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MBA600 Evaluating Strategic Decisions of Woolworths Assessment 2 Answer

Assessment Information

Subject Code: MBA600

Subject Name:Capstone

Assessment Title:Assessment 2 – Individual Report

Assessment Description

Using the organisation chosen for Assessment 1, students are to apply their learnings from the capstone topics and apply them to the organisation by undertaking additional research.

Again, assuming the role of an organisational consultant, students are to write a report that clearly articulates the organisations strategy and business model and outlines in detail the approach to operations, product and marketing (week 3) as well as innovation and growth (week 4). Attention should also be paid to the use of research and insights (week 7) and strategic implementation and change (week 8).

Findings should be presented in a report of 2,000 words (+/-10%). Areas covered should include:

  • An executive summary.
  • An introduction that summarises the purpose of the report.
  • A summary of the organisation’s strategy.
  • A specific outline of how the organisation undertakes; operations, marketing, product development, innovation, growth, change, strategic, implementation.
  • A summary of recommendations that identify areas of focus and opportunity to enhance the organisations performance in the future.
  • A conclusion.
  • References.

Students are encouraged to use a wide variety of information sources that include, where possible, primary research such as interviews with staff or executive members within their chosen organisation as well as use of an appropriate mix of strategic and business analysis tools and references.

Answer

ORGANISATIONAL STRATEGY 

Assessment 2: Individual report 

Executive Summary

The aim of the report is evaluating strategic decisions of Woolworths and developing recommendations accordingly. Hence, it involves summarising the strategies of Woolworths. Next, it discusses how business operations, marketing, change, product development, growth, innovation and other activities are conducted within the company. It is found that the company faces challenges in managing change successfully. Therefore, it requires encouraging employee engagement in all its activities. 

Introduction

The purpose of the report is analysing strategies of Woolworths related to its operations, product development, marketing, innovation, change process, growth and policy implementation. Therefore, the study involves evaluating the process undertaken by the company and identifying the gaps exist. Based on the gathered information about the company, some recommendations on future growth and opportunity available Woolworths are provided so that overall performance can be optimised. 

Summary of Woolworths’s strategy

The mission statement and the critical policy of Woolworths are to offer the perfect buying experience to the customers every time they purchase from the company. It wants to become a purpose-led company. Unified by the group purpose, it offers better experience together for better future, develops a framework for the way it desires to operate and to be superior for the customers, the team member, the shareholders and the communities it serves. Therefore, it works end-to-end as a single team and motivates independence within a framework. It keeps things unpretentious, mainly for the store teams. The company wants to be the first choice of customers. Therefore, it has decided on six priorities. The first one is developing a team and culture of customer 1st brand, making the shopping process convenient and connected, distinguishing its food customer schemes, developing its drinks businesses, revealing value in the range and making everything better for buyers, safer and more straightforward for stores and support. The vision of the firm is to offer excellent goods and services to the buyers every day through its fresh food strategies, human resource strategies and price strategies. The organization is focused on improving if and cost-effectiveness list for achieving this it has combined and applied many approaches, including low price strategy and project refresh strategy (Woolworthsgroup, 2020). 

Woolworths has mainly six strategic motivations, which it determines at the team level that will offer future-fit dealings, growth to long-term profits, and creating sustainable worth for all the stakeholders. Its customer intuitions and data drive inform all the business decisions as it becomes a more customer-centric group. To develop this, it lingers to improve the loyalty scheme and provides customers with an allied retail experience. Next, it concentrates on providing customers engaging, relevant digital, inspiring and in-store journeys. The company helps its employees in offering brand-designed, consistent customer experience and linking customers flawlessly from its corporal stores to the virtual stores and vice versa. Woolworths defines the perfect customer experience by channel, format and services. It distinguishes itself on high fashion, which is pertinent to the customers by design-led, visibly segmented, innovation and quality product ranges. Hence, it emphasises on fabric, finish, comfort and fit for offering market-leading variety. The organisation encourages customers, who demand timeless classics and wearable fashion with the innovative product through a unified combination of buying, design, technology and planning. The company is concentrated on offering customers superior quality, reliable, safe, creative and flavour food at a high value. Thus, it provides an inclusive but corrected range of most wanted and required items and motivating solutions to meet a variety of customers’ needs. Apart from that, the firm rule across the southern hemisphere, specifically in Australia. By continuous incorporation around business operations, it will influence competency and manage a complete focus on controlling cost, which in turn adds expressively to the group profitability. The first business journey of the company is its strategy to make a change for the stakeholders in the communities and the environment. It includes the problems which affect most to the people and allows a reliable approach to addressing sustainability issues around the international supply chain. It helps the firm to attain its vision of becoming one of the most responsible retailers of the world (Woolworthsholdings, 2020). 

