MGMT19128 Strategy and Change

 What do we mean by ‘making dynamic adjustments Revisiting problems in performance measurement Evaluating the context of control Does the Balanced Scorecard need recalibration KPIs as context-bound levers of change Strategic levers Tactical levers Operational levers Are we there yet.

 

What are we measuring Quantifiable measures drive out non-quantifiable measures Are we trying to measure performance too soon Short-term EPS and ROI encourage managers to consider only tactical or operational issues  What are we rewarding Is sub-optimisation occurring.

 

What are the interdependencies among the four scorecard categories What are the relative weightings required to deliver strategic intent.

Woolworths Limited was primarily founded by Percy Christmas way back in 1924, when it came with its first store. Since then the company has grown its number of stores all over the Australia, and has even expanded its operation in international market, with its stores in New Zealand and India. The company has gained competency in retail chain industry and has also added liquor retail in its business operation. At present the company employs experienced and middle aged employees in order to build its competency in the market (Danieltrifkovic, 2016). The company’s mission is “To deliver to customers the right shopping experience each and every time” while the company’s vision is “To have their customers put them 1^st across all their brands” (Bruwer, 2002). Woolworths stands near to holding around 30 % market share in the industry. In order to boost its revenue there is need to revamp the external and internal strategies in order to come out as leader in the industry.

The earlier assessment clearly projects the strengths and weaknesses of the company (Arli et al., 2013). In present paper, we would be going in detail regarding three strategic questions, which are, Formulation strategy (Where could/ should the organization head), Implementation strategy which answers, How might it get there?, and Evaluation and control which answers, How might the organization best measures its success? Whatever the business, it cannot progress without proper strategy in the market. Competition exists everywhere, it is the will and ideas which make lot of difference not only for the company and its founders but also in the lives of people who are associated with the company. Strategic leadership doesn’t comes with ease, there needs proper planning in order to execute certain steps, which prove beneficial not only in short term, but also in long term for the organization or the business itself.

Formulation Strategy

Formulation strategy focuses upon answering the key strategic question, i.e., Where could or should the organization head.

At present Woolworths is at around 30 % of market share. In order to improve its market capture and gain major market share in the industry, the company needs to strategically think about its business functions minutely in order to develop the future prospects and actionable steps to move ahead of the competition. At present competition is huge in the market. Woolworths need to build its organization, bringing INNOVATION, in its business, not only in core operations but in all of its business functions and verticals. The company needs to develop robust realistic strategic plans. The company’s focus should be to become good to great company in future course of time. Lot of efforts needs to be put in the internal structure of the organization and develop strategies which put the organization in WIN- WIN situation.

The company needs to be more customers centric and include customer relationship strategies, if the company wants to retain its customers who have huge bargaining power, due to wide range of other competitors existing in the market. The company shall revamp its mission and vision and should include clear communication strategies not only in its internal structure but also externally. Marketing does lot of contribution towards the growth of an organization. It is because of these reasons that all business functions of the company shall be aligned to make Woolworths not only best service provider in the market, but also best employers to work for in the industry (Woolworths Limited, 2017).

Any company is as good as its employees, so in order to gain competitive edge and become leader in the industry, the company needs to revamp its strategy of retaining the best employees and recruiting the fresh talent which would give innovation edge to the whole structure of the company. There is requirement to make products and services within the company to STAR position, and remove the non-performing assets or product and service lines from the whole company structure. Company should focus to head towards good to great organization in its future course of time and become competitive enough to lead the market in all spheres.

Moreover, the company shall focus on bringing simplicity in its all operations and remove complexities in business operations. After thorough analysis using SWOT and PESTLE analysis tools the company should remove the weaknesses and further sharpen its skills including making its strengths more robust in the market. Pricing does impacts the business and its services and goods, however, if the company deals better in the market, it can become its strength not only in current scenario but also in coming future for the company. Diversification and Low cost leadership strategies would really help Woolworths to gain competitive edge in the market and whole of the industry. It shall develop customer loyalty programs and shall make it as core strategy if the company really wants to improve its market share in the industry.

