HI5019 Strategic Information Systems T2

Introduction

This aim of this report is to provide a detailed strategic analysis of the company, Woolsworths supermarkets. The required analysis of the company is executed using PESTLE analysis, Porter’s Five Forces analysis. The opportunities, and the threats of the company are discussed in this report. A brief report of the resources of the firm are provided in this report. The capabilities and the elaborated analysis of the capabilities are stated in this report. The core competency analysis of the company is discussed. An information system that is suitable for the organisation and it meets all the requirements of the company are stated in this report. Lastly, this report concludes with an appropriate conclusion of this report.

Woolworths supermarkets is a store chain of supermarket/grocery located in Australia and it is owned by Woolworths Limited. The company was established in 1924, and with the help of collaboration with Coles, it formed a near-duopoly of the supermarkets of Australia, and it controls almost 80% of the market of Australia (Biddle 2016). The speciality of the company is selling power of the company in the groceries department such as fruit, meat, vegetable and packaged foods. The interest of the customers started to be attracted towards the company after the company successfully implemented several store branches all over Australia. The stores of Woolsworths started selling varieties of goods and services, which gave them the power to claim as the cheapest store for groceries in Australia (Blundell 2013).

Discussion

GENERAL ENVIRONMENT

PESTLE analysis 

Political factors:

The profitability in the long-term future of the Woolsworths supermarkets are majorly denoted with the help of the political factors that plays a substantial role in all the markets of the country. The industry of retail in Australia have been severely affected due to the political factors. The competition among the minor retailers has increased because of the business and dominance of the supermarkets that are dealing in the retail industry such as Woolsworths (Bober 2014). This increased competition has forced the government to apply required policies. The laws that are controlling the monopoly in the market sector and the right of the shareholders have been implemented. Analogous decisions such as profitable viewpoint within the coal industry, and the interest rate that is applied on the electricity have been diminished. These laws have created a benefit for the company for doing business more efficiently (Bogomolova et al. 2016). The importance and the political stability of the food and staples industry retailing sector constituting in the economy of the company needs to be resolute.

Economic factors:

Marketing growth and the performance of Woolsworths supermarkets are effected by the behaviour of buying of the consumers and the demand of the customers according to the economy condition of Australia. The global crisis in 2009 created a condition of decrease in the disposable income, which lowered the consumption behaviour of the consumers (Burch, Dixon and Lawrence 2013). The conditions of natural calamity and climate changes are equally the reason behind the decrease of production. Aggregate demand and aggregate investment of any economy are understood with the help of economic cycle and macro factors of the environment such as the rate of inflation, savings rate, foreign exchange rate and the interest rate. The economic factors such as inflation, rate of growth, and economic indicators of any country affects the rate of growth in the retailing industry of staples and food (Burton, Spanjaard and Hoek 2013). The statistics of the average purchasing done by the customers will assist the Woolsworths supermarkets in predicting the trajectory of growth.

Technological factors:

The trend in Australia of shifting towards the implementation of technology in the businesses is a major factor in the growth of business in the country. The growth of technology can be seen all over the world. A strict analysis is required to be done by the organisation for understanding the rapidness of technological growth and interpret the reach of technology in disrupting the industry (Davey and Richards 2013). The industries have to implement the required methods for handling the technological disruptions as quickly as possible as the time will decrease due to the quick growth of technology implementation in the country. The competitors of Woolsworths supermarkets have made a significant technological development and these developments needs to be analysed by the Woolworth company to implement suitable developments in the systems of the Woolworth supermarkets (Cameron et al. 2015). A strict analysis of the offerings that are provided by the technological advances needs to be determined to interpret the requirements of the consumers.

Social factors

The company Woolsworths supermarkets holds a massive base, which involves different kinds of employees and shareholders residing in the organisation and the workforce of the organisation provides the opportunity to be a leading employer (Grigg 2015). Several duties and initiatives have been implemented by the company to make developments for the society. The common beliefs and ideas of the population and the company, Woolsworths limited creates a process of interpretation of all the potential consumers of any market and the designing process of the marketing communication for the industry of food and staples (Grimmer 2017). The demographic analysis and the knowledge level of the population in a country has to be severely analysed. A detailed examination of the structure of power, the structure of class and the hierarchy of the society needs to be executed. The company should consider the cultural inclinations of the society where they are approaching for starting business. The ideology and the beliefs of the society towards the idea of entrepreneurship has to be critically analysed along with the leisure interests (James 2016).

