity measures the percentage of profit earned using the shareholder's equity in the company (Hill et al, 2007). According to this chart, the recent three years spike compared to the earlier years shows that more is returned to the shareholders.

Conclusion

Using Porter's five forces model as the framework of the analysis have showed that Woolworths have more competitive advantages than other competitors in the industry. Another section is coming with the current situation analysis of Woolworths. By applying the SWOT analysis, we can see that Woolworths have more internal strengths and weaknesses to face. Woolworths is proud that they have been giving to the customers more quality products at the lowest price it. Applying the everyday lowest price strategy has made Woolworths or its subsidiaries like Safeway have more competitive advantage to compete with other major competitors. Besides, in the analysis, it is also given the opportunities and threats of Woolworths in the new markets when compared with other powerful international competitors like Wal-Mart. Woolworths still need more effective strategies to win the completion with these strong competitors. Next, coming to financial analysis, the report specifically examine and analyze the current financial situation analysis of Woolworths based profitability ratio, capital structure and liquidity, and peer analysis when compared to other competitors such as West farmers. It showed that Woolworth Ltd is indeed leading the industry with strong investor return and get more financial advantages than others in order to obtain a good reputation. Finally, ending with stakeholder analysis is given to us what the stakeholder elements such as customers, investors or suppliers need and want from Woolworths Ltd. Although they have different positions, but there are some common values that they can get from the Woolworths. They are all desires for more benefits which raising their values. In short, facing with more challenges from other competitors in the industry, Woolworths should continue with the current store image as it meets the current customer's trend. It should continue to supply more quality goods with the best price in order to create more customers attractiveness. In addition, innovation and development of store structure should be focused. Besides, understanding of competitor's strategies and anticipate moves of retaliation in order to response their strategies is very important for Woolworths. 8.

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