Swot Analysis and Retail Industry free essay sample

Social analysis3 Technological analysis3 Industry3 Competitors4 Issue that caused Woolworth decline and new opportunity6 SWOT Analysis7 Strengths7 Weaknesses8 Opportunity8 Threats9 Issue that caused Woolworth decline and new opportunity9 Recommendation of new strategies10 Conclusion11 References12 Introduction Woolworths was first opened in Sydney (Datamonitor, pr 1). The company deals with the sale of electronic goods, general merchandise, liquor (Safeway liquor) as well as grocery. One of the major challenges that face the company is competition. This is because the supermarket industry in Australia is very competitive. The company’s major competitors are the composite buyers, Cole’s, IGA and the franklins. Moreover, the company also faces competition from the Audi (Datamonitor, pr 1). The company also has the health and safety policies that ensure that they are committed to ensuring workplace safety. They include a risk management approach, effective employee consultation as well as effective implementation of the policy (Datamonitor, pr 1). PEST analysis of the world In their day-to-day running businesses are affected by macro-environmental factors, which are analyzed, using a pestle analysis. We will write a custom essay sample on Swot Analysis and Retail Industry or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page A pestle analysis is simply a framework that classifies environmental influences as political, economic, social, technological, legal and environmental (Kotler et al 68-108). Political analysis Woolworth success can also be linked to the peaceful environment. It is evident that, peace has prevailed in Australia due to political stability. This has not only seen the growth of the retail industry, but also many businesses in the region have succeeded. It is evident that, a stable political environment results to an effective economic environment (Kotler et al. , 68-108). Economic analysis Economic factors are economic growth, interest rates, exchange rates and inflation rate. As currently Japanese, United State and Hong Kong currencies are going down, but Australia’s currency is keep growing up, exchange rate goes down from Australia to other country, under this situation, Australian should import some products from other countries in a lower price and sell in Australia, which can helps decrease the outlay and earn more money. Base on this information, Woolworth should also look for some new brand from other country and import them to get advantage under the economic growth which can should import some products from other countries in a lower price and sell in Australia, which can helps decrease the outlay and earn more money. Social analysis Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Social cultural trends can show that the changes of consumer tastes and behavior. As In the last thirty years, Australia has liberalized its immigration policy and opened its borders to Europe, Middle-East and Asia. This has caused a real shift in self-perception as Aussies begin tore-define themselves as a multi-cultural and multi-faith society rather than the old homogenous, white, Protestant nation. Under this situation, Woolworth should import Europe, Middle-East and Asia’s foods and stuffs, because there are more and more people come to Australia, stuffs from their home country can reduce their home-sick, also increase customer’s loyalty and satisfaction. Technological analysis Technological factors include ecological and environmental aspects and can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Some technologies such as CCTV cameras for monitoring customers during self-service must also be up to date to ensure efficiency. In addition to this, the use of social Medias such as Facebook, Twitter, Weibo, and You Tube can also assist the firm greatly in terms of advertisement. As Facebook, F-commerce, called Facebook commerce. Facebook have more 800 million users in the world. People can get some free advertisement simply though Facebook’s â€Å"Like† and â€Å"Share†, it is a good way to promo their goods, also people do not have to spend money on it. So, this is the free promotion for the goods and the effective strategy to expand their product to the world. (K. O. Hara, 2011) Industry The retail industry of Australia is a major catalyst to the economy of the country. Additionally, it is the barometer to the economic health of future growth prospects of the country. The function of this industry is to serve as an intermediary for the producers and offer the services that complement its sales (Smith 33-50). The Gross Domestic Product growth of the industry has also been so strong making the total growth in the industry to be 7,850 million US dollars. The industry has 3,760 businesses, which run 4,340 establishments. The major players in the industry include Woolworths Limited, Coles, Franklins, IGA and the Audi. It is apparent that the industry until now has presented relatively high-to-high attractiveness for the players in the industry (Smith, pp. 3-50). This is due to the high barriers to entry as well as the weak bargaining power of the buyers and suppliers making the profitability very high especially for Woolworths the company in question. Nevertheless, the future environmental changes are set to change the attractiveness of the industry to moderate. This means that even the profitability of Woolworths will also decrease in the future. This is due to the fact that it is postulated that the bargaining power of buyers and suppliers will increase. For this reason, Woolworths’ ability to beat its competitors as well as maintain a competitive advantage is highly dependent on the company’s capabilities and resources (Smith, pp. 33-50). Most importantly, it depends on how the capabilities and the resources will be exploited in the future when the attractiveness of the industry as well as profitability declines. Luckily, there is low threat of substitute products or services in supermarket retail industry, supermarket is an irreplaceable business, and they sell everything as daily necessary, food, drink, fruit or even DIY cake kit. There are no other place can buy let people buy everything in one place, for example, convenience shop as 7-11, although they open 24 hours and 7days, but people might cannot find the thing which they really want to buy in 7-11, however, they can find that in Woolworth. At the result, people must choose supermarket be their first choice if they want to buy everything in one place. Competitors However, they have very high intensity of competitive rivalry, as the Australian retail industry has a very high concentration. This is because it has few major players competing in the industry. They