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Key success factors the core strategy for woolworths

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KEY SUCCESS FACTORSThe core strategy for Woolworths has always been cost leadership. However, the fast pacedindustry of Supermarkets does not often allow to cling on to one isolated forte. Henceforth,Woolworths has evolved to other powerful factors in its years of operation.LOW-COST DISTRIBUTION AND STOCK MAINTENANCEWoolworths established cost leadership by maintaining a simple, yet powerful distributionchannel. By establishing a network of retail stores, the company ensured that its customersare never turned away.With almost nil production costs, the entity primarily focuses on storing the goods in its store.Given the perishable nature of the goods, the stock turnover days are bare minimal giving thecompany an advantage to not disrupt any of its establish distribution routine.MINIMAL R&D COSTSWoolworths enjoys the advantage of minimal research and development costs for its business.Most of the products are third party owned and the in-house “home-brand” products arecheap alternatives for the customers.Visibility of the stores require lower marketing costs, just enough to compete against theother supermarket giant Coles. Having said that, Woolworths have been investing a lot in itsstore designs and outlays to improve customer satisfaction. This is one of the newinvestments that the company is making in this new era of shopping, where often a returningcustomer is a result of good service and ease of shopping.DIFFERENTIATION9 |P a g e
Reiterating from above, the company cannot and is not relying only on cost leadership. Withcontinuous competition from Coles, and now, Aldi (a cheaper option for customers),Woolworths has differentiated its business from its competitors. The company now focusesmore on differentiation than any other factors in its arsenal.This is, to an extent, has created a unique success story for the company. It has opened upconvenient ‘metro’ shops, along with providing in-store options of hot and fresh foods (e.g.sushi, kebab etc.) for its customers.More innovation towards simplifying the shopping experience of its customers areundertaken in 2016. The billion-dollar loss has definitely been a setback for the company, butit is jumping back on to the race by embracing innovation, change, and most importantly, bydifferentiating its business model from its competitors.KEY RISK FACTORSLike all other companies, Woolworths too has its unique risk factors. They can besummarised below:COMPETITIONIt is undeniable that Woolworths has its own following of loyal customers. However, withever growing competition in this fast paced industry, winning and retaining new customers isa challenge for the company.MANAGEMENT ACTIONSHistorically, this has been the key reason for the company to fall short from its competitors.

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