Development of a Case Study for Woolworth-myassignmenthelp.com

Question: Discuss about theDevelopment of a Case Study for Woolworth. Answer: Introduction: The most important function of management is framing and implementing the strategy, and theory related to strategy is challenging in nature. This term strategy is considered as most common used term in the public discourse. It is used to refer various things such as state policy to personal choices. Very few researchers are there who actually appreciate the actual meaning of the term, and one of the best meanings given related to the strategy theory by the Harry Yarger (Yarger, 2006). As stated by the Hary, strategy theory is broad in nature and it opens the mind in context of all possibilities and mainly considers the costs and risk related to our decisions. It also considers the consequences related to adversaries, allies, and others. Structure of this report includes various sections and these sections include brief introduction and ownership structure of the selected organization that is Woolworths Limited. This section also contains the mechanisms related to external and internal governance and other forms of external control. Second section of this report states the basic sources of cost and differentiation advantage in the industry in which Woolworths limited operated. It also states the position of the organization in the respective industry and its major competitors in the strategic group diagram and for this purpose theory is used. Third section of this report includes the value chain analysis of Woolworth Limited for identifying the competitive advantage. Fourth section of this report includes the VIRO analysis related to competitive advantage stated in section 3, and also develops the understanding of these sources with the help of corporate governance mechanism. Last section of this report includes the recommendations for the purpose of developing strategic resources which also includes corporate governance processes for the purpose of increase the competitiveness of your organization. Lastly, brief conclusion is stated for concluding the report. Brief introduction of Woolworths Limited: In 1924, December 5th Woolworth was opened for conducting the business in imperial Arcade of Sydney. Percy Christmas was the founding CEO of the Woolworth Limited, and at the time of opening he stated that every city requires Woolworth, and every man, woman and children required the place from where they get good things in cheap prices. Words stated by Mr. Percy is still the basis of value system and philosophy of Woolworth (Woolworth group, n.d.). Presently, this company owns supermarkets and other merchandise consumer stores in Australia and New Zealand. They operate the supermarkets named Woolworths and Safeway in Australia and Countdown in New Zealand. This company operates via various business outlets such as Australian Food, Liquor Petrol, New Zealand Supermarkets, General Merchandise, Hotels and Home Improvement. Segment related to Australian Food, Liquor and Petrol is mainly engaged in the procurement of food and liquor and also in those products which are resell to the Australian consumers. Segment related to general Merchandise engaged in general merchandise related to discount for the purpose of reselling to consumers predominantly in Australia. Segment related to Hotel Provides the services related to hospitality and leisure activities, which includes accommodation, alcohol, gaming and entertainment. Lastly, segment related to Home Improvement provides the products of home improvement for reselling the same to the Australian consumers. Ownership Structure: Woolworth limited is the company which has the largest supply chain in Australia, and this company is operated as public company which received majority of its income from the activities related to food and groceries, home improvement products, petrol, liquor and general merchandise in Australia and New Zealand. As the public company, shares of the Woolworth can be purchased from the Australian Securities Exchange (code: WOW). As the public company Woolworth enjoys following characteristics of public company: There is no limit on maximum number of shareholders. There is no restriction on the transfer of shares. Woolworth is large in size. Company is listed on the ASX (Orreeconomics, n.d.). Mechanism related to external and internal government: Internal corporate governance mechanisms are introduced for the purpose of ensuring the proper actions related to management. It is not possible for shareholders to manage the day to day operations conducted by the business, and for this purpose there is a need to set up corporate governance mechanisms for the purpose of ensuring that management act in the best interest of the owners. Internal governance mechanism is directly under the control of the company owners, and it is applied for the purpose of monitoring the corporate risk and assurance of corporate controls. In Woolworth, board of the company is accountable for Groups system of internal control and also delegates this responsibility to the management of the company. System related to internal control governance is managed for the purpose of ensuring that significant risk is appropriately managed and also provide assurance on following matters (WHL, n.d.): Business objectives of the company are achieved in both normal and adverse trading conditions. Operations related to business must be carried in efficient and effective manner. Management related to financial information must be reliable. Assets of the company and information are appropriately safeguarded. Company complied with all the regulations and applicable laws (Woolworth Limited, 2011). The most important factor related to internal control governance is a review conducted by the independent assurance providers by assessing the adequacy and effectiveness of the internal controls. External corporate governance mechanism includes the control of those who are controlled by the outsiders of the organization