Woolworth LIMITED
Business Strategy Reprot
Background to Company
Woolworth Limited is the food and takeaway liquor retailer in Australia, often colloquially known as "Woolies' and going by the slogan 'The fresh food people'. It operates in every Australian state and territory. Offshoots are Woolworth's online (Homeshop) which allows uses to purchase food over the Internet and Woolworth's Liquor a department of Woolworth's supermarket stores (IRIS Tasmania, November 2007).
Challenges
Woolworth Limited has to follow government rules and regulations. The political factor involved in this situation is creating both opportunities and a threat for Woolworth Limited. It is an advantage in that it affords Woolworth a diverse work crew since the Australian government applies the Fair Work system that requires that employees and other staff receive maximum weekly hours, protections from unfair dismissal of employee, flexible working roaster, balance between work and family life, and advance notice of termination and redundancy pay. All these facilities are motivating employees towards Woolworth, encouraging responsible employees so that Woolworth is better able to increase its sales margin with increased customer satisfaction. Recently, however, the government has announced its Stimulus Package 2010 that has affected a rise in interest rate that paused customers to spend in retailing. The credit is tight, sales are flat, and that is leading to a threat for Woolworth Limited. Economic factor such as taxation, government spending levels, interest rate, inflation rate, and import/export ratios are elements that related to organization profitability, and that affect both capital availability, cost, and demand. Woolworth itself has acknowledged the rising prices in food ("Woolworth Limited," web). Recently family budget has been hurt due to a high interest rate and rise in fuel prices that have risen from $1.20 to $1.30 (per liter) which is making it more risky for Woolworth's to meet their expected sales.
Social challenges include the demand that varies with the population size, and the earning capacity of people that provides both opportunities and threat for particular organizations (Thompson, 2002: Pearce and Robinson, 2005). The recession has caused a slump in spending capacity. Woolworth has always provides fresh and organic food keeping in mind the customer's health ("Woolworth Limited," web). And the strategy of selling fresh organic food and displaying concern towards the customer's health offers the opportunity to sell their products among the customers.
Technology is another key factor that helps make a business successful and Woolworth has employed this to the utmost. The Woolworth strategy of providing online shopping has increased Woolworth sales rate to 59% for the year 2010. Everyday rewards program provide customers to register their membership and receive discount on fuel, which also provides opportunities for Woolworth to increase their sales. Woolworth also offers Qanta Frequent Flyer points and personalized shipping offers. As of February 2010, 4.6 million Everyday Reward cards were issued with, with 2.1 million issued associated with Qanta Frequent Flyer points membership ("Woolworths Limited - Half Year Presentation HY10" (PDF)). There is the Everyday Money credit Card where points are earned for punches made at a Woolworth's Limited and these points are then converted to shopping vouchers. The Everyday Money Prepaid Master Card was recently issued in June 2010 ("Woolworths Limited - Half Year Presentation HY10" (PDF)) Finally, there is a pre-paid Mobil service where $2 SIM cars are purchased in stores and recharges are available both online and in stores. One future objective, planned in association with Lowe's (America's major home retailer business) is to enter the home improvement market. Woolworth's first step in that direction will be to open its first home improvement business in Coolaroo, Victoria in 2011. All of these factors are facilitating Woolworth's opportunities to increase its sales margin. And Woolworth expect of net profit of 8-11% in 2010-2011.
2. Prospective Business Strategies
The first step would be to conduct an internal self-analysis of Woolworth's profitability and its experience curve (Aaker, & Day, 1986) Particularly in Woolworth's case, regarding Woolworth's history can help us generate solutions for its future. This is not the first time that Woolworth is struggling with difficulties (Hollingsworth, 1990). How did Woolworth overcome its past difficulties and acquire its present prodigious profile?
It reacted by becoming more innovative and more creative and decentralizing. Using a bottoms-up approach, creativity was sought from the lowest level of the hierarchy -- the store manager, since it is the store manager that is most closely associated with the trends in the market.
Woolworth Limited also used Boone and Hollingsworth (Hollingsworth,...
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