Preliminary Business Studies - Business Planning Assignment On Woolworths PDF

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Adem Yerlikaya - 11 Business Studies Term Two Assignment 2021

BUSINESS STUDIES ASSIGNMENT TERM TWO 2021 - BUSINESS MANAGEMENT Table of Contents

Con Content tent

Page Number(s)

EXECUTIVE SUMMAR SUMMARY Y

(2)

Business Over Overview view

(3-4)

Oper Opera ations

(4-5)

Marketing

(5(5-7) 7)

Human Resour Resources ces

(6-9)

Mana Management gement Approa Approach ch

(10-12)

Bibliography

(13)

BUSINESS REPORT FOR - CHRISTOPHER SPYROU

BUSINESS REPORT BY CONSULTING AGENCY - StudyBusinessStudies Ltd. The purpose of this report is to analyse Woolworths’ overall overview as a business, including how it operates and markets towards consumers, and provides recommendations to Woolworths Supermarkets concerning management strategies and management approaches to embed within their operations in the long term.

WOOL WOOLW WOR ORTHS THS SUPERMARKETS - HILL HILLSDALE SDALE Phone Number: (02) 8565 9209 Address: South Point Shopping Centre, 238-262 Bunnerong Rd, Hillsdale NSW 2036

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As part of the Woolworths Supermarkets chain, Woolworths Hillsdale’s main function is to follow the predetermined business operations set out by Woolworths. Woolworths’ primary business function is to ensure groceries, fresh produce and meats and other products are able to be delivered to a high standard to everyday consumers. Woolworths Hillsdale is operated by the chain Woolworths Supermarkets, and henceforth aims to achieve the same goals. Currently, Woolworths has two main objectives, each with detailed plans to bring business success. Woolworths’ main objectives include successfully implementing the Food St rategy, which has been shaped by both economic and social influences. The other main goal of Woolworths is to ensure that the F21 strategy is implemented, which is shaped by both social and technological influences.

Food Strategy - SMART Goal - ‘create a better experience [between the business and customer] for a better tomorrow’. Specific - Ensure that all customers receive the best possible service at all times. Measurable - Ensure that there are fifteen team members actively working on the shop floor to not only increase productivity but to assist customers with their needs Achievable - Ensure that guides for employees to provide the best customer service are created by managers Realistic - Assist consumers efficiently and quickly as possible whilst upholding the safety for the individual, their co workers and all customers. Timebound - Managers should remind employees to provide consumers with the ultimate customer experience the very next time they are on shift. F21 Strategy - to accelerate ‘digital, internet communications and convenience for [Woolworths’] online customers’. Specific - Improve customer experience online attempting to replicate the online experience as closely as possible to the in store experience. Measurable - Employ 15 members specialising in computer technology to design a more convenient online platform for consumers to purchase their groceries. Achievable - Ensure that services provided via digital communication are just as efficient between consumer and business as it is in store i.e. same respect and patience. Realistic - Update the Woolworths website with new deals every week (in line with in store deals) before focusing on general website redevelopment. Timebound - Employ 50 more people to fill the demand for customer enquiries via telephone by the 31st of June 2021.

Woolworths Hillsdale - Public Company Woolworths Hillsdale is part of the Woolworths Supermarkets retail chain, which is owned and operated by Woolworths Group. Woolworths Group is listed on the Australian Stock Exchange under the ASX code WOW, which means any individual is able to purchase

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shares (a small proportion of the company) for a set price which varies on the business’s ability to continue earning revenue. Therefore, Woolworths is a public company as its ownership can be held by anyone; hence the name “public”.