for the purpose of serving to the regulators, governments, trade unions and financial institutions. Woolworth believes that most appropriate mechanism for the purpose of ensuring effective external governance is the claw back provisions which are the existing ASX Corporate Governance Principles. External auditors of the company use different methods for communicating the information to the board, and they do not rely on the management of the company. From external audit, company tries to minimize the risk which arises because of the activities conducted by the company. Audit committee of the company access and review the results of internal and external audits and also review the material issues which are introduced because of the audits. Audit committee also review the charge related to financial and operating controls of the company which includes: Risk management Environment health and safety. Compliance related to legal requirements. Ethical guidelines which directly affect the practices related to corporate governance of the company (ASX, 2016; Woolworth, n.d.). Cost and differentiation advantage in the industry: The retail industry provides the intermediary services between the manufacturers and consumers of final goods, and this sector contributes almost 5% in the GDP of Australia and 9% to total hours worked in the economy. Cost related to retail business is mainly driven by the factors related to geography, markets and commercial decisions. However, some costs related to retail industry is influenced by regulatory settings such as trading hours, employment conditions, the supply of retail space, the transportation and delivery of goods, utility charges and product labeling (Lewis, 2015; PC, 2014). Cost Advantage: The classical theory related to international trade is also known as Theory of Comparative Costs or Advantage. Comparative advantage is an economic law which refers to the ability of any business to produce goods and services at opportunity cost which is lower than other businesses. This theory is developed by the English political economist David Ricardo in 1817 in his book named as Principles of Political Economy and Taxation. Basic sources of this theory are: Company can localize in global markets by implementing the strategies, and this will lead to a successful path. Other source of cost advantage is strategic alliances, and it is considered as important source of capabilities and it also help the business in competing effectively. Other important source is competitive advantage which helps the business in achieving top position in the market (Partnership creating growth, 2013). Cost strategy of Woolworth includes three key factors which are stated below: Providing core offers to the consumers, so that consumers put Woolworth first. Ensure innovations for the purpose of fulfilling the need of consumers. Creating further customer value by organizing for success and also executing the lean retail model. Cost strategy of Woolworth was implemented for the purpose of neutralizing competitors. Competitors of Woolworth such as Coles and Aldis affect the sales of Woolworth. For the purpose of reducing their effect, Woolworth consider various factors such as lower pricing, better ranging, targeted customer offers, ensuring loyalty system which is revised, and also the strategy for the purpose of improving own brand. Own brands of Woolworth play very important role in competing with the limited range discounters, and as per Woolworth management, own brands of Woolworth help in creating higher quality and better price by close ranging gaps. Further aspect of Woolworth comparative strategy involves the rebalancing of capital expenditure between the newly opened stores refurbishments of old stores (Knight, 2015; AFN, 2015). Differentiate strategy: Differentiation strategy includes the creation of products and services with such attributes which are sufficiently distinctive and helps in apart the business from the business of the competitors. In case differentiation strategy of organization works then organization can charge premium amount from their customers for their products and services. Woolworth also used the differentiation strategy which differentiates the products and services from the competitors of Woolworth. Company first differentiates itself from the factors of environment friendly approach by conducting their business. Current strategy of the business of the Woolworth is considered as differentiate strategy (Woolworth Group, n.d.). This strategy mainly result in concentration of organization on creating the product which is highly differentiated in nature and also creating the marketing program in order to become the class leader in the industry such as mantra of Woolworth of Fresh Food People is very successful. By positioning the business around the primary value of food being fresh, Woolworth gets larger in the position of market share (Hays, n.d.; Woolworth, 2016). Value analysis of Woolworth: Mission statement of Woolworth states the freshly produced foods for the consumers and also enjoyable and convenient experience of consumers. Following are the value creating activities of the consumers: Inbound Logistics: Woolworth uses its own distribution centers, and this leads to advantages of procuring bulk quantity and also help in reducing the cost price and take advantages from consumers in form of discount (Bonney, Clark, Collins Fearne 2007). Operations: Woolworth owns its own farmer which lead the company to supply fresh product at low cost to the consumers. Outbound logistics: Woolworth use vendor quality management system which helps the organization in ensuring the quality of the product and also freshness of the product. Marketing and Sales: Woolworth strategy includes big budget for the marketing activities, which successfully aware the consumers about the brand. Customer services: refund policies and by reducing the waiting time by using the trolley mounted scanner (Walters Rainbird, 2004). VRIO analysis of Woolworth: Tool which