Legal factors:

The intellectual rights of possession of a company is not protected extensively due to the implementation of frail and weak legal framework of a country. The marketing of various industries in Australia along with Woolsworths supermarkets have been affected due to the implementation of strict legal boundaries by the government (Jie, Parton and Chan 2015). These laws have affected the organisation by lowering down the performance and production of the company. An analysis of the Anti-trust laws residing in the retailing industry of staples and food must be executed. The discrimination laws should be analysed. The intellectual law and the patents that are involved in the country should be analysed. The safety and health laws should be analysed extensively. The main factor of an organisation is the protection of the organisational data. The organisation with the best measure for protecting the data makes a clear progress in the market (Johnston et al. 2017).

Environment factors

Implementation of specific preventive measures and protocols have been executed by the company for ensuring protection of the environment. The rules and protocols that are implemented by several businesses in the markets have been successful for making the most profits and productivity for the companies. The companies with an idea of starting a new business in the markets must invest considerably in the areas where there is a chance of  resource depletion, development of flexibility of the alterations in the climate an appropriate supply of water. The environmental factors such as climate change and weather conditions has to be analysed critically (Knox 2015).

INDUSTRIAL ENVIRONMENT

Porter’s five forces model:

Threat of new entrants: Low

New organisations introduces innovation in the food and staples sector. Modified methods of conducting business is introduced by new organisations. Woolsworths supermarkets have made it difficult for the new entrants to flourish in the retailing sector by creating diverse collection and several operations (Lawrence 2013).

Bargaining power of the buyers: High

The power of the buyers is significantly higher in the sector retail business. Buyers have a tendency of buying items that are aimed for fulfilling the personal needs of the customers at a minimum cost. The Wesfarmers limited is a major competitor of Woolsworths supermarkets. The bargaining power can be diminished by the organisation with the help of introduction of new products at a cheaper cost (Merrett and Smith 2013).

Threat of substitute products: Low

The customers of the retailing industry consume products regularly, which makes it difficult for modifying the products in this sector. The tendency of the customers to consume only one kind of products and the chances of shifting to a new product is significantly lower. The tendency that is implemented by the organisations to conduct business with an orientation towards service provides advantage from the companies that conduct business in a product oriented approach (Mortimer 2015).

Rivalry among existing industries: Moderate

Rivalry among the existing companies in the sector will lead to the reduction of prices and the damage the profitability. This concludes that the impact of rivalries in the retailing sector is significantly higher than other industries. The Woolsworths supermarkets have a moderate threat amount from the existing companies in the retailing sector (Mortimer 2017).

Bargaining power of suppliers: Moderate

The Woolsworths supermarkets face a moderate amount of threat from the bargaining power of the suppliers. This reduced threat is obtained by the help of strong and stable mutual relationship with the suppliers and this creates a probability of long-term future partnership. The need of buying several kinds of products by the companies in the retailing sector creates introduces a high demand of the suppliers in this sector. The position of the suppliers also matters in this sector as the dominant suppliers of the products in a market will create reduction of profits for the organisation. The power of negotiation of the suppliers increases the rate of the products and forces the organisations to pay significantly higher prices for these products.

Opportunities:

The opportunity of the retail company lies in the difference they can create in personalizing the in-store experience of the customers. Such service includes self-checking, personalized wish lists and intelligent shopping assistance with auto setting of choices based on the wish list, etc. these will help in boosting the popularity of the stores and attract potential customers to check out.

 However, keeping up with the changing style statement and fashion of consumers is the best way to grow the business. The retail industry in the Australian market shows eminent potential of growth due to implementation computerized sales and services, regular updating with the changing fashion statement and advancement in overall supply and chain management. Woolsworth has a huge opportunity to grow in specialized shopping experience.

