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Strategic Analysis of Woolworths

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Strategic Analysis of Woolworths Name : Samantha Evelin Student Number (ID) : 20080581 Due Date : Monday, May 14, 2007 Lecturer : Dr. Quamrul Alam Tutor : Md. Nazmul Amin Majumdar Unit Code/ Name : MGF 3401/ Strategic Management Word Limit : 3500 words Word Count : 4061 words Table of Contents Executive Summary 3 1. Introduction 1.1 Industry Profile 4 1.2 Company Profile 4 2. Body 2.1 External Analysis 6 2.1.1 Porter's Five Forces Analysis 6 2.1.2 Driving Forces 10 2.1.3 Critical Success Factors 11 2.2 Internal Analysis 12 2.2.1 SWOT Analysis 12 2.2.2 Core Competencies 16 2.2.3 Value Chain 18 2.3 Woolworths' Competitive Strategies 20 2.3.1 Corporate and Business Strategies 20 2.3.2 Implementation Strategy 22 Recommendations 23 Reference List 24 Executive Summary The purpose of this report is to provide a strategic analysis of Woolworths in its Australian retailing industry. There are some external environments that affect Woolworths' businesses, such as discussed in Porter's five forces analysis, which are: rivalry among competing sellers, threats of new entrants and substitute products, and bargaining power of Woolworths' suppliers and customers. There are also some driving forces that influence Woolworths' businesses, such as government influences and sociocultural influences. Woolworths also has to analyze its critical success factors in its external analysis. This report also provides the internal analysis of Woolworths, such as Woolworths SWOT analysis (the strengths, weaknesses, opportunities, and threats Woolworths possesses). Woolworths' core competencies analysis (resources and capabilities) is also one of the internal analysis Woolworths has to analyze in order to grab opportunities and avoid threats. Analyzing the value chain of Woolworths, such as its primary and support activities, will help Woolworths improve its own stores managements. Woolworths has some business and corporate level strategies, such as cost-leadership strategy for its business-level strategy and unrelated diversification for its corporate-level strategies. Making strategies and successfully implementing them is one of the key factors of Woolworths' success. ...read more.


This is due to the many acquisitions Woolworths has made. Although sales of the company are increasing a lot, the rate of increase in debt due to acquisitions is greater than the increase in its sales. And substantial amount of debt will increase the financial risk of Woolworths. Increasing overhead expenditure According to Datamonitor (2007, p. 15), the main reasons for increase in overhead expenditure relate to Chief Executive Officer retirement payments and costs associated with venturing into India. Increasing overhead expense may put the pressure on the company to sustain its competitive level. Limited geographical presence Although in Australia and New Zealand Woolworths' businesses, such as Dick Smith Electronics, Ezy Banking, Homebrand, et cetera, win the competition compared to its major competitors such as Coles and IGA, Woolworths operates only in Australia and New Zealand (Datamonitor, 2007, p. 15). If compared to its international competitors such as Wal-Mart, which has operations in Asia, Europe, South America, US, Canada, Mexico, and the UK, Woolworths does not stand a chance unless it also expand internationally. 2.2.1(c) Opportunities Entering new markets Woolworths has already formed an agreement with the TATA Group to develop consumer electronics business in India (Datamonitor, 2007, p. 16), therefore it is an opportunity for Woolworths to go global. Moreover, Woolworths has already established a buying office in Hong Kong to directly source products for distribution in Australia. The company is already having 30 people in Hong Kong office and it will be an opportunity for Woolworths to improve its business in Hong Kong, and according to Datamonitor (2007, p. 16), the company is planning to do so. Successful acquisitions Woolworths has made successful acquisitions in recent times and is approaching New Zealand Commerce Commission this year to purchase Warehouse Group, New Zealand's largest retailer (Datamonitor, 2007, p. 16). These acquisitions is an opportunity for Woolworths as it will further strengthen Woolworths' size and bargaining power. ...read more.


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