QUESTION TWO - OPERATIONS a) It remains critically important for Woolworths to implement quality assurance management strategies to maintain its position as the leader in the supermarket industry in terms of market share. In business and logistics, quality assurance strategies aim to prevent defects or problems from occurring during the production line, rather than to respond to them. Quality assurance management strategies are proactive rather than reactive, which allows the company to allocate resources (especially labour and technology) towards other operational priorities. Woolworths Food recorded 42.151 billion dollars in gross revenue over the 2020 full year (Jan-Dec) which implies that the business is producing a significant amount of output. As the business is extraordinarily large by measure of output, it would be inefficient if the business had to dedicate resources constantly to ensure safe and reliable products are produced for consumers. Businesses should refer to the ISO (International Standardization for Organisation) 9000:2015 that focuses “on quality management and quality assurance to help companies effectively document the quality system elements needed to maintain an efficient quality system”. Included in ISO 9000:2015 standards are guidelines that recommend businesses to adopt specific procedures, controls, recording and documentation measures relating to achieving quality assurance. Without a solid framework to manage the already stressed production lines Woolworths uses to generate an exorbitant amount of output, it would be difficult to maintain efficiency due to the fact that problems including technological failure or employee strikes may arise. Therefore, for a large company such as Woolworths, a quality assurance system to manage the factors of production (particularly capital in the form of technology and labour) would be most suitable since it reduces the time to make decisions and avoids doubt that may arise from implementing quality control strategies. b) To realign themselves with the ever changing economy, Woolworths has had to increase its own operations. Economic influences are forms of outside pressure on a business drawn from normal economic cycles that lead to either an increase or contraction in demand. These influences have significant power to alter the way a business operates (plans). In 2021, the economy in Australia is steadily improving, after a 3.1 per cent increase in economic growth in the December quarter in 2020 after a seven per cent contraction in the June quarter of that same year. However, economic growth has not affected Woolworths’ as significantly in comparison to other businesses. This is because Woolworths’ products are necessary for people to survive and thus the business is considered an essential service. Like its competitors Woolworths in fact increased their profits over the course of the coronavirus pandemic; the business recorded an 8.3% increase in sales revenue over the course of 2019-20 and a 10.4% increase in sales on a normalised basis in the second half of 2020. This was primarily due to increased ‘panic buying,’ as well as increased in-home consumption which resulted from state restrictions. Although economic conditions of 2020 did not have much of an influence on Woolworths’

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operations, the demand for particular non-perishable products, such as toilet paper, pasta and hand sanitizer had suddenly increased at a rapid rate by consumers. This meant that the business’s stores were forced to dedicate more of their own floorspace for the sudden influx in toilet paper. In some instances, grocery team members were instructed to space out the stock on the shelves during particular times of the day to prevent all of the stock from being exhausted immediately. Although this economic influence had not directly affected the Woolworths business as a whole, it had a large effect on each individual retail store as once the demand for toilet paper had subceded, businesses had to revert their store layout back to ordinary trading circumstances, which may have taken time and resources to do so. Some retail Woolworths stores, especially those that already had limited floor space, may have not been able to stock other products some consumers may have needed. As a result, such consumers may have shifted their loyalty to other competitors such as Coles. Although economic conditions throughout 2020 may have had a small impact on how the Woolworths Supermarkets business operates as a whole, some retail stores within the business may have lost more consumers due to their inability to stock particular products. However, as all stores are owned and operated by Woolworths Supermarkets, there may have been a slightly negative domino effect on the business as a whole, perhaps within a particular local area. QUESTION THREE - MARKETING 3a) Woolworths Hillsdale has a local target market. That is, its market intends to serve consumers that live in the Hillsdale area and surrounds. Woolworths Hillsdale also needs to identify the target market of TK MAXX Hillsdale, a large unique discount variety business within the same shopping centre to spontaneously entice customers to visit their store. TK MAXX Hillsdale’s target market consists of local residents from all over the eastern Sydney region that desire cheaper products that are typically sold in department stores such as Myer and David Jones. Products desired include clothing, shoes, accessories and homewares. Woolworths Hillsdale is able to achieve greater revenue if management is able to merchandise their store and product to appeal to TK MAXX Hillsdale’s market as well as their own. MARKETING MIX Woolworths employs and prioritises the four P’s of the marketing mix when presenting their product to achieve not only their business goals but to also “neutralise [competitors such as] Coles and contain Aldi’s impact on [their] sales”.

