Woolworths Group Limited: International Challenges
Individual Research Essay
Today, with increased globalization and with advent of new technologies, the organizations are aiming for expansion. The organizations want to capture new opportunities available in the market, open new branches, and subsequently increase bottom-lines of the organization (Kumar, Gaur, & Pattnaik, 2012). However, before opening new branches in new locations, it is found that the organizations need to understand the new culture.
There are several challenges faced such as differences in language, culture, religion, work approach, and work ethics, and other business values. It is thereby recommended for the senior management of the organization to deploy a team that will be working on these issues and will then suggest necessary recommendations to overcome these problems.
This report will discuss the international challenges faced by Woolworths Group Limited - one of the major Australian companies in the retail industry. It will discuss the key challenges faced by them, will identify the gaps, and will then provide necessary recommendations to improve the current situation. The top-level management of the company needs to focus on understanding the aspects of globalization and culture so that they can formulate their strategies accordingly. It will help them achieve desired objectives in a given challenging work environment.
Woolworths Group Limited is one of the major Australian companies operating in the retail sector. It is also the second largest company operating in Australia in terms of revenues. The headquarters of the company are located in Bella Vista, New South Wales in Australia. The major operations of the company include supermarkets, hotels and pubs, liquor retailing, and Hospitality services. As per the financial reports of 2017, the total revenues of the company were around A $55.669 billion.
There are nearly 205,000 employees working in this organization. The company is operating in Australia since 1924; today, it is serving not only Australia but also New Zealand and India. There are several products served across majority of the supermarkets and other retail locations of this company. The company believes in providing good quality products at low costs to the customers.
Hence, they even organized big discounts for the customers not only to attract them but also to deliver value of the products to their customers. The company had opened Big W discount department stores for this purpose in 1970 and they thereby became popular among the target segments in Australia.
Later, they expanded in other countries with an objective of expansion and improve bottom-lines of the organization. The company wanted to expand their operations in the developed nations of the world also. However, they faced certain challenges before operating in such nations. It is thereby important to focus on such issues, bridge the communication and working gaps, and only then open new stores in new parts of the world.
The top-level management of Woolworths Group Limited, thereby, needs to focus on such issues and then revamp their market strategies to achieve desired objectives in a given work environment. It will help the senior management to overcome some of the major hurdles arising in the new countries of the world.
Challenges faced by the Managers in Global Business Environment
The companies after observing their competitors might plan for expansion in other parts of the world. Also, with increased globalization and effective communication, today, it is possible for the companies to expand in other parts of the world. The organizations need to focus on certain factors that might turn into hurdles if proper attention is not paid on them (Kumar, Gaur, & Pattnaik, 2012).
It is thereby important to overcome these challenges, prepare the road-map, and only then deploy the operational plan to expand in new countries of the world. The operations team of the organization has found that there are several challenges before expanding into new countries. The first is the physical distance that can create hurdles if proper communication is not carried out.
Earlier, due to lack of technologies, it was difficult to manage the communication without telephones, mobile phones, and Internet. Also, the costs associated with logistics, freight, and shipping will add to the product costs that might turn costlier to the organization (Wilensky, 2015). It is thereby important for the organization to manage this issue, plan the strategies, and overcome the challenges as mentioned.
Second is the unfamiliar culture of the new location. The organization needs to understand the culture of the new country from different perspectives. The organization will require to recruit new employees at local level so that it becomes easy to conduct the business in such a scenario. However, there are several challenges arising related to culture that will actually halt the progress of the organization.
Woolworths while planning to expand their operations in India faced this challenge and was unable to overcome it until they formulate joint venture with the Tata Group of Companies. The top-level management of Woolworths faced cultural challenges and barriers as they did not understood the expectations of the customers, work culture, local cultural values, beliefs, language, traditions, and religious sentiments (Carrascoso, 2011).
It will thereby harm the organization from different perspectives and as a result, the company will fail in achieving the desired objectives. The same scenario was repeated in the case of Woolworths and they were unable to succeed in their operations to expand in India.
Another important challenge is regarding the formulation of the marketing strategies in a new environment. It is important to note that the people of Australia will vary with the people of India. The needs, requirements, and expectations will change to a greater extent for the organization that is serving their products to the customers from both these locations.
It is thereby important to first understand the culture, then identify the needs and expectations of the customers, and finally focus on implementing a plan that will assist in formulating required strategies for the organization. The marketing team of Woolworths was required to understand the culture of India, identify the culture trends and expectations of the customers, and were then required to formulate strategies of marketing to penetrate into the Indian market.
They thereby took the support of Tata Group of Companies to better understand the culture and then revamp their marketing strategies in a given work environment. Another major challenge identified in such working scenario is organizational communication. The top-level management will be identifying a particular team and will be deploying them on a new project at new location (Enderle, 2011).
