Competitive Strategy – Case of Woolworths
Introduction
Gaining a competitive advantage against a company’s rivals involves the creation and sustaining of superior performance by the company. Woolworths, an Australian based company operates in the retail industry. The retail industry is highly competitive and this forces Woolworths to formulate competitive strategies by differentiating its operations from the competitors in order to gain a competitive edge (Madsen and Walker, 2015, p. 88). Woolworths faces stiff competition from Wal-Mart, ALDI, TESCO, and Macro Wholefoods Limited companies. The main goal of Woolworths is becoming competitive in the retail industry by giving customer high-quality retail services and products. To achieve this dream, the company applies strategy development tools such as the SWOT analysis, PROFIT, PESTEL, Porter’s five forces in designing competitive advantage strategies against its main rivals as mentioned above. The aim of this essay is explaining SWOT, PESTEL, and Five Forces as the main strategy development tools used by Woolworths in gaining a competitive edge against its competitors.
Porter’s Five Forces
The Porter five forces strategy analytical tool assesses the current position of the whole sector in which a company operates (Porter, 2011, p. 66). The analysis of Woolworth’s operations in Australian retail industry is done through the application of the five forces as follows:
Bargaining power of buyers
There are numerous companies that operate in the retail industry in Australia. As a result, the bargaining power of customers is significantly higher as far as the purchasing of basic commodities from the supermarkets by customers is concerned (Porter, 2011, p. 68). Since buyers have broad options of companies to buy from, Woolworths offer after sales services such as discounts, transport, and e-business more effectively hence winning more buyers. As a result, the competitive edge is gained.
Bargaining power of suppliers
The Australian retail industry is highly concentrated with big companies and among them is Woolworths.
