GSBS6060 | Strategic Management | Organic Products of Woolworths
- Demonstrates clearly the application of the Business Model Canvas, Value Proposition Canvas and possibly other relevant innovation management tools and techniques including blue ocean strategy tools and test cards to create and justify a specific business model.
- Successfully applies critical thinking, and analytical thinking to create elements of a business model and predict their strategic implications
Answer:
Introduction
This report demonstrates business plan for Woolworths to launch organic product in Australia. This plan also discusses many tools named business canvas model, value, proposition, and test cart that supports to effectively operate the business in the marketplace and get a reliable outcome. It also demonstrates the business pattern. In last, it recommends many strategies that should be implemented by the organization for getting higher success as well as sustaining their position in the marketplace.
Company overview
Woolworths is a famous supermarket in Australia as it has more than 997 stores at a global level. In this organization, more than 11700 employees are employed that deliver services of the organization to their potential consumers. This organization has used training and development method and improves skills of employees to positively treat with their consumers and attract them for the long term. Moreover, it is also examined that Woolworths identify consumers who believe to pay in oppose to healthy products and services. In the existing business era, Woolworths is famous for delivering their innovative products and services in Australia. Through this way, it makes their unique image in the marketplace and obtains higher profit. It has 27.49 AUD of shares prices in recent time (Woolworths, 2018).
Business idea
Woolworths will introduce their organic food in the targeted market for their consumer who desires to purchase healthy products and services. This product has entails many characterize suitable calories, fiber, and vitamins, which could be imperative to make a healthy lifestyle of consumers.
Challenges faced by the organization at the time launching organic products and services
Woolworth will confront from many challenges at the time of launching their organic products and services in the marketplace. These could be associated with consumer’s expectation, reaching out the consumers, change in the customer demand, and higher competition level. These are discussed as below:
Understanding customer expectations
In the current era, it is a very complicated task for the organization to understand the expectation of consumers. For sustaining their position in the marketplace, it is mandatory for Woolworths to use marketing strategy and understand the expectation of consumers that could be costly and time-consuming. It will influence the overall productivity of the organization (Hill, Jones, and Schilling, 2014).
Reaching out the consumers
Reaching out the consumers could also be another important task for Woolworths. Woolworths could market research and determines a feasible way to reach at the consumers. Due to the availability of many methods, it is complicated for Woolworths to address feasible way and get a reliable result.
Change in customer demand
The demand of consumers could be influenced by different factors like income, interest, age, gender, trend, and taste (Anderson and Sutherland, 2015). The demand for any products and services could be varying from the trend that creates the complication for Woolworths to maintain the demand and supply of goods and services. Thus, it could influence the overall profit of Woolworths.
Higher competition level
In the upcoming period, Woolworths could face a higher level of competition that could lead as it would decline possibilities of getting higher success in the marketplace. It could facilitate the firm to use the latest tools and techniques and attract more consumers to retaining their position in the marketplace (Ang, Benischke, and Doh, 2015).
Business pattern
Woolworth limited could segment their consumers on the basis of two factors named
Woolworth Limited can categorize their consumer on behalf of certain factors like demographic factor and behavioral factor as it is discussed as below:
Customer demographics/ segmentation
For delivering quality products and services in the marketplace, Woolworths could segment their consumers on the basis of interest, age, lifestyle, and income. It would be imperative for improving the existing financial condition of the firm. Furthermore, Woolworths select 16 to 39 years of consumers to deliver their goods and services. This age group of consumers understands the importance of healthy products and services (Bai, Krishna, and Ma, 2017).
Behavioral Segmentation
Woolworth could also segment their goods and services according to their behavior for selling their organic goods and services. Moreover, the organization could concrete on the medium as well as a higher class of urban people to deliver their services. It would be imperative for obtaining a huge amount of competitive benefits by attracting a huge number of potential consumers towards the products and services (Bernard, Grazzi, and Tomasi, 2015).
Target market strategy
Woolworth limited use undifferentiated marketing strategy for making a diverse image of the organization in the marketplace. In this strategy, the company could develop one specific good and services by considering a single marketing mix tool. This strategy could direct the organization to manage the fluctuation issues and get a reliable result (Rothaermel, 2015). It is examined that Woolworth limited should implement this marketing approach to get higher competitive benefits. Furthermore, this strategy leads to attract a higher number of consumers towards products and services of the organization. Apart from this, the organization could also imply the digital marketing approach to increase the awareness of goods and services and get a reliable result (Boellis, et al., 2016).
Key customers
Woolworths limited can target the particular customer as per the certain factors such as behavioral and demographical. Woolworths should implement the geographical factor through which it can target those customers who want the healthy lifestyle in Australia. By using the demographic factor, Woolworth can target both genders of customers like males and females as the organic food products are used by both genders. A corporation will target the 20-35 and 36-50 years of customers to develop awareness about the products and services that could persuade the consumer purchasing behavior. It will also include both levels of consumers such as upper and medium in order to increase the revenue of products and services.