However, it is the responsibility of the project manager to manage these virtual teams and overcome the challenges of effective communication. It is found that due to differences in time zones, due to scheduling issues, and due to lack of coordination, the virtual teams are not able to synchronize as per the expectations of the organization.
Also, due to lack of communication between the project manager and a given team, the gaps are expanding; there is a need to focus on these aspects and thereby prepare the strategy that will assist in overcoming this challenge. The top-level management of Woolworths can deploy project collaboration tools system to ensure effective communication and also to ensure bridging the gaps mentioned in given processes of the organization (Enderle, 2011).
Further, another biggest challenge faced by Woolworths while expanding in India were the tariffs and export fees. Majority of the countries will be charging export duties and tariffs when the products are bought to their nation. In a similar scenario, the senior management of Woolworths were required to provide tariffs, follow the regulations of India, ensure compliance with the legal norms, and pay export duties to the Indian government.
The management team at Woolworths found it extremely difficult to manage such operations with high costs in India. It seemed like it was not appropriate to expand in India and instead focus on their operations in Australia. However, through carful planning and later with channelization of all the resources, Woolworths was able to overcome this challenge. The next major challenge that can be faced by the organization will be to deal with the human resources of the organization.
The role of the Human Resources (HR) department is important as they need to manage with manpower requirements, focus on recruitment and selection procedures considering the objectives of the organization in new location, provide additional arrangements for moving the HR resources from the source location to the destination location, and also motivating the staff members to continue working in the organization (Ghauri & Santangelo, 2012).
The top-level management in association with the HR department needs to communicate the vision and mission of the organization. They need to inform about the major benefits that will be received through such expansion objectives. Further, they need to motivate the employees on their motivation factors to ensure that they continue working in the organization (Myint, 2011). They need to overcome the workplace conflicts, inter-group conflicts, and instead focus on the objectives of globalization. Only then they will be able to achieve desired objectives in a given environment.
Conflicting Context and Understanding the Work Environment
It is important for Woolworths to understand each of the factors mentioned above to avoid conflicting context and situations in a given work environment. The role of the HR department, operations department, and the senior management is vital in such cases. The top-level management of Woolworths is required to formulate strategies that will help them first formulate the international company structure.
Second, they need to determine the foreign laws and regulations and thereby ensure following them while they start their operations in the destination location. Further, they also need to take care of the accounting practices carried out in such organization. They need to follow other necessary laws and procedures through which they will be able to overcome other financial issues faced by the organization (Baden-Fuller & Mangematin, 2013).
It is important to focus on the aspects of cost and differentiation as it will help them to achieve desired market attention from the customers. They need to prepare the marketing and advertisements strategies accordingly and ensure achieving of desired objectives in a given work environment.
Further, the finance department of Woolworths needs to focus on the aspects of currency rates, universal payment methods, and other such financial aspects that can directly impact on the revenues of the organization. It is important for them to manage the currency rates so that they can earn maximum by selling their products in India.
Further, it is important for them to choose the right set of shipment methods as it will be difficult otherwise to transport the products from Australia to India. The role of the supply chain department and the operations team will be important in such cases; they need to deploy specialized Enterprise Resources Planning (ERP) modules for the purpose of demand forecasting, demand management, shipment, logistics management, and other major operations of the organization (Baden-Fuller & Mangematin, 2013).
It will ensure of fulfilling the objectives of the organization and thereby achieve desired success in a given project in India. The top-level management of Woolworths, however, can monitor these strategies and modify them as and when required.
Applying Relevant Frameworks and Management Principles to overcome the Challenges
There are different frameworks and models that can be applied in the case of organization expansion under the given globalization program. The top-level management before focusing on any of the aspects needs to estimate the overall demand of the customers from a new location.
They thereby need to prepare the segment map, identify the target segment, and then position their products in the market. Initially, they can start their operations through joint ventures or through mergers or through any form of partnerships with any local firms of the destination location (Yelderman, 2016).
Woolworths has entered into strategic joint venture partnership with Tata Group of Companies, with an objective to not only expand but also to understand the Indian culture, determine the demands of the Indian customers, and accordingly prepare the future strategic plans for the organization (Yelderman, 2016).
It will help those overcome major operational challenges, focus on key aspects of globalization, identify strategies through which they will be able to expand in India, and subsequently achieve required objectives in India. It will help Woolworths improve their overall profitability and bottom-lines in a given case scenario.
Considering the given cases, it is important for Woolworths to focus on each of the aspects to overcome language and cultural barriers, local competition, tax codes and compliance issues, supply chain risks, and operational and HR management risks in a given working scenario.
The top-level management needs to understand the culture, prepare the road-map, train the employees, and work according to the Principles of Ethics to achieve desired objectives in a given organization. It is important for the senior management to monitor each of these strategies to judge the overall performance in the new location. They can thereby modify them wherever required; it will ensure success in carrying out new business activities in the new location as discussed in this project.