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PESTLE Analysis of Woolworths (SWOT Analysis and recommendations)

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MyAssignmenthelpAu | March 04, 2020

This article tells about the strategic analysis of the strategy implemented by Woolworths in order to attain a high level of development. The strategy is implemented to achieve growth by satisfying customers. The analysis of effects the Woolworths and Australian retail by analyzing the external environment via environmental and political conditions affecting Woolworth's performance.

It also accesses competitive conditions with significant development and change of strategy. The company has skilled employees, good infrastructure and efficient procurement facilities. All these factors support the growth of the organization. The study results in suggestions that Woolworth must focus on innovation and make strategies for skill enhancement of employees with training. 

Introduction

The report aims at doing an important analysis of a company such as Woolworths. It is an Australian supermarket retailer. The organization has achieved growth and development in the retail sector in Australia. There are many factors that have contributed to high growth.

The strategic monitoring of the report is done in a positive way. It focuses on studying the business actions and strategy of Woolworth to provide recommendations for improving the current strategy. The various factors have to consider such as the external and internal environment in order to the analysis of the organization. The strategic analysis is done by implementing PESTEL is an important tool.

Strategic analysis of Woolworths

The analysis of Woolworth in the retail industry shows that the company has earned a lot of reputation in the retail sector. The company has implemented strategies linked with growth in the operations and extending the lead in the market segments. It also has implemented strategies to utilize the shareholder value and maintaining business growth.  The strategy also includes satisfying the customers and employees.

External analysis of Woolworths

It also focuses to do the critical analysis of the external environment via tools that are discussed below:

Macro environmental factors: These factors affect the industry and are better analyzed by implementing strategic tools like PESTEL and porter five forces.

Porter five forces: it helps to access the current status of the industry. Also, it tells how different factors impact performance. This analysis is performed in the following ways:

Bargaining power of buyers- There are many retail stores and supermarkets that offer the required items to the customers. As the consumers have a large variety of options so, the bargaining power is on the higher side.

Bargaining power of suppliers- The analysis shows that it is concentrated and there are various big players with a concentrated market share. The bargaining power of the suppliers increases.

Threats of new entry- The larger organizations have created tougher situations for new players to enter in the industry conditions. It decreases the threat of newcomers in the industry.

Competition among existing organizations- the competition in Australian retail is higher as there are few competitors.

The threat of substitute- The products are consumed on a daily basis is important and daily use is important. Also, the threat of substitutes is less. Consumers use retail products with no other choice.

 PESTEL analysis: This is an essential tool that helps to access the external condition of the industry. The application of the tool to access the industry performance is discussed as follows-

Political- The political conditions present a great influence on the retail industry and Woolworth's performance. The Australian Government has initiated the competition policy to prevent key players to eliminate competition.

Economic- The decline in the market will affect the Woolworth's performance. Other factors such as changes in currency exchange rates, abating of the Australian economy and decline in the economy also affect the retail operations.

Social- The companies in Australia achieve community development ad societal development as per the social trends. It shows that the customer prefers socially responsible companies.

Technological- The implementation of green refrigeration technology has been done by Woolworths. Also, the perishable products are stored for a long-time.

Environmental- The performance of Woolworths is affected by environmental factors. It affects the profitability of the business. 

Legal- the carbon tax has affected the retail industry. It has affected the operations of the organization. The laws affect Woolworth's performance in the implementation of business activities.

Internal analysis- This section is focused to analyze the efficacy of the strategies implemented. The internal analysis is related to SWOT and value chain analysis.

SWOT Analysis- SWOT is a strengths, threats, weaknesses, and opportunities. We are discussed how these tools are performed-

Strengths-. The leadership increases the ability to use the market potential via strong resources. This can be done via human as well as technological resources, and your presence in the industry. 

Weakness- It can be analyzed by the effect on the external environment conditions that affect the retail market. The Government has restricted to keep high prices of products.

Opportunities- The retail industry has promising growth potential. The factors like advancements in the supply chain, modernization, and consumer lifestyle has changed the retailer's ability. Woolworth is looking forward to adopting the strategy of multi-option retailing.

Threats- The threat in retail is from the high competition. Government intervention is a major factor that affects the Woolworth's growth. 

Value chain analysis- The analysis tells about the support and primary activities. And,  these activities include inbound logistics, outbound logistics, operations, sales and service to clients. It tells that the procurement strategy is adopted by the organization by achieving performance. The strategy of local sourcing of food aims to support local producers. The products are processed and sold to Woolworths. The primary activities are supported by many support activities for skilled human resources, supporting supply chain and strong IT infrastructure.

Recommendations

The critical analysis of Woolworths is undertaken to analyze the strategies implemented. The enactment has shown that Woolworths is focused to get the high level of growth. The growth is supported by a commitment to employees and customers. The analysis has indicated that various factors like political condition, changing trends and social patterns, adverse economic conditions affect the growth of the organization. We are discussing certain recommendations.

It is advised that Woolworth must aim to frame the strategy as per the political scenario of the nation. It must adopt a policy of fair price.

It must focus on continuous innovation as its strategy. Preferences and consumer social trends show dynamism.

It must also increase the support of employees by providing training.

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