Positioning of products and services
Positioning plays a key role to enhance the financial condition of Woolworths. It is also stated that through this strategy, a corporation can create their distinctive image in the market and pull the attention of bulk of customers towards their products (Meyer, Neck, and Meeks, 2017). Woolworths should offer a lucrative discount on their products and services to their consumers in order to enhance the growth of the company. Moreover, this strategy would aid the company to generate the distinct image at the marketplace (Buckley and Ghauri, 2015).
Competitors
There are certain key market players of Woolworths such as Cole’s supermarket, Wesfarmers and Aldi. These companies offer different services such as food products, groceries, footwear and beauty products. Hence, for gaining the competitive advantageous, Woolworths should offer organic food delivery services to their consumers. This services could be beneficial for creating the distinctive image as compared to its key market players in the food retail industry (Coeurderoy and Murray, 2014).
Strategic management tools
Value proposition canvas (VPC)
The value proposition canvas is a model to match the product to a customer who can purchase the products. The key result is to identify the thing in the product that no one wants (eliminate them) or for things that people want but are not in the product (create them) (Eriksson, et al., 2015).
The above chart shows that customer has a great job in increasing demand and revenue of the company. Hence, Woolworths should assess the customer’s concern. This chart also demonstrated that customers face the issue in terms of getting the product quality with affordable rate. They also want to get health-conscious products. From this chart, it is analyzed that Woolworths developing organic food products to decline the health obesity issue of people. Thus, it can be stated that the development of the organic product is matched with the needs of customers. It could be effective for gaining the revenue of demand of customers.
Business canvas Model (BCM)
Business canvas model is a strategic management technique and lean start-up template which aids to develop the new business model. It is a visual chart that demonstrated different elements such as the value proposition of product, customer, infrastructure, and finances. This model can aid the Woolworths in linking the activities by exemplifying the potential trade-offs (Forsgren and Johanson, 2014).
Following model shows the Business model of Woolworths for developing the new organic food products:
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Key Partners
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Key Activities
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Value Proposition
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Customer Relationships
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Customer Segments Mass-market segmentation:
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Key Resources
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Channels
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Cost Structure
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Revenue Streams
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Value curves and blue ocean strategy
A value curve is a diagram that could be practiced by Woolworths to demonstrate immediately whether the value is generated within organic food products and services (Game, and Apfelthaler, 2016). Following the value curve shows the value created by Woolworths and its competitors in different services:
As per the above chart, it can be stated that product quality of Woolworths is high as compared to Coles and Aldi. Furthermore, Price is low as compared to Coles but high from Aldi. It is also assessed that that customer services and brand awareness are also high as compared to Coles.
Blue ocean strategy
Blue ocean strategy could be created by Woolworths for developing new market space and aids to gain competitive advantages. This strategy would be also beneficial for generating customer value when declining costs (Hennart, Sheng, and Pimenta, 2015).
The following table shows the ERRC grid for Woolworths in terms of developing organic food products:
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Eliminate |
Raise |
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Reduce |
Create |
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The above chart shows that Woolworths would eliminate different factors such as traditional delivery channel, non-organic products, and health obesity issues. It would raise Quality products and Health-conscious products. It would also reduce the cost of developing the products and range of products. In addition, focuses on creating organic food products and using contemporary channels.
TOWS Analysis
TOWS analysis is a technique of strategic assessment, which is practiced for assessing the environment of the company and evaluating the situation analysis of company (Hernández and Nieto, 2015).
The following table shows the TOWS assessment of Woolworths:
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Strengths
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Weaknesses
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Opportunities
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S-O Strategies
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W-O Strategies
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Threats
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S-T Strategies
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W-T Strategies
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Strength- Opportunities
There is the availability of organic food products and prominent R&D aids to target the mass market that provides the opportunity to expand into new markets and gaining online revenues. It has prominent R&D that would help to create the larger base of customers. Moreover, there are different products range which would aid to decline the health issues of customers (Hollender, Zapkau, and Schwens, 2017).
Weaknesses- Opportunities
Development of organic food products will provide at the premium rate due to high cost. However, its distinctive product feature will aid to sustain in the marketplace and generating more share. The demand for organic food production is high in the market that would support the Woolworths for creating business sustainability (Laufs and Schwens, 2014).
Strength- Threats
Woolworths is having the significant marketing approach that aid to cover the mass market. This new product idea will also aid the Woolworths to deal with the customer’s preference and sustain in the market despite restricted trade policies (Ginter, Duncan, and Swayne, 2018).
Weaknesses- Threats
Woolworths has beneficial research and development system, which would aid to arrive at the customer’s demand and decline their issues. Strategies implemented by Woolworths will aid to generate the competitive benefit in the market (Jarzabkowski and Kaplan, 2015).