A business’s product is perhaps the most important element of the marketing mix, as the multitude of variables which differentiate a business’s product from competitors include quality, design, name, packaging, warranty and exclusive features. Woolworths intends to continuate its Own Brands (including Essentials and Sam’s Pantry) on the market for popular products, such as bread, milk and nut bars in order to reduce competitors' input. Woolworths exclusively products from these brands the business has deliberately created to gain a competitive advantage, attempting to ‘close range gaps in which no branded alternative exists’.

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In terms of price (value of goods purchased), Woolworths prioritises its own branded products to not only be of better quality than its competitors, but also to provide a cheaper alternative. By creating these products to be better and by selling these products at cheaper prices, Woolworths is now able to successfully achieve its goal of executing the Food Strategy, as the strategy prioritises ‘creating further customer value’ for products demanded. Promotion is another key component in which Woolworths attempts to achieve their goals of implementing the Food Strategy. As part of their Lean Retail Model that is encompassed by the Food Strategy, Woolworths attempts to entice their customers into spending by reducing ‘real dollars’ - a metaphor that implies how Woolworths reduce the prices of their products for consumers. This can be easily achieved by promoting particular products at discounted prices; the ‘½ Price’ discount on highly demanded products is one that is attributed to Woolworths. By applying such promotion practises, Woolworths are therefore able to ‘improve the core offer to ensure that customers put Woolworths first’ which is an objective quoted from Woolworths’ Food Strategy itself. In terms of place, or channels of distribution, Woolworths Hillsdale ensures that an abundant number of various products are regularly distributed into its store. Fresh and perishable produce, for example, are directly distributed to Woolworths Hillsdale from exclusively Australian producers, unless in exceptional circumstances. The direct process from producer to consumer is the simplest, most efficient and fastest channel of distribution, which ensures that Woolworths is taking the right steps to “improve the range and freshness of fruit and vegetables”. EFFECTIVENESS OF MARKETING MIX As a result of its inclusive and highly detailed marketing mix, Woolworths has been able to significantly increase its own market share over the course of 2018-20 period. Woolworths has now been able to increase its market share from 32.9% in 2019 to around 37% by 2020, a large increase. Factors surrounding price, promotion, product, and place have led to this surge in market share. PRICE In terms of price, Woolworths has taken an extraordinarily rapid and no-nonsense approach to ensure that their business creates a sense of customer satisfaction. Their Food Strategy was implemented in March 2021 when arch competitors Coles decided to reduce the price of barbecue chicken, one of Australia’s most demanded products within an entire grocery store, by $1. Within less than 24 hours, Woolworths decided to ‘price match’ holding its position in the market for that particular product. As a result, few customers would have deterred from shopping at Woolworths, since the majority of consumers would more likely than not desire to take their loyalty as a result of the influence of promotion.

PROMOTION/PRODUCT Woolworths is able to promote their products in a manner that has had a significant impact on their overall revenue. Woolworths has maintained its Essentials brand, where the business could have easily chosen to only offer more expensive products to customers. In

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addition, Woolworths heavily promotes their ‘gold’ range that appeals to ‘friends and family’ allowing the consumer to feel comfortable in making important decisions regarding the high quality of food expected at social events for example. They believe that their items should be “affordably priced to help [consumers] buy all the ‘must haves’... for the lowest prices, every time”. This has allowed Woolworths to increase their market share over competitors such as Coles, whose strategies do have any clear mention of price. As a result the gap in terms of market share between Woolworths and Coles has widened even further, with Woolworths recording 37% compared to a mere 29% recorded by Coles.

