Introduction
In the contemporary business era, organizations intend to gain a competitive advantage by improving the internal and external business environment. Many factors revolve around the internal and external business environment, and the company must be aware of it. This study revolves around a strategic analysis of an Australian firm. Main components of this study are the overview of the organization, analysis of internal and external environment, articulation of competitive advantage, strengths and weakness also with possible future sustainability. The purpose of this study is to derive several insights and make effective business decisions in a competitive landscape. An overview of the Australian company is below.
Overview of Organization (Woolworths Group)
Woolworths Supermarkets is a prominent Australian grocery chain, which was founded in 1924. It is Australia’s largest company by revenues and 2nd in New Zealand. Main products of this retail giant are Supermarkets, Caltex Woolworths, Liquor, General Merchandise (Big W), Woolworths Finance, and Hotels & Gambling (ALH Group). However, the business is in the limelight due to general merchandizes in Australia. According to 2017 financial reports, the revenue of the company is A$55.669 billion, and it seems the highest revenue in the corporate sector of Australia (Powrbot.com, 2017). Due to its incredible brand image and competitive advantage over other rivals, the firm has maintained its sales for a long run.
Analysis of Internal and External Environment
The strategic analysis tool is to be used to derive both internal and external insights. For Instance, strengths and weaknesses are triggered by internal business environment. On the other hand, opportunities and threats are aligned with the external business environment.
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Internal: Strengths
The firm has sustained its brand image in the Australian retail market, and it seems one of the biggest strengths. The group manages large numbers of supermarkets and a huge market share as well (Hogg, 2013). Financially, the firm is strong enough to expand the business in different potential markets. It has been observed that the firm has successfully used both online and Brick & Mortar business model to serve the increased customer traffic. Environmental commitments and portfolio diversity of the company are well-known strengths.
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Internal: Weakness
Lacking advertising on both modern and traditional media channels is a significant weakness, and it seems a valid reason regarding a decline in the competitive advantage. The firm depicts limited international presence, as it is dependent on just Australia and New Zealand (Khumalo, 2016).
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External: Opportunities
It is an excellent opportunity to expand in different markets, which are undone yet, and it is possible through capital investments. Sales can be increased, and brand image can be sustained through reshaping promotional activities. Winning customers in the competitive market is one of the primary priorities. Now, it is the right time to engage social media channels to enhance the visibility of marketing and customer engagement (Rajeck, 2015).
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External: Threats
Online business growth in Australia seems low as compared to other countries, and it looks a considerable threat to Brick & Mortar companies like Woolworths Group and related subsidiaries. Rapid business expansion of competitors or new arrivals such as Aldi is a significant threat to the company, as far as sustainability is concerned (News Corp Australia Network, 2016). In Australia, there is a discount war in the retail sector, which can hit the financial capability and profitability as well. If the company does not keep products at a discounted rate, customer conversion can be observed.
Articulation of Competitive Advantage
The company has gained a competitive advantage due to its incredible and diverse product portfolio as compared to other rivals such as Coles and Aldi (News Corp Australia Network, 2016). Even Aldi changed its product strategy by expanding its product line and reducing the competitive impact of this retail giant. The increasing market share of the company leads to revenue streams and profitability, and further, it helps to expand the business in the region. Even in New Zealand, the internalization has become successful, which contributed to gain the advantage over local retailers or supermarkets. The management stability has helped to maintain its focus on differentiation, product development, and internalization, and interestingly, these are some critical competitive drivers.
Diagnose of Strengths, Weakness, Sources, and Future Sustainability
The financial capability and differentiated product portfolio, which are key strengths of the company, can help to sustain the competitive advantage in this competitive landscape. For Instance, after maintaining the brand image in both Australia and New Zealand, the main priority of the company is to use financial resources, identify the needs of customers, and develop or maintain the portfolio. Comparatively, it seems rare in the retail market, and it ensures the competitive advantage of sustainability. The competitive advantage can also be sustained through utilizing social media channel. Customer engagement and interaction must be differentiated to be relevant and different at the same time. Both financial and human resources, including management and employees, can facilitate in sustaining the business advantage.
Aldi, being a prominent competitor of this company, took a 10% market share in the retail market (Rogermontgomery.com, 2014). Some dramatic increase in the volatility of the firm seems rare. However, Aldi is a real threat, and financial, human and technological resources will be used to tackle it. It is a fact that competitors are looking to come up with some high-quality items along with low process as compared to other retail giants. They want to gain the advantage through possible customer conversion, and Woolworth Group is quite aware of it. It is a time to convert all opportunities into strengths and make the difference in an intense rivalry.
Conclusions (Strategic Opportunities & Risks)
In the end, it is to conclude that Woolworth Group has got the potential to gain and sustain a competitive advantage in the retail industry. However, the management of the company must have to streamline some strategic considerations. Business expansion is a crucial strategic opportunity to increase market share. On the other hand, fierce competition can restrain the firm from grabbing the expected customer range. Strategic thinking and cognitive capabilities are to be combined to enable the edge over rivals for a long run.
References
Hogg, A. (2013) Woolworths’ management stability produces market share gains, bucks trend, 23July, [Online], Available: https://www.biznews.com/interviews/2013/07/23/woolies [5 April 2019].
Khumalo, K. (2016) Woolworths continues international expansion, 6October, [Online], Available: https://www.iol.co.za/business-report/companies/woolworths-continues-international-expansion-2076761 [5 April 2019].
News Corp Australia Network (2016) Woolworths’ ‘defensive’ move against Aldi won’t work: expert claims, 7June, [Online], Available: https://www.news.com.au/finance/business/retail/woolworths-defensive-move-against-aldi-wont-work-expert-claims/news-story/4085d99a93dbf783787a199bef9f3875 [5 April 2019].
Powrbot.com (2017) Woolworths Ltd Company Profile, 1January, [Online], Available: https://powrbot.com/companies/profile/woolworths-ltd/ [5 April 2019].
Rajeck, J. (2015) How Australia’s Woolworths delivers the goods on social, 30September, [Online], Available: https://econsultancy.com/how-australia-s-woolworths-delivers-the-goods-on-social/ [5 April 2019].
Rogermontgomery.com (2014) Is Aldi A Real Threat To Woolworths & Coles?, 26November, [Online], Available: https://rogermontgomery.com/is-aldi-a-real-threat-to-woolworths-coles/ [5 April 2019].