The company shall understand the value of economies of scale and building value provider in all its interactions with the customers and suppliers. The company shall make robust and realistic plans in order to build strategic strength in the market. The skills development, training and development of employees shall be on regular basis within the internal structure of the company. There is requirement to improve first employee relationship, which than will percolate to excellent customer relationship. Behavior and how we communicate really impacts the business and its sales. In order to build leadership position in the market and industry, the company needs to develop communication strategies for both internal staff and while communication external to an organization (The Saylor foundation, 2017).

For the given project, the ambitions and abilities of Woolworths require to be refined. The Ambition to become Good to Great companies shall be developed to attract best employees to work for Woolworths. When best employees work for Woolworths the company itself would become better company, and its market share would increase from 30 % to above figures. 

Organization Performance 

The organization shall focus on delivering quality communication between  all the stakeholders and shareholders.

Use of balanced scorecard, would ensure formulating better strategies for Woolworths. The balanced scorecard analysis would take into consideration, Financial perspective, Internal process perspective, Innovation and learning, and Customer perspective.

Customization is the trend which is followed by many companies around the world, and has proven track record of increasing returns on investment. Hence, during formulating strategy for Woolworths, CUSTOMIZATION, shall be key focus area. 

As described in chart, the formulation strategy for Woolworths shall be to be in position of STRONG – STRONG, for both short term and long term. This would ensure continuous improvement in the operation of Woolworths, and would help the organization tto achieve significantly better position in the competitive market space.

 Gap Analysis 

Gap Analysis would help in finding out the grey areas, where Woolworths need to focus upon. Each of the gap shall be taken into consideration, and based on which particular, Formulation strategy shall be developed, which would further enhance the performance of the company and its brand and financial position all together.

Another key point to be taken into consideration is effective decision making. 

The effective decision making is at the heart of Formulation strategy and shall be practiced by the company to Formulate and direct these decided strategies through set of effective decision making across the organization structure of the company. 

Implementation Strategy

Implementation strategy would answer, the second strategic question, which is, How might it get there?

In order to implement the formulation strategies, the company needs to focus on three aspects of an implementation strategies. These are Operational capital, Cultural Capital, and Human Capital. There is need to focus on these three aspects, if the company really wants to achieve the position as described in the formulation strategy. As discussed earlier, clear communication makes lot of difference in making the organization successful or not. There is requirement to strategically think on these aspects. Vision shared is valued less compared to shared vision within the whole structure of an organization. The organization shall implement open ended communication throughout its internal structure and employees. Cultural capital and Human capital are both crucial aspects for the company. There needs to be team spirit within the organization, and collaboration among the stakeholders and shareholders, by the company itself. These strategies and thought process impacts hugely towards making an organization to achieve leadership position in the market and industry as a whole. There is need to understand the wants, needs, and desires of human capital of the organization. Only after implementing these steps the company would be in position to retain its customers for longer period of time. 

There is need that the board of directors of the company shall build strong relationships with both stakeholders and shareholders, which would give new strategic direction to the company. Proper compensation  in terms of monetary aspects to the employees would help the goodwill of organization to spread fast in the market and the industry. This will put the company in position to gain interests from the best people in the industry to join the team of the company and make it a profitable business in the industry and the market itself. The company needs to develop astute leadership under its own umbrella and the same thing shall be communicated to the lowest level of the organization. Organization can move ahead only when the directions and strategies are shared and understood commonly between the employees and the leadership team of an organization.

There is requirement to implement innovation in leadership styles and innovations in the way the organization interacts with its staff and employees. The same thing percolates outside the organization and develops huge impact over the overall business of the company, and in present case over the business of Woolworths. It shall be understood clearly that collaborations and relationships have long lasting impact not only on the individual but also on the whole organization. There is requirement that strategic communication shall become internal aspect of the company. Only through these steps the company would be in position to implement the formulation strategies and would help the company to become good to great company in years to come in the industry as well as in the market.

Proper communication channels and structure of communication between the board of directors, shareholders and executive management would help in implementing the change both within and external to an organization. The only thing which never changes is the change. Open ended mindset would help the Woolworths to adapt to the changes quickly and develop way to have profitable business not only in short run but also in long run. This would benefit the organization such as Woolworths for many years irrespective of the challenges it may come across during the course of time and in the market.