include Woolworths, Coles, Aldi as well as IGA. The Woolworths is able to compete with its competitors as well as doing well for their position in the industry by using such tactics as product introduction, advertising and price competition (Smith, pp. 33-50). The threat for new entrants within the Australian retail industry is relatively low and it is estimated that it will remain so. This is because the insidious conjunction of local zoning laws and leasing agreements has resulted to an artificial scarcity of grocery store sites (Australian Competition and Consumer Commission 42-65). Consequently, potential new entrants have been prevented from entering the Australian retail industry. Also, Woolworth’s competitors had their own competitive advantage to help them be out standing in supermarket industry, one of the big competitors is Aldi, which is the  first grocery retailer  in Australia to introduce a National Pricing Policy  across all Aldi stores which means they guarantee their product will be all seem price even in different branch. People shouldn’t have to pay more for their groceries simply because of where there live, people will pay the same low prices on groceries in every ALDI store in Australia. It’s Aldi’s way of keeping things fairer for all Australians, but Woolworth does not have such Policy as Aldi, every branch of Woolworth, their product’s price is different, for example, seem product in Boxhill’s store is on sale but the Woolworth in city might not for sale. Sometime customers need to pay more because of where they live; it is so unfair to customers. Also, Aldi is target on middle to low income families’ market, they are selling products which are all made in Australia, it can help Aldi to decrease their outlay and decrease their price setting, and customers can enjoy the product in a lower price, it can gain more customers satisfaction and also if customers are buying more in one time, Aldi can earn more income as well. Another huge competitor of Woolworth is Coles, both of them are target to the same market which is from all locations, of all ages, gender, and income, putting in mind their behaviours and lifestyles in order to satisfy their wants and needs. The firm targets Time saver buyers, Family Shoppers and International students (Round, pp51-64). This means that, the firm encompasses geographical, demographic, behavioural and psychological market segmentations. Coles is being outstanding in retail industry, they have different product range with others, they have a new product line of clothes call â€Å" Mix Apparel†, it can helps them to attract more customers and gain more customers satisfaction because people can really buy everything they want in one place. Also, there are some Coles’ store are open 24 hours in Melbourne which did not provide by Woolworth, it can give service to some customers who sleep late, although it cannot help them to earn much money but it can helps them to gain customers satisfaction. Moreover, Coles has a well management as a pervious news about dried milk: Some dried milk for baby which made in China has poison which is not good for baby, so a lot of Chinese buy dried milk from Australia then bring back to China and sell in China, it cause there are lack of dried milk in Australia, Woolworth made a decision to avoid Chinese monopoly dried milk, they set a limit which is everyone can buy 4 packs of dried milk only, therefore everyone can buy dried milk, this strategy indeed solve the problem but not a clever strategy. On another hand, Coles did not set limit, they contact more supplier and increase inventory, therefore people can get as much as they want, this strategy can solve the problem, and gain customers satisfaction and customer loyalty also, and it is a win-win situation. Issue that caused Woolworth decline and new opportunity Base in the discussion above, Woolworth was being quite successful because of they had good service and they launch of â€Å"Fresh Food People† in 1987 was supported by an advertising campaign that ran for several years. And also as said above, low threat of substitute products or services in supermarket retail industry, supermarket is an irreplaceable business, and they sell everything as daily necessary, food, drink, fruit or even DIY cake kit. There are no other place can buy let people buy everything in one place. However, Woolworth had been not very successful in these few years, there is some reason that made them be decline. Firstly, although Woolworth offers its range of products conveniently and at affordable prices to ensure a competitive advantage (Round, 51-64), this pricing strategy is not target on middle to low income people, a lot of people as those people who are come to Australia for their working holiday, they do not have so much money to buy their foodstuffs or some daily necessary in a higher price, these people will choose some cheaper supermarket as Aldi instead of Woolworth, because Aldi will provide goods with lower price but in good quality, there are no reason to choose Woolworth under this situation. Actually Woolworth can extend their target market to low-high income family, it is a huge range, but because Australia’s economic growth, they can import product from some low cost country supplier which can help to decrease the outlay, therefore they can decrease their price to suitable those low income family, and gain their satisfaction. Another reason that cause Woolworth decline is because there are high competition in this industry, Coles has well management and they have their own clothes product line, Woolworth need to be unique in this industry, they should additional hours in stores as Coles has 24 hours stores and also publish their own brand line and launch new brand. SWOT Analysis The SWOT Analysis is one of several strategic planning tools that are utilized by businesses and other organizations to ensure that there is a clear objective defined for the project or venture, in order to accomplish this task, the process of SWOT involves four areas of consideration: strengths, weaknesses, opportunities, and threats (Deakin 2004). Strengths We know Woolworth is huge supermarket in Australia. They have lots of stores around Australia with good location. That can be the strength for them. Woolworth Limited has a number of stores within Australia. They manufacture they own branded goods as well as supply goods from local suppliers and other major brands. Woolworths Limited deals with final consumer products/organic products ranging from foodstuffs, groceries and liquor, which have short life, cycle (Round, pp51-64). Also they have a strong brand name and reputation among customers. Moreover, they will offer discounted prices sometimes which increase footfall