The idea of strategic analysis mainly refers to the different methods and procedures that are being used to research a particular company and the situation of the industry where the company is conducting its business operation. The report provided below provides a substantial amount of knowledge on the internal and external analysis of a company named Woolworths Group that specializes in the retail sector. The external analysis would shed light on the potential of the industry and the influence of the macro-environmental factors on the business functioning of the organisation. The report would also focus on the different opportunities and threats that the company is subjected to. On the other hand, the internal analysis of the company led to the understanding of the availability of the resources for their operations and in the proper analysis of the company’s core competencies.
It is important that an individual is familiar with the historical background of the organisation and the fair share of success and failures they have incurred in the past and the vision they have for the future. The company that has been chosen for the research is Woolworths Group, and it is one of the major providers of retail services in Australia. The products of this company comprise some of the most recognisable and trustworthy brands in the retailing industry and this company serve millions of customers on a daily basis. The mission of the company is to deliver products to the customers conveniently and ensure that the products turn out to be value for their money. The company has more than 3,000 stores across Australia, and they employ more than 205,000 employees who serve more than 29 million customers every week (Woolworthsgroup.com.au, 2018). As of 2017, the annual revenue of the company amounted to almost $56 billion making it the second largest company by revenue in Australia (Woolworthsgroup.com.au, 2018). The company is also known to be a partner to thousands of local farmers and manufacturers.
2. What industry is it?
In the current scenario, the retail sector of Australia is facing challenging circumstances mainly due to high levels of competition and because of increasing digital disruption. However, some of the major retailers have managed to ensure that they can transform the challenges and utilize them as one of their strategies by formulating a plan that would aim at enhancing productivity and profitability of the organisation. The retail sector of Australia will also be able to employ almost 8.9% of the population. It indicates that the industry will be accustomed to the growth of 1.7% per annum in the next five years. The retail industry highly contributes to the economic stature of the country. In the year of 2012-13, this particular industry contributed almost 4.5% to the GDP of the country (Growth, 2018). The retail sector has one of the youngest age profiles of all of the industries. In addition, the industry is also very diverse, and they have a coordinated approach to workforce development.
The industry environment
The strategic management tool that is being used for the understanding of the industry environment for Woolworth’s group is Porter’s five forces. It also allows the understanding of the influence of competitive forces in influencing the profitability of the company.
For the operations of Woolworths Company, the supplier power has been identified to have a low impact on the functioning of the company as to ensure the proper management of their supply chain; the company can approach multiple suppliers of raw materials and for products from different brands as well.
The power of the buyers has been estimated to be from moderate to high, thus implying that the customers can seek more offers and discounts for the products available in the stores. The customers are the key stakeholder of the company, and it provides them with the opportunity to ensure that they can avail products at best prices possible (Bamiatzi et al., 2016).
The threat of the potential entrants in the industry is low because the industry is already equipped with a sufficient amount of companies that have been able to gain a huge customer base. The company has, however, managed to eradicate the threat of these competitors and safeguard its competitive edge.
The threat of substitution is being identified to be from moderate to high. Since the company, Woolworths has managed to maintain their market dominance, but the company has also managed to gain some of the competitors in this sector thus rating the threat of substitution from moderate to high. If the customers are not satisfied with the product portfolio or the pricing range of the company, then they will search for companies with similar products but with the affordable price range (Sutton-Brady et al., 2015).
Rivalry among competitors
The rivalry among the competitors has been rated high because, in the retail sector of Australia, Cole’s supermarket chain has been recognized to be its biggest competitor. The competition between the companies does take a toll on the profit margin, and it can be prevented by building product differentiation and by attracting a large customer base than the competitor.
Abs.gov.au. (2018). 3101.0 - Australian Demographic Statistics, Dec 2017. [online] Available at:http://www.abs.gov.au/ausstats/abs@.nsf/0/D56C4A3E41586764CA2581A70015893E?Opendocument [Accessed 11 Sep. 2018].
Asx.com.au. (2018). [online] Available at: https://www.asx.com.au/asxpdf/20130927/pdf/42jnlfh700y1zr.pdf [Accessed 11 Sep. 2018].
Bailey, J., Price, R., Pyman, A. and Parker, J., 2015. Union power in retail: Contrasting cases in Australia and New Zealand. New Zealand Journal of Employment Relations, 40(1), p.1.
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