A summary on the way the company undertakes operations, marketing, product development, innovation, growth, change and strategic implementation

Operation- The balanced scorecard approach can be applied here for identifying and enhancing internal business activities of Woolworths. The BSC assesses everyday business operations under four perspectives including finance, customer, learning and growth and internal business process (Nørreklit et al. 2018). For learning and growth, Woolworths has renewed its focus on employee training and lining up staff incentives for lifting the customer game. The new training is for helping employees to engage customers. It led to 2.8% sales increase to $18.7 billion around the Australian food division of the firm. The first half of 2017 witnessed 1.9% growth in sales. Thus, staff training was successful in increasing customer engagement and improving overall productivity of the business (Cameron, 2020)

when it comes to business processes, Woolworths emphasises cost management. It improves the operating model and enhances the processes, which enable the organisation to increase efficiency and reduce the cost of conducting business intensely. It also involves heightening the supply chains, leveraging and capitalising in the distribution abilities to support development, mainly in online. Moreover, the company develops its IT platforms for offering support and flexibility of the cost-effectiveness, innovation and sustainable solutions. The company also drives interactions and proficiencies from the co-site of the David Jones and Country Road Group at the new head office in Melbourne, Australia. Woolworths influences group scale in decisions and negotiations of real estate. It implants an attitude of ongoing development in cost optimisation and productivity. 

In terms of customers, the company believes that valuing customers and gaining their trust are the foundations of customer satisfaction. Hence, the company focuses on listening to the customers and taking initiatives for rewarding customers and building trust. The latest data shows that overall customer satisfaction earned by Woolworths is 69% (NewsComAu, 2020). It shows that although the customer satisfaction level is high for the company, it must work consistently on this area for gaining 100% satisfaction of the customers.

By means of financial performance, net profit of the company after $1.724 billion tax increased 12.5%. Australian food department has experienced the highest growth. Sales increased by 4.7% in 2019 (Woolworthsgroup, 2020). It reflects strong financial performance of the company which is improving consistently. 

Marketing- Woolworths is one of the leading Australian retailers. When it comes to the product range, customers can avail a wide variety of options including apparel, accessories, household items, grocery, liquor, baby products, pet products, drinks, freezers, pantry, dairy, fruits, vegetable, seafood, deli, meats and bakery. In terms of pricing, the company has impended a mixed strategy. It offers high-quality premium products with additional benefits such as discounts and incentives on fuel charges. The combined pricing strategy depends on competitors' pricing, related market and products. Thus, it uses premium pricing for some of the products and competitive pricing for others. For promotion, the company uses both traditional and contemporary media for reaching maximum customers. It helps the firm improving its brand visibility. For enhancing and managing brand loyalty, Woolworths also introduces different loyalty schemes. It incorporates an incentive using sponsored petrol cost at Woolworths Plus Petrol station and Caltex Woolworths petrol pump. In terms of place, the company has established an extensive chain. It operates through 976 supermarkets and 19 convenience stores, which are attractive, clean and are located in a way that the buyers can cross through it effortlessly (Parkinson, 2018). 

Product development- Woolworths uses the TradeStone platform for developing a foremost product development community, connecting all its retail outlets and over 6000 suppliers. The primary benefit comes from replacing several bequest systems and worksheets with an essential source, which supports product quality and acquiescence. However, it is the linked nature of the channel, which is projected to offer real frugality and influence innovation. The TradeStone’s Merchandise Lifecycle Management platform includes product lifecycle management, product design, supplier management, sourcing, finance, business to business sales management, order management and logistics. The company works collaboratively around all its divisions for building a single product development system (Sullivan, 2020). 

