The internal environment of an organization consists of its available resources, inherent capabilities and competencies, and the structure of its inner systems and processes (The Internal Environment 2006, p. 126). It is absolutely necessary for business managers to commence organizational internal analysis as it assists them to understand the firm’s strengths and weaknesses.
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This in turn helps the company to devise suitable strategies aimed at leveraging its strength to achieve sustainable competitive advantage in the area of investment (Stahl & Grigsby 1997, p. 31). This paper evaluates the internal environment of Woolworths Safeway, Australia.
Resources can be described as fundamental inputs that enable a business entity to carry out its activities (The Internal Environment 2006, p. 127). In formulating a proper internal analysis, resources are divided into two – tangible and intangible. Tangible resources refer to the physical assets under the possession of a business entity.
Woolworths Limited have greatly diversified its business interests into 5 broad segments that includes the supermarket division, general merchandize, consumer electronics, hotels, and wholesale division (Corporate Information 2009, para. 1).
To maintain a competitive advantage, Woolworths operate under several brand names such as Safeway, Dick Smith Electronics, Tandy, Woolworths, Foodtown, among others. It has a strong physical presence in the whole of Australia and New Zealand as it operates 3,030 supermarket stores, petrol stations and hotels. The organization is sufficiently strong, having posted $37 billion in revenue in the first half of the 2009 fiscal year (Money 2009).
Its intangible resources include loyalty schemes such as petrol subsidies at Caltex Woolworths, everyday rewards, credit cards, and frequent shopper club. In human resources, Woolworths had over 180,000 employees as of 2008, a 38% increase in human capital since 1993 (Australia’s Leading 2009, para. 1). Its reputation has been greatly boosted by its logo, ‘The Fresh Food People’, which has been used for over 20 years.
An internal analysis can also be done by evaluating the organization’s capabilities and core competencies. Capabilities can be defined as the organization’s capacity to deploy deliberately integrated resources aimed at achieving a desired end result (Lachowicz 2006, p. 20). Woolworths is known to offer its employees many opportunities to develop their careers, considerably reducing employee turnover (MGSM 2008, para. 2).
Furthermore, Woolworths motivates and empower employees through an expansive workers credit union known as Employees of Woolworths Association. Recently, Woolworths took measures to streamline their supply chain by contracting Kuehne + Nagel as the sole provider for the organization’s worldwide order management and freight management from crucial export regions such as Europe, North America, Asia and Africa (Kuehne 2009, para. 1 & 2). The contracted company has a global representation.
Taking pride for its use of sophisticated business management techniques, Woolworths have also introduced latest webMethods Optimize technologies to evaluate its supply chain processes and identify grey areas in need of improvement. Earlier this year, the company implemented Workforce Optimization Software technology to improve customer service and satisfaction (James 2009, para 1). What’s more, its logo has been utilized by the company as an effective marketing strategy for over 20 years.
Competences encompass all the characteristics that an organization may require in order to compete favourably in the marketplace (The Internal Environment 2006, p. 129). Core competencies are the organization’s most critical sources of competitive advantage. Woolworths have several activities that it performs exemplary well in comparison to its competitors.
For instance, the organization is known for its insatiable appetite of developing and nurturing nationally recognized brands. Woolworths Australia is also known for its low prices, not mentioning the fact that it offers quality products and services at major cost savings. Its home brand is the all-time largest-selling grocery brand in Australia. The company is also known for its timely delivery, quality assurance, and customer service.
The SWOT analysis is a technique used to evaluate an organization and its environment. It stands for strengths, weaknesses, opportunities, and threats (SWOT Analysis 2009, para. 1). Based on the above discussion, Woolworth’s strengths includes powerful retail brand in Australia and beyond, outstanding reputation and brand name, value for money, diversification, committed and dedicated workforce, convenience, and high uptake of information and communication technology.
Its Weaknesses includes the huge number of employees and confusion arising from trading names. Woolworths opportunities includes venturing into new markets due to the partnership between the organization and Kuehne + Nagel, more customers brought by the 360® Workforce Optimization software, and focus on specific markets such as hotels, liquor, petrol, and grocery stores. Being a leading organization in Australia, Woolworths will continually face the threat of stiff competition, both locally and globally.
List of References
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Corporate Information 2009. Woolworths Limited. Web.
James, B. T. 2009. Woolworths Limited Implements Workforce Optimization Software from Verint Witness Actionable Solutions to Support First-Class Customer Service. Web.
Lachowicz, P. 2006. The Internal Environment: Resources, Capabilities & Core Competencies. Web.
Money 2009. Lowe’s Taps Australia Growth with Woolworths Venture. Web.
MGSM 2008. Woolworths Limited. Web.
Stahl, M. J., & Grigsby, D. W 1997. Strategic Management: Total Quality and Global Competition. Wiley-Blackwell. ISBN: 9781557866509
SWOT Analysis 2009. Web.
The Internal Environment: A Resource-Based View of Strategy 2006. Web.