PLACE Woolworths has been able to have maintained its reputation as the ‘fresh food people’ by essentially ensuring their produce is locally sourced as described in Australia’s Fresh Food Farmers report. It constantly reiteates that 100% of fresh meat and 96% of fresh fruit and vegetables are produced and grown respectively in Australia, by local farms and businesses. The brand has also recruited over 3490 large and small businesses to produce fresh food for the company. Woolworths desires to “improve the range and freshness of fruit and vegetables”, as part of its execution of their Lean Retail Model. Woolworths also uses a Sensory Evaluation Kitchen (located in Bella Vista, Sydney), a state of the art customer testing facility where customer panels test fresh food for taste, functionality and appeal, before such product is approved for retail sale. Although Woolworths Hillsdale itself is just one store, it depends on many producer centres in which the store's food stock is distributed directly to the business (without the involvement of wholesalers). As a result, Woolworths is able to efficiently and consistently supply fresh produce of very high quality. It can be said that Woolworths effectively uses the 4 P’s of marketing; price, product, promotion and place within its business operations to ensure that all consumers are able to access quality products for the lowest possible prices. The effective usage of the marketing mix has allowed Woolworths to widen the gap in terms of market share significantly over a short period of time against competitors such as Coles and ALDI. QUESTION FOUR - HUMAN RESOURCES In Woolworths Hillsdale, there are about 150-200 employees, all of which are employed on either a full time, part time or casual basis. There are many jobs which are required to be undertaken in the customer service, bakery, deli, fresh produce and grocery departments Woolworths Hillsdale offers. In every department, there are team members, supervisors (on floor bosses that ensure the business runs smoothly) as well as managers (leaders in a department).

TEAM MEMBERS In the customer service department, team members must process transactions and deal with customer complaints and enquiries in a manner that allows them to be the face of the store.

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In the bakery department employees must be able to prepare and bake bread and pastries on site and also must shelve some specialty products from other businesses. In the deli department, employees prepare sliced meats, fish and cheeses as well as shelving and maintaining the quality of produce on the shelf. It is the produce department’s responsibility to shelve fresh fruit and vegetables whilst maintaining quality standards. The groceries department shelves a wide range of products typically found within the grocery aisles, from biscuits to ice creams to drinks to nuts to sauces, pasta and rice. DEPARTMENT MANAGERS The department managers oversee operations completed by the employees within the department, with a focus on stock rotation (ensuring ‘markdowns’ are placed on foods near expiry) and also ensure targets are met in terms of sold product with relevance to supply. The Department Managers also monitor processes and promote an inclusive and positive work environment. STORE MANAGER Asides from assisting on the floor and overseeing merchandising (advertisement of products to the consumer’s eye in store), the store manager’s role is to be the store’s representative when conducting regional business (as Woolworths is a chain and requires the work of multiple stores to achieve strong market share and hence revenue), and is also responsible for overseeing employee recruitment. RECRUITMENT PROCESS In terms of recruitment, there is an efficient process since Woolworths Hillsdale recruits individuals through the Woolworths Careers (WOW Careers) website https://www.wowcareers.com.au. The website directs applicants to answer a few questions and submit their CV (resume), and also asks them to write about their skills, hobbies and life goals. The WOW careers website states, when hiring, they will; -

Abide by Anti-Discrimination and Equal Employment Opportunity legislation throughout our Recruitment Process, Recruit based solely on merit, ensuring the best person for the job is selected Act in accordance with the Privacy Act when dealing with your personal information Treat all candidates professionally and with respect at all times. (all statements derived from https://www.wowcareers.com.au/page/careers/come_and_work_for_us/our_recruitment_process/).

If an applicant is successful, they may or may not be asked to sit an interview with the Department and/or Store Managers. If the applicant passes the interview phase, they will be notified as to how they will provide important information related to their employment. Similar to most employers, the applicant is required to complete a tax declaration and must provide a proof of identity. Once the application is approved, the individual is able to be provided with uniform and complete an induction shift to settle in the workplace. The employee is now able to commence employment.

TERMINATION AT WOOLWORTHS SUPERMARKETS

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There are various types of involuntary separation undertaken by Woolworths, all of which are listed under Section 20 of the Woolworths Supermarkets Agreement 2018. FORCIBLE TERMINATION Woolworths will provide a period of written notice to notify the employee of their termination. The leng...