in store and developed merchandising, direct purchasing, sales and customer service practices commonly used today, which is very convenience to customers. Also Woolworth has very high quality advertisements to help them to promote their brand, In order to emerge successful in the retail market, the company employs a combination of promotion strategies, which include advertising, public relations, personal selling and sales promotions. By so doing, they are able to ensure effective communication in the marketing process (Round 51-64), which helps them get better sales and get more profit. Weaknesses The weakness of Woolworth is the brand has failed to sustain its competitive advantage, although Woolworth is huge, competition from similar companies is also likely. Being successful, they are open to attack on any ethical stance low pay and poor work conditions, supply of goods from poor cheap labor countries, and environmental issues. Moreover, they do not have National Pricing Policy  across all Woolworth stores which mean they did not guarantee their product will be all seem price even in different branch. Sometime customers need to pay more because of where they live; it is so unfair to customers. Opportunity The opportunity of Woolworth is Woolworth can tap and import Europe, Middle-East and Asia’s foods and stuffs into the market to gain more customers satisfaction and loyalty, especially those customers who are come from Europe, Middle-East and Asia. In fact, these people are occupying a part of the population. Moreover, Woolworth can extend their target market. For its new venture, Woolworth’s targets customers who at least have a home or who want to have one. Also, they need target on those people who with low income. Generally, reduce the price of the company’s products as well as priced to enable its customers even those with low incomes to afford to purchase and also follow National Pricing Policy  to set the same price in all branch, therefore, customers will not have to pay more because of where they live. On another hand, because they have a huge brand name, the brand can tap new emerging markets like emerging and developing countries as South East Asia. Threats The threats of Woolworth is there have so competitor in this retail industry, and they have their own competitive advantage to be out standing in this industry, but Woolworth do not have any signature to being outstanding in the industry as much as their competitor has. Also, although they manufacture their own branded goods as well as supply goods from local suppliers and other major brand and sell in a lower price, but their high discount products and horrible packaging sometimes perceived as low quality products in consumer minds. Moreover, there are not easy to develop more branches in Australia because marginal pressure due to high real estate prices restricting the opening of more stores. Issue that caused Woolworth decline and new opportunity According to â€Å"Sun Zi Art of War† said â€Å"know yourself, know your enemy; hundred battles, hundred won. †(Wee 2002) Based on the SWOT analysis above, know Woolworth themselves, analysis shown that Woolworth was successful because of they have a strong brand name and reputation among customers and also have lots of stores around Australia with good location, therefore customers is easy to go shopping because of good location, and they have a really good advertisement to helps them to improve their image to customers. Although they had been successful, now is being worst because of there are huge competition in supermarket retail industry. Known their enemy, their competitor has their own competitive advantage to be out standing in this industry, Woolworth do not have any signature to being outstanding in the industry as much as their competitor has. Also there are not easy to open more branches in Australia because of high real estate prices in Australia. There still have some new opportunity; they can tap some Europe, Middle-East nd South East Asia supplier, Woolworth can get advantage under Australia’ economic growth and decrease their outlay, and gain customers satisfaction especially those people from Europe, Middle-East and Asia, they are a part of Australia population. Moreover, repackage their own brand product, because the package that they have now is really terrible, customers would not like to buy a product like this. Recommendation of new strategies Strategy is about shaping th e future (Mckeown, 2012). Woolworth currently need some new strategies to help them the rate of sales goes up, based on the discussion above, the report has few recommendations. 1. Launch new brand A lot of companies are using this strategy to gain larger customer base such as Coles and Mix Appeal, Woolworth can launch their own clothes product line with their own design and own packaging. 2. Expand to global market: New stores oversea Woolworth can establish outsource distribution channel. As the retail industry is increasing, the increase of the service of delivery is necessary. Woolworth can establish store or ware house off shore such as in Hong Kong and delivery direct to the customers’ door. Especially the history of Australian brand launch in oversea as Cutton on launched in Hong Kong, they have a really good profit because in asia Western’s brand will be more popular than domestics brand. 3. Target market Woolworth should extend their target market to low-high income family, generally, these are individuals who have an income thus can afford to have a home. However, the company’s products are well priced to enable its customers even those with low incomes to afford to purchase. To archive the goal, they can tap some new supplier from low cost country. 4. Tap new supplier Australia is a multi-cultural country, there are lots of people are come from Middle-East Europe and Asia. To take benefit under this situation, Woolworth can find new supplier from those country, it can helps to gain customer satisfaction and loyalty, and also because of the currency of Australian is growing up, they can import those product in a lower price and sell in Australia, it can decrease the outlay but increase the profit. 5. National price policy Follow National Pricing Policy  to set the same price in all branch, therefore, customers will not have to pay more because of where they live, therefore gain trust from customers and gain customers satisfaction. Conclusion After the analysis of Woolworth, include PEST, Porter 5 forces and SWOT analysis, found that there are so many competitors in supermarket retail industry, Woolworth’s competitors had their own competitive advantages, so Woolworth needs to be changed their strategy, to gain more competitive advantage and become more successful.