help in analyzing the internal resources of the organization is known as the VRIO analysis, and this tool was introduced by the Barney, J. B. (1991) in his work Firm Resources and Sustained Competitive Advantage. In this work, author stated that four factors must be present for the purpose of becoming the source of sustained competitive advantage. As per author resources of the organization must be valuable, rare, imperfectly imitable and non-substitutable (Rothaermel, 2012). Following are the four factors of VRIO which help the Woolworth in gaining competitive advantage: Valuable- first question related to this framework is whether internal resources of the organization is valuable, and this can be determine by considering whether resources add value by enabling the firm in grabbing the opportunities and defend the threat. Resources are valuable if they help the organization in increase the customer value and this can be done through differentiation strategy. As stated above, Woolworth differentiates its products by providing fresh food to the consumers directly from the farm which enhances the customer value of the organization. Rare- Resources which are acquired by very few companies are known as rare resources, and such resources help the organization in getting competitive advantage. It also includes the use of rare resources in other way. In case of Woolworth, company uses its own distribution centers, and this lead to take advantage to the procure bulk quantity and also help in reducing the cost price and take advantages from consumers in form of discount. Costly to Imitate: in case resources which are costly to imitate, and those organizations which does not have such resources cant imitate, buy or substitute the resources at reasonable price. There are two ways through which imitation can occur and these two ways are directly imitating or provide substitute products. Woolworth use vendor quality management system which helps the organization in ensuring the quality of the product and also freshness of the product which is costly to imitate and this provides competitive advantage to woolworth over other resources (Sullivian, 2013). Organized to Capture Value: a resource does not provide any advantage to the company if such resources are not organized to capture the value from them. It is necessary that firm must organize its management systems, processes, policies, organization structures, and culture for the purpose of fully realize the potential of its valuable, rare and costly to imitate resources and capabilities. In case of Woolworths, Woolworth strategy includes big budget for the marketing activities, which successfully creates awareness among the consumers about the brand and refund policies and by reducing the waiting time by using the trolley mounted scanner. Development of these resources is also linked to the internal and external corporate governance mechanisms of Woolworth such as internal and external audit can be used by the organization for developing these resources. Audit committee of the company accesses and reviews the results of internal and external audits and also review the material issues which are introduced because of the audits. Recommendations: Price strategy is considered as the most important strategy in the retail industry, and this fact is supported by Miranda, Konya Havrila (2005) that price is the factor primarily considered by the consumers on priority basis while deciding about the goods. Therefore, for the purpose of achieving their strategy Woolworth must consider on: Cost leadership culture- as stated by Hanson (2005), cost leadership strategy is the integrated set of action which is designed for the purpose of producing and delivering the goods at lower cosst in comparison to consumers with those features which are accepted by the consumers. For the purpose of gaining output at lower cost, Woolworth must consider the approach related to sale-up/costs down which results in reducing the cost related to production. Strategic alliance- the second recommendation for Woolworth is to try to develop their strategic alliance between all those businesses which are conducted in different markets. Woolworths and their major competitor, Coles, have applied this strategy as they have started collaborating with companies like Shell and Caltex. Conclusion: After considering the above facts it is clear that Woolworth can be considered as the most trusted and popular brand in Australia and New Zealand, and this company faces high competition in the retail industry. Strategies framed by Woolworth help the company in maintaining their leading position in the retail industry. For maintaining their position, the company chooses different strategies and internal and external corporate governance mechanism. Strategy of Woolworth includes cost advantage and differentiates strategy. Woolworth, board of the company is responsible for the internal control system of the group and they are also responsible to delegate this responsibility to the management of the company. Systems are managed by the internal control governance for the purpose of ensuring that significant risks are appropriately managed. Recommendations for Woolworth includes cost leadership strategy which states that integrated set of action which is designed for the purpose of produc ing and delivering the goods at lower costs in comparison to consumers with those features which are accepted by the consumers and Woolworth must continue and try to develop their strategic alliance by using different operations in their business. References: ASX, (2016). Corporate governance statement. Available at: https://www.woolworthsgroup.com.au/icms_docs/182380_Corporate_Governance_Statement.pdf. Accessed on 30th October 2017. Woolworth Limited. Corporate Governance Manual. Available at: https://media.corporate-ir.net/media_files/irol/14/144044/cg/WoW%20-%20Corporate%20Governance%20Manual.pdf. Accessed on 30th October 2017. Yarger, H.(2006). 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