Sustainable development shall be key focus for an organization such as Woolworths if it really wants to transform its business and profit margins in the industry. There is requirement that the organization such as Woolworths shall bring in transformation not only in its internal structure and business model but also seek transformation in the lives of its employees and gain excellent position in the tough market. Simplicity shall be the key goal of the company that is Woolworths. Simple business model and infrastructure would help to gain competence in the market and would help in having rapid gain in terms of profit for the organization in longer run.

Further there is requirement to observation and recalibrate transformation within the organization. Transformation is not easy but if made within the organization, it can adapt to changes and build flexible strategic decisions to overcome challenges which happen in the day to day operations of the business and company itself.

The  question of, How do we get there? Can be answered through the Implementation Strategy. For this effective leadership and management shall be key criteria.

It requires the need to understand the difference between, Leadership and Management. 

As described in the chart here, Leaders provide vision for the future and Management carries out execution of existing policies and procedures.

For Woolworths to become, Good to Great company, its necessary to develop and revise the Vision and Mission statement of the company, and develop newer policies and procedures through formulation strategies. 

The implementation strategy should take due consideration of impact of, Environment, Business strategy, Capabilities, Leadership, People, Culture, Structure, and Systems. The formulation strategy can be implemented through all these key players, and each and every decision making can be analysed through implementing them through these key 8 tools.

Operational Capital, tools for effective management requires, the detailing of these characteristics, Cultural Capital defines the organization both internally as well as externally.

Hence, the effective way to implement the formulation strategies is through change in cultural capital of the Woolworths. The key focus shall be on, CULTURAL INTENSITY AND CULTURAL INTEGRATION.

Principles of transformation would help in implementing the change across the organization.

The last of implementation strategy is through, HUMAN CAPITAL. 

The Human Capital, is the most treasured capital for any company or an organization. In order, to seek changes to get higher market share in the competitive market, the use of Human Capital would help the organization in managing good changes and also registering accountability of these changes which it can match it through the real results and expected results. 

Evaluation and Control

Evaluation and Control is an important aspect for any business which thinks of implementing strategic goals for the benefit of its organization. Evaluation and control, answers, how might the organization best measure success?

Well, there are many tools and techniques through the way an organization can measure its strategic implementation and goals it wants to achieve. Balanced score card is an efficient tools, which helps to understand the progress and performance of the organization and helps to analyse and create corrective steps in order to achieve the goals which the organization wishes to achieve in present and future times.

Another tool which can be employed is Enterprise risk management analysis. Enterprise risk management practices helps the organization to measure two aspects, these are, Value at Risk and Earnings at Risk. Financial goals and results have direct impact over the overall functioning of an organization. Return on investments is the tool which helps to understand whether the particular strategy had beneficial impact over the organization or not.

Through the mentioned sets and tools the organization can build successful and resultant plans in order to overcome the challenges and come out as leader in its pursuit towards excellence. Woolworths Limited is bigger organization, hence its business gets impacted through various factors. Also since, its operating in international markets, the degree of impact of different factors have wide range of implications over the whole organization.

Key performance indicators, not only in business but also in measuring the performance of internal staff of the organization, helps in having clear understanding of the whole business for the board of directors and executive management of the organization.

In order to further evaluate its strategic implementation, Woolworths can include performance management system throughout its internal structure. The fundamental benefit of performance management system is that it helps to measure, record different aspects of key performance indicators and employees contribution towards an organization.

Whether the employees follow shared vision or vision shared, it can be easily measured through these mentioned metrics. If employees follow shared vision and organization has achieved the shared vision stance in its overall organization, key performance indicators would register the required changes which the strategic management team of the organization wishes to achieve. If however, the strategies are not implemented successfully the key performance indicators would highlight the same (Santos, 2013).

There is also requirement to change the Business scorecard and recalibrate the business scorecard in order to achieve best possible record of organizations overall performance. The evaluation metrics would give best estimation of the proper planning carried out by the team of the organization in order to achieve the vision and mission of the organization. There is requirement, to evaluate risks, associated with the company. This can be achieved through Risk management systems. The best risk management systems help the organization to measure the impact of various risks associated with the organization. With this it gives directions to the responsible staff of the organization, to take appropriate steps in order to control the impact of risks affecting the organization negatively.

Key performance indicators as discussed above, help in measuring the following aspects, Finance, Customer, Internal business processes, innovation and learning. Together these aspects, which have direct relationship with the overall growth of the organization, can help in giving best insights over the well being of the organization.

