The strategic analysis analysis for Woolworth

Background of Woolworth 

Woolworth has been operating in Australian supermarket and grocery industry for years, along with its sole competitor Coles, showing that this sector follows duopoly market structure. However, recently Amazon has entered into the industry and begin to capture significant number of online food and grocery revenue. Based on the entrance of Amazon, Woolworth has started to worry about its competence, profitability, reputation as well as loyalty of its customers (Merrett, 2019). Therefore, the underlying report has focused on conducting the strategic analysis for Woolworth, such that any feasible and effective solution can be given to Woolworth for dealing with competition posed by Amazon.  

Situational Analysis of Woolworth

The situation analysis helps to identify the issues being faced by Woolworth. The reliance is maintained on assessment of both external as well as internal issues. 

External Analysis

The external factors mainly lie outside of organization, and while interacting with outside world, the effect of these forces cannot be ignored (Vorobyov et al., 2019). The industry is at mature lifecycle stage and volatility of revenue is low. However, when competition is offered by new entrants, then revenue stream of Woolworth is most likely to undergo modification. The regulation level in industry is medium, yet Woolworth can expect that any changes in policies of Government and any legal changes can affect the operations of business (IBIS, 2018). The economy is stable, yet the value of Australian dollar has fluctuated significantly over past few months and it is likely to affect revenue of Woolworth. The technology change is medium and company can cope up with that based on its resource base (IBIS, 2018). The entry barriers are high, capital intensity is medium (IBIS, 2018) and thus new players might not enter into the market with ease. 

On the other hand, in terms of competition, Woolworth is likely to witnessed strong competition from Amazon in online selling. It has been witnessed recently that society has undergone huge change as part of pandemic and online shopping is aggressively replacing the traditional in-store shopping. This is not expected to be temporary and long run change is much likely in buying patterns of consumers. Therefore, competition from Amazon is one of the main challenge which lies in external environment of Woolworth.