Table 1: General Environment Analysis
(Source: Created by the learner)
4. 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.
5. Competitive environment
Coles Supermarket has been identified as the biggest competitor of the company. The annual revenue of both the companies is almost similar to a marginal difference. Both the companies belong to the retail sector, and the competitive scale between both of them is always high. By 2017, the competition in the retail industry was just limited to between Coles and Woolworths. However, in the current scenario, the competitive nature has increased with the entry of Amazon and ALDI (Business Insider Australia, 2017). Both of these companies have differentiated product portfolio, and their performance in the market has been praised ever since their foundation. In addition, they have appropriate return policies and home delivery options within a limited timeframe. The companies have managed to dilute the scenario of intensified competition between only two companies in the sector. Due to the popularity of both the companies overseas, there is a possibility that Woolworths will be accustomed to a much higher level of competition in the future.
6. Opportunities and threats
The opportunities and threats are being identified as the external strategic factors of the company that allows them to identify the potential options and coercion that could influence their operations. According to Bailey et al., (2015), the opportunities and threats of the company are as follows:
The green drive of the country allows the company to promote the idea of sustainable activities
New trends in the consumer behavior allow the company to experiment with different products and technologies
The increase in the prices of the raw materials poses a threat to the supply chain of the company
The physical evidence of the company can suffer a massive impact due to the services provided by competitors such as Amazon and ALDI
Part 2- Internal Analysis and Proposal
1. The firm’s resources, tangible and intangible
The company has a fair quantity of tangible and intangible resources. They invest a substantial amount of financial capital for the proper use of assets in gaining profit margin for the company. The key tangible resources of the company are property, plant, and equipment. The tangible assets of the company are being tested for impairment on an annual basis. The company identifies impairment loss whenever the recoverable amount surpasses the carrying amount. The recoverable amount is determined based on the cash flow projection (Asx.com.au, 2018). The intangible resources of the company comprise of brand names, liquor licenses, gaming licenses, gaming entitlements, and research and development. The intangible assets of the company play an integral role in forming the consolidated accounting policies. The investments made in equity securities are being identified as financial assets of the company.
2. Capabilities identification
As it has been identified in the previous sections, Woolworths is a retail organisation that operates in Australia. The company is being considered as one of the prominent and one of the best retail companies in the country. From the external analysis conducted above, it has been found out that the company has been subjected to suitable market and economic conditions of the country. The primary intention of the company is to establish a customer-centered store that allows them to prioritize the needs and requirements of the customers at the initial stage. They are capable enough to ensure that they can generate sustainable performance in food. The company has managed to witness growth both in the store operations of Australia and New Zealand. The company has also witnessed a substantial amount of growth with the branding of the products of their own brand. The company has also been able to launch their online community ‘The Bunch’ that allows the customers to taste the Woolworths own brand products free (Woolworthsgroup.com.au, 2018). Thus, it can be said that the company has been trying to gain the loyalty of the customer base with the help of a different range of products.
Table 2: Core competency analysis
From the table provided above, it can be said that the company’s ability to achieve sustainable performance in food, the promotion of their brand and their online community have allowed the company to gain a competitive advantage in the market.
4. Propose a suitable information system solution that meets the chosen company needs.
The use of a suitable information system solution would ensure that the company can gain a substantial amount of convenience while conducting the operations of the organisation. It would ensure that the company can monitor the performance of the employees and collect data for the maintenance of the materials that are being gained and delivered to the customers making purchases appropriately. The use of iVend Retail has been proposed for meeting the needs of the company that would allow them to ensure that they can stress performance and functionality (Ivend.com, 2018). This software empowers the enterprise retailer and allows them to make informed decisions faster than usual. This software is affordable for the company and can offer better management that drives profit and in addition delighting the experience of the shoppers.
5. Evaluate the proposed system and provide your recommendations
The use of iVend has been recommended as a suitable information system solution for the company. This software can meet the necessities of the company regarding the experience of the shoppers alongside the management of the employees as well. Some of the disadvantages associated with the use of software comprising of its price tag, unmentioned warranty, bugs in the software, increase in the price of the license and many more. With such disadvantages associated with the functioning of the software, it would be considered appropriate for the company to ensure the involvement of different softwares that could help them enhance the operations of the company. Some other software that could be used by the company is NetSuite, Visual Retail Plus and many more.
To make some improvement in their operations the company can try to experiment with different products under the name of their own brand. The company can also incorporate the use of cloud computing and artificial intelligence to ensure that they can initiate the advancement of technology in their stores. They can initiate the self-checkout option for the convenient shopping of the customers.
The strategic analysis conducted above was based on the company named Woolworth’s Group. The strategic analysis allows in the proper identification of the company’s performance and in addition, allows in conducting a proper external and internal analysis of the company. The external analysis allowed in the understanding of the competitiveness between Coles and Woolworths and the entry of new retail organisations such as Amazon & ALDI. The analysis also demonstrated the influence of the general environment and the industry environment. The analysis also presented with the substantial amount of information on the competitor and the opportunities and threats available for the company. However, the internal analysis of the company led to the identification of the tangible and intangible assets of the company and the exact operations of the firm. The software iVend Retail has been chosen as the suitable information system that can fulfill the basic requirements of the company.
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