Hence, the mentioned tools and techniques would help woolworths to achieve Formulation strategy, Implementation strategy and measure these strategies through effective Evaluation and Control.

Recommendations

Woolworths Limited is the largest retain chain in whole of Australia. It offers its products, at low prices in order to benefit the customers, and has implemented it as its one of the strategic plans in order to gain maximum share in the market. From study of Formulation, Implementation and Evaluation and control, it is highly recommended, that Woolworths Limited, shall employ Customer Relationship Strategies, as one of its core strategies in order to remain in the business for long haul. With the help of Customer relationship strategies the company can become the customers choice retail chain. Another recommendation, for the company is to remove, the DOGS, from its product lines. There is no gain in investing in the products, which cannot give any kind of competitive edge to the company in present and future years. It is therefore would be beneficial to invest in STARS in product lines of the company, as it will help in giving competitive edge to the company in present as well as in future. The next of recommendations for the company, is to include diversification of its business functions, in order to gain maximum economies of scale, which would help the company to gain competitive edge in the industry, compared to the competitors operating in the market (Pritchard, 2000).

The company needs to develop strategies which makes it best employer in the market. Hiring young talents and best of the people would help the company to gain competitive edge in the market and also in the longer run. The company is at around 30 % of market share, these figures are less, if the company wishes to achieve leadership position in the industry. The best strategy would be to have both cost leadership, and premium pricing strategy to certain product lines along with diversification of product lines as well as business functions. Employing young youth would help the organization to gain innovation strategy in the market. This would help the company to gain high competitive edge in presence of fierce competition.

Conclusion

Woolworths Limited can become leader in the market if the recommendations and answers to the three strategic questions are followed by the organization. The present paper discusses succinctly in detail the three strategic questions and helps to develop better understanding regarding the topic, “Strategic trajectory: Shaping an alternative Future”.

References

1. Arli, V., Dylke, S., Burgess, R., Campus, R., & Soldo, E. (2013). Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).
2. Bruwer, J. (2002). The importance and role of the winery cellar door in the Australian wine industry: some perspectives. Australian and New Zealand grapegrower and winemaker, (463), 96.
3. (2016). Is a lack of Integrated Marketing to blame for Woolworth's recent

downturn?. Retrieved From: https://mpk732t12016clustera.wordpress.com/?s=woolworths

4. Harris, J. K., Swatman, P. M., &Kurnia, S. (1999). Efficient consumer response (ECR): a survey of the Australian grocery industry. Supply Chain Management: An International Journal,4(1), 35-42.
5. Johnson, T., & Bruwer, J. (2003).An empirical confirmation of wine-related lifestyle segments in the Australian wine market. International Journal of Wine Marketing,15(1), 5-33.
6. Jones, E. (2005). Liquor retailing and the Woolworths/Coles juggernaut.Journal of Australian Political Economy, The, (55), 23.
7. Peters, R. E. (1998). The broader application of HACCP concepts to food quality in Australia. Food Control,9(2), 83-89.
8. Pritchard, W. N. (2000). Beyond the modern supermarket: geographical approaches to the analysis of contemporary Australian retail restructuring.Australian Geographical Studies, 38(2), 204-218.
9. Santos, D., Svensson, G., & Padin, C. (2013). Indicators of sustainable business practices: Woolworths in South Africa. Supply Chain Management: An International Journal, 18(1), 104-108.
10. Smith, D. (2011). Dick Smith's Population Crisis: The Dangers of Unsustainable Growth for Australia. ReadHowYouWant.com
11. The Saylor Foundation. (2017). Strategy Formulation. Retrieved from: https://www.saylor.org/site/wp-content/uploads/2013/09/Saylor.orgs-Strategy-Formulation.pdf. Accessed on: 04.06.2017 

12. Wheelen T.L., Hunger, J.D., Hoffman A. N., & Bamford C.E. (2015). Strategic Management and Business Policy: Globalisation, innovation, and sustainability., Harlow UK., Pearson. 

13. Woolworths Limited, (2017). Strategy and Objectives. Retrieved From: http://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-andobjectives
14. Wright, C., & Lund, J. (2003).Supply chain rationalization: Retailer dominance and labor flexibility in the Australian food and grocery industry.Work, Employment, and Society, 17(1), 137-157.