Innovation- For serving customers better within the small set-up stores, Woolworths wanted to discover a way to examine and authenticate the ideas before making a considerable investment. Therefore, collaborating with ThoughtWorks, the company established an in-store innovation lab. The Morden working process involves continuous prototyping techniques, which helps to bring a modern idea to life within a short time. It allows the company to experiment with new concepts with their buyers all the while finding a real-time response. In short, it offers insight into the buying behaviour of the customers in small stores which is profoundly different from the action of the customers, who shop from standard supermarkets (Thoughtworks, 2020). The company focuses on innovation continuously, which enables continued development with technology and varietals in produce, a decrease in the salt and sugar in the products and the launch of innovative cooking processes and several first-to-market products (NGO Pulse, 2020).  

Growth- Woolworths outlined a three-year growth strategy named 'Lean Retail' model for reducing over $500 million costs around FY2015-2016. The aim of the cost reduction is increasing investment in all sides of customer experience containing better convenience, price, improved access and service and obligation to innovation. The model builds on the historical outlook of influencing growth by looking for efficiency and spending on customers, with an explicit acknowledgement that the approach requires to be personalised to a contemporary era. Thus, for driving growth, the company invests in a multidimensional and unified offer to the customers (Convenienceworldmagazine, 2020).

Change- Bringing changes in different activities is essential for seamless growth of a company (Fernandez and Rainey, 2017). Therefore, Woolworths is ready to cut $50 million per year by changing rosters and streamlining roles in the stores. However, the changes have affected employee confidence and disrupted suppliers. The company declared a new model for store operating in June that creates two departments, modern convenience and unique service. It replaces the roles of a team leader with a sole manager and produces more parts for customer-facing supervision. As a result, several thousand employees are forced to work for a lower payment for non-managerial roles that created staff dissatisfaction.

Strategic implementation- In terms of strategic implementation, Woolworths focuses on doing business responsibly. It encourages diversity and transformation within its employees and the supply chain. Besides, it contributes to the development of society and cultivating an improved future for the communities. The company also promotes the wellness and health of the employees and customers. It protects ethical, environmental and social standards in its sourcing process highly.

Further, it focuses on sustainable agricultural and obtaining raw materials from sustainable sources. The company also shows responsible behaviour toward nature by reducing waste across the business and encouraging customers to make an effort in reducing waste. Besides, it also manages the limited water resources by reducing consumption and improving energy efficiency (Hall, 2020). 

Recommendations

After going through the different strategies and activities of Woolworths for managing business operations, changes, growth, new product development, and so forth, the most critical area of concern seems to be the change process. The decision of restructuring that the company took for cutting cost led to reducing employee morale and dissatisfaction, which is not a positive thing for the company. For running the business successfully, implementing the change positively while achieving company goals, the satisfaction of employees is a vital thing to make. Therefore, the company is recommended to improve employee engagement in organisational decision-making and change management. According to Moulton et al. (2019), involving staff into the change process makes it easier to bring the change smoothly without any kind of resistance or dissatisfaction. 

Therefore, increasing employee engagement in change management is suggested to Woolworths. 

Apart from that, for achieving the goal of cost reduction, continuous improvement can be helpful. Instead of making any inconsiderate decision, gong through the four stages of the PDCA cycle for continuous improvement can facilitate the firm gaining and managing operational efficiency (Agostinetto and Amaral, 2017). For example, for enhancing the in-store experience, the company differentiate the offerings in its different stores. It may include personalised services, artificial intelligence-based buying assistants, self-checkout, personalised loyalty schemes and many more. It will be opportunistic for Woolworths differentiating customer experience and attracting more customers. The company should also remember that for gaining customer satisfaction, satisfying employees is necessary. Therefore, focusing on employee needs and fulfilling those needs accurately is essential for improving employee motivation and dedication toward their performance and serving customers more nicely.

Conclusion

Organisational strategies are the backbone of a company, as they decide the growth and development of the entity. Therefore, for designing strategies effectively, a company requires considering several internal and external factors, which can influence the policy in short-term or long-term. While deciding for restructuring, Woolworths did not find the opinions of the employees, which led to the redundancy of 1000 of employees and salary cut of several employees. It affected the morale and satisfaction level of employees negatively. Therefore, it is recommended that Woolworths to encourage employee engagement in every activity and decision-making, so that their support and effort can be expected.

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