Threats

Threats are those parameters, which can be disastrous to the improvement of a company. In case of Woolswarth are as follows.

• Competitive nature of the market: Australian retail industry is considered as one of the highest bidders in the global market. The main competitor of Woolsworth is Coles. However, Amazon and other online shopping portals are also trying to get hold on the market. Competition is tough here, which is why it is a huge threat for Woolsworth.
• Changing ideas towards health-consciousness: people now a day are more health conscious than earlier, which is why the choices are changing rapidly. From soft soda drinks to organic fruit juice and healthy foods. This has effected the retail industry too. Popularity of chemical free organic products like cotton is taking hold of the market than polyester and other synthetic products. With the changing habit to environment friendly products is a huge threat for retail industry.

(Internal analysis and proposal)

The firm’s resources, tangible and intangible 

To be a highly sought after retailer in Australia and New Zealand, Woolsworth have to use strategically all the tangible and intangible resources effectively. The company uses highly experienced employees to control the manufacturing and storing of the products to ensure quality of the product unlike their competitors. Instead of fresh workers, they prefer to recruit middle-aged experienced people for better outcome; however, this can affect the quantity of production. The company spends a large part of their yearly profit over their employees to ensure satisfaction. Human resource is the best intangible asset of Woolsworth and the reason of their huge success.

The in-store service is the highest priority in the list of tangible assets of the company. As the company is focusing on opening more stores around the company, the in-store services like customized shopping, intelligent assistance are some of the few sought after benefits of offered by Woolsworth. People love to shop around stores like this.

Capabilities identification 

The capabilities of Woolsworth are as follows:

• Woolsworth has seen a great improvement in terms of financial parameters throughout the last few years. The company has reached a growth rate of 7.96% reducing the overall costs in the last five-year cycle. These figures can give big challenge to the competitors like BI-LO or Cole. The ability to understand their customer’s requirements and implementing new technologies for in-store shopping are the key factors of their huge financial success.   
• Woolsworth has been turned into the most trusted brand in Australia. In 2005, in a survey the company was ranked in the first position of the list of top retailers in leadership and innovative customer care strategy. Even, BRM AMP Australia voted them as the top sustainable retailer in 2012. Currently they are the top brand for online shopping in Australia and New Zealand for quality products and price.
• Woolsworth is also known for their healthy relationship with their suppliers and producers. The company proudly flaunts their relationship with the suppliers. A small change in the pricing in the retails have a huge mark among the suppliers. Woolsworth has worked with major suppliers like Federal Government in a Green/White Paper processing project to develop National Food plan. In 2007, they launched a new program of Woolsworth Fresh Food Future program to work directly with the farmers for sustainable agriculture.

Core competency analysis

Within a short time-span Woolsworth has acquired the position of top retailer in the market of Australia and New Zealand giving a huge competition to companies like Cole. The reason of this success are the better analysis of the changing requirements of customers and best quality in store services besides strong financial success and better relationship with suppliers and employees.

The company always ensure that they recruit experienced employees to ensure quality product to their customers. Unlike other retailers, they always recruit middle-aged experienced people as their employees. In addition, they perform regular survey among their customers and potential ones to have in depth knowledge about the current fashion trends. In addition, the transition to eco-friendly choices are their strength as they are already following these.

The implementation of intelligent services in their in-storing retail shops is also gaining popularity among many. People are enjoying their services like customized shopping list, intelligent assistance. This parameter differentiates the brand from others giving a boost to their financial status. In addition to this, the company flaunts their relationship with suppliers. They take a good care of their suppliers time to time to ensure quality products.

Information system

The accounting information system that is proposed to the organisation is Xero. This is an organisation of public software situated in New Zealand. Small and medium businesses obtain the platform of cloud computing for the accounting software of the company. The products of this organisation are base on the services of SaaS model and these services are sold with the help of subscription. The major features of Xero are automated account reports of credit card and bank, purchase orders, invoicing and expense claims (Birt et al. 2017).

