Woolworths Strategic Analysis

Topics: Customer service, Brand, Strategic management Pages: 13 (3575 words) Published: August 25, 2013
Woolworths Limited is a retail company made up of a range of businesses that provide customers with quality, range and value. This report focuses on two parts, Woolworths Ltd Strategic analysis and strategic review in order to provide advise to the Board and Senior Management of Woolworths to obtain a higher achievement in 2012. In the first part, the report demonstrates analyzing the business environment by SWOT analysis, key capabilities, major stakeholder interests and identification of generic business level strategy of supermarket unit. Then the second part provides analysis on two strategies from internal and external environment and the Corporate Balanced Scorecard analysis contributing better implement their strategic plans. 1. SWOT Analysis

Internal| External|
Strengths| Opportunities|
* Wide range of trading divisions * Location advantages * Global sourcing and stable supply chain * Experienced management team | * Woolworths is a listed company. * Widespread of internet * Increasing immigrating population * Acceptance of credit card payment| Weaknesses| Threats|

* Management risk of new appointed managers * Increasing funds of new investments * Low short-term profit * Higher inventory cost| * Regulations and nature disasters in new operating sites * The rise in interest rates * Challenge of forceful retailers’ entry * Strong Australian dollar| Strength

Woolworths has many trading divisions in Australian and New Zealand, which cover wide range of industries such as supermarkets and petrol to ensure its EBIT growth. The sites of supermarkets are across Australian and New Zealand located in most of the shopping centers, so it is convenient for customers to find their nearest one, which can increase customers’ satisfaction. In addition, the expending global souring and international logistics capabilities ensure the stability of supply chain. It provides cost advantage through other competitors and brings substantial profits to Woolworths. The experienced management team delivers continuous growth in profit every year and ensures the sustainable development in the intense competition industry. Weakness

Many new stores were opened in the last years, thus the management risk arise since new management teams must be appointed in new stores. In addition, investment cost and research cost increase at the same time. The increasing funds of expending investments including supply chain systems, multi-channel and stores leads to lower capital returns to shareholders. Moreover, due to the accelerated started up of new business in home improvement, the profit growth is relatively low in short term. In terms of inventory, higher level of average inventory held than last year brings increasing cost and higher inventory risk. Opportunities

As Woolworths is a listed company, it is easy to collect funds in assistant with implementing of the new business. The wide use of Internet leads to customers’ preferring to shop online, which can save time. Woolworths takes advantages of online and has a strong lead position in multi-channel business. The keeping increasing immigrating population in Australia causes growing in number of customers. Most of Australian residents would like to use credit card rather than taking large amount of cash in pocket, so accepting card purchasing also help Woolworths boosting consumption growth. Threats

More regulations to comply with and licenses to acquire cause the increase in managing and operating costs when the company expands operating scale in different regions. Moreover, nature disaster involving floods, cyclones and earthquakes happened in Queensland and Christchurch caused disruption to the business and some additional costs incurred. Saving rates increasing and uncertainty of global economic conditions have adverse influence on consumption growth. What is worse, the strong retailers’ entry enhances the competition in...
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