Assume you have applied for a senior strategy job at a big corporation in your country or region that has two or more SBU’s. Prepare notes for a structured presentation to the selection committee about how you think they should be analysing a company’s external environment, for TWO of the corporations SBU’s. The attendees at the presentation will be practical-minded managers who expect you to convince them that the model can and should be used in their business by you, by giving them the relevant principles and especially examples of how to apply the principles to one of their SBU’s. Right now they use Porters five forces model quite well so there is no need to deal with that in depth – instead you need to discuss issues of how to identify an industry’s strategic groups, industry drivers and key success factors.
Write down your structured notes for the presentation, convincing them to employ you to direct their external environmental analysis.
What are the main industry drivers for Woolworths fresh food and what strategy changes are needed?
While Porters Five forces analysis is essential in determining what kind of competitive forces Woolworth face, and how strong they are; in analysing the external environment on a whole we need to also consider “What factors are driving industry change”.
An external analysis must be dynamic and look at the overall impact of the change drivers. Will they increase or decrease demand? Make competition more or less intense? Produce higher or lower profitability.
In the current AU market for fresh food we are potentially facing an imposed GST on fresh food items. We need to consider the impact of this government policy change on our strategy and goal to become “first choice for fresh food”. In addition we need to focus our marketing on capturing and capitalising on the benefits of societal changing attitudes towards fresh food. This changing attitude helps us identify “fresh food” as a strategic group of importance within the Woolworths SBU’s.
Increasing globalisation is also an important area of industry change here in AU with the emerging global competitors such as ALDI. We need to focus our strategy for fresh food around this increased competitive intensity.
With this in mind Woolworth’s fresh food strategy should incorporate ways to combat these external forces.
An example of how to apply such external analysis to strategy is
- Provide superior quality at comparable price to lure customers and maintain existing customer base.
- We can do this by reducing the time from farm to customer, more direct sourcing of produce, improved supply chain practices
- Try to reduce the GST price impact on fresh food
- Market the fresh food directly levering data on health statistics locally and providing customers with a “recipe” for healthy freshly made, easily made meals.
Woolworths Key success factors in fresh food.
- Why do buyers choose Woolworth’s fresh food over competitors?
1) convenience of a one stop shop
3) store attractiveness
4) friendly service
We need to allocate sufficient resources to refurbishing your stores to maintain/gain competitive success.