Recommendation

After conducting a strategic analysis of the business environment of the Woolworth supermarkets, it is recommended to implement the Xero software for creating a modified system for accounting. The benefits that can be gained by the organisation are:

• Data backup can be executed automatically. It will diminish the excess time spent on manual backup of data and better security can be provided to the data.
• Better support can be provided to the clients of the company.
• Financial reporting can be provided in real-time, which is a modified ability of managing cash flow efficiently
• Easy collaboration can be implemented among the business owners and the advisors who can have the access to all the information in real-time (McWilliams 2017).

Conclusion

At last, it can be concluded that the political, social, economical, technological and legal factor play a major role in the profitability of Woolsworths supermarkets. Woolworths supermarkets is a store chain of supermarket/grocery located in Australia and it is owned by Woolworths Limited. The speciality of the company is selling power of the company in the groceries department such as fruit, meat, vegetable and packaged foods. Fluctuation in the economy of the country creates a threat for the companies in the sector. The government implemented strict laws. The threats of new entrants in this industry is lower, the bargaining power of the buyers are higher, the bargaining power of the suppliers are lower, the rivalry among the existing companies is moderate and the threat of substitute products is lower.

References

Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle. Busidate, 24(3), p.3.

Birt, J., Wells, P., Kavanagh, M., Robb, A. and Bir, P., 2017. ICT literature review.

Blundell, L., 2013. Resurrection of a retail giant. Property Australia, 27(9), p.22.

Bober, I., 2014. Smoke and mirrors. AJP: The Australian Journal of Pharmacy, 95(1125), p.2.

Bogomolova, S., Loch, A., Lockshin, L. and Buckley, J., 2016. Consumer factors associated with purchasing local versus global value chain foods. Renewable Agriculture and Food Systems, pp.1-14.

Burch, D., Dixon, J. and Lawrence, G., 2013. Introduction to symposium on the changing role of supermarkets in global supply chains: from seedling to supermarket: agri-food supply chains in transition. Agriculture and Human Values, 30(2), pp.215-224.

Burton, S., Spanjaard, D. and Hoek, J., 2013. An investigation of tobacco retail outlets as a cue for smoking. Australasian Marketing Journal (AMJ), 21(4), pp.234-239.

Cameron, A.J., Sayers, S.J., Sacks, G. and Thornton, L.E., 2015. Do the foods advertised in Australian supermarket catalogues reflect national dietary guidelines?. Health promotion international, 32(1), pp.113-121.

Davey, S.S. and Richards, C., 2013. Supermarkets and private standards: Unintended consequences of the audit ritual. Agriculture and human values, 30(2), pp.271-281.

Grigg, S., 2015. Spinach–A global expedition to understand the prevalence of Damping off and practical management techniques.

Grimmer, L., 2017. Is it so hard to say sorry? Revisiting image restoration theory in the context of Australian supermarkets. Asia Pacific Public Relations Journal, 18, pp.17-32.

James, S.W., 2016. Beyond ‘local’food: how supermarkets and consumer choice affect the economic viability of small?scale family farms in S ydney, A ustralia. Area, 48(1), pp.103-110.

Jie, F., Parton, K. and Chan, C., 2015. Australian beef supply chain integration: case studies of the two largest Australian supermarkets. International Journal of Supply Chain and Operations Resilience, 1(2), pp.121-138.

Johnston, R., Stafford, J., Pierce, H. and Daube, M., 2017. Alcohol promotions in Australian supermarket catalogues. Drug and alcohol review, 36(4), pp.456-463.

Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths' dominance (Vol. 6). Black Inc..

Lawrence, G., 2013. Submission to the Senate Committee on Recent Trends in the Preparedness for Extreme Weather Events.

McWilliams, K., 2017. Productivity in accounting services. Improving service sector productivity: the economic imperative, p.118.

Merrett, A. and Smith, R.L., 2013. The Australian grocery sector: structurally irredeemable?. The State of Competition.

Mortimer, G., 2015. Down, down but not different: Australia’s supermarkets in a race to the bottom. The Conversation, (28).

Mortimer, G., 2017. Getting rid of plastic bags: A windfall for supermarkets but it won’t do much for the environment. The Conversation, (17).