Recommendations
Reasons and implementation
Woolworths should imply many strategies to improve their current financial situation and get a higher result. These are differentiation strategies, pricing strategies, and digital marketing strategy as it is shown as below:
Differentiation strategies
Woolworths should imply differentiation strategies for generating their different image in the specified market. This strategy could differentiate products and services of the organization from the competitors that would increase the possibilities to obtain higher benefits (Lebedev, Peng, Xie, and Stevens, 2015).
Pricing strategies
Woolworths should imply pricing approaches by which firm deliver their goods and services at a reasonable cost. It could also be effective for attracting new consumers and retaining their existing consumers for long-term (Musso and Francioni, 2014).
For this, organizations should research to understand the consumers that how much they willing to pay for specified products and services. It would also enable the organization to retain their position in the marketplace (Hitt and Duane Ireland, 2017). Woolworths should deliver products and service to the higher and medium class of consumers due to getting higher competitive benefits (Meyer, et al., 2018).
Digital marketing strategy
The digital marketing strategy is practiced for promoting the goods and services among a large number of consumers (Robson, 2015). There are many sources that could be considered by the organization to deliver their goods and services in the least time and cost named YouTube, Instagram, SEO, Google, LinkInd, Facebook, and Snapchat. These sources could also support the organization to meet the aim and objectives in limited time and cost. Furthermore, these methods could provide an opportunity for the firm for directly communicating with their specified consumers and get a reliable outcome.
Test cards
Test card can be used by Woolworths to validate the innovative business ideas with customer experiments before scaling them. Following test card would be used by Woolworths to validate the ideas of developing organic food product in Australia:
Conclusion
With respect to the above interpretation, it can be summarized that Woolworth could use many strategies management tools and techniques for operating their business process in the specified marketplace. These strategies are business canvas model, value proposition, and test card. Further, it can also be concluded that the organization should use demographic and behavioral segmentation for classifying their specified market and obtain higher benefits. From the application of the demographic segment, it will target the age group of 16-39 years of consumers to deliver their organic products and services. It can also be illustrated that organization should use digital marketing strategy tool to improve their existing profit and influence a huge number of consumers. These sources are snapchat, Twitter, YouTube, Twitter, and Facebook. It would lead the organization to directly converse with their specified consumers and obtain a higher amount of the consumers.
References
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Bai, X., Krishna, K. and Ma, H., 2017. How you export matters: Export mode, learning, and productivity in China. Journal of International Economics, 104, pp.122-137.
Bernard, A.B., Grazzi, M. and Tomasi, C., 2015. Intermediaries in international trade: Products and destinations. Review of Economics and Statistics, 97(4), pp.916-920.
Boellis, A., Mariotti, S., Minichilli, A. and Piscitello, L., 2016. Family involvement and firms’ establishment mode choice in foreign markets. Journal of International Business Studies, 47(8), pp.929-950.
Buckley, P. and Ghauri, P., 2015. The internalization theory of the multinational enterprise: A review of the progress of a research agenda after 30 years. In International Business Strategy (pp. 99-121). UK: Routledge.
Coeurderoy, R. and Murray, G., 2014. Regulatory environments and the location decision: Evidence from the early foreign market entries of new-technology-based firms. In the Location of International Business Activities (pp. 226-260). Palgrave Macmillan, London.
Eriksson, K., Johanson, J., Majkgård, A., and Sharma, D.D., 2015. Experiential knowledge and cost in the internationalization process. In Knowledge, Networks, and Power (pp. 41-63). London: Palgrave Macmillan.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. UK: Routledge.
Game, R. and Apfelthaler, G., 2016. Attitude and its role in SME internationalization: why do firms commit to advanced foreign market entry modes?. European Journal of International Management, 10(2), pp.221-248.
Ginter, P.M., Duncan, W.J. and Swayne, L.E., 2018. The strategic management of healthcare organizations. John Wiley & Sons.
Hennart, J.F., Sheng, H.H. and Pimenta, G., 2015. Local complementary inputs as drivers of entry mode choices: The case of US investments in Brazil. International Business Review, 24(3), pp.466-475.
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Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hollender, L., Zapkau, F.B. and Schwens, C., 2017. SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation. International Business Review, 26(2), pp.250-263.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), pp.1109-1126.
Lebedev, S., Peng, M.W., Xie, E. and Stevens, C.E., 2015. Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50(4), pp.651-662.
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Meyer, K.E., Ding, Y., Li, J. and Zhang, H., 2018. Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad. In State-Owned Multinationals (pp. 211-251). UK: Palgrave Macmillan, Cham.
Musso, F. and Francioni, B., 2014. International strategy for SMEs: criteria for foreign markets and entry modes selection. Journal of Small Business and Enterprise Development, 21(2), pp.301-312.
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Rothaermel, F.T., 2015. Strategic management. USA: McGraw-Hill Education.
Woolworths. 2018. About us. [Online]. Available at: https://www.woolworthsgroup.com.au/page/about-us (Accessed from 16 October 2018).
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