Woolworths biggest mistake of strategy is to

Woolworths is a number one South African department store. Their business is comprised with three business units including food, clothing and homeware departments.

Their target group is directed to people in LSM (Living Standards Measure) 8-10 which means that they target from upper and middle income class (Bowen and Luiz, 2009). Their new strategy is about improvement of the company’s sustainable performance and is known as ‘The Good Business Journey’. It is consisted with transformation of the business regarding BEE (Black Economic Empowerment) and employment equity requirements, the environment and climate change, and social development (Bowen and Luiz, 2009). The company is interested in whether their sustainability goals were too ambitious or not and what they need to do in order to archive this goals. Therefore in the following paragraph I will be critically evaluating their strategy as well as their approach to strategy implementation.

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According to my knowledge, I consider this strategy as a very ambitious due to a huge number of changes for a short period of time, exactly for five years. The biggest mistake of strategy is to set up goals without comprehensive understanding of what it would take to archive them. Moreover, they made their goals according to the international and the local environment at that time and during these years they did not take into account changes affecting the strategy. Firstly, they had to have a clear model for implementation addressing each strategic activity with description. Each of the activity should have their own manager with team members but the Good business journey is managed centrally just under leadership of the corporate affairs office and the head of corporate governance which represent a huge challenge for them because is almost impossible being able to archive all those goals. The strategy should be tacked by clearly provided projects, programs, tactical plans, budgets, action plans and procedures.

Furthermore, strategy is made without central budget so it means that during recession they had not been able to apply cost-cutting measures. Moreover, this strategy requires complete change of organizational structure and culture of the company. It includes change of the consumer way of thinking, staff behaviour towards consumers, new organizational structure of their suppliers etc. Although, they consider in-store staff as key to the success of the strategy, they did not provide proper educational training about trends towards sustainability to their new employees.

They received just general information about the Good business journey, while old employees had overall picture into the strategy. Another key point is that after two years of the beginning of the implementation they pointed out risks which could affect their strategy. Highly risky areas are about incapability of reaching goals regarding transformation, data integrity, packaging, energy and external trading conditions. Despite all aggressive advertising features in markets such as in-store ticketing, packaging and labelling, there is still a lack in feedback from company towards consumers. In my opinion, company should provide customers with more information regarding their sustainability programmes and to explain why they use certain methods.

In 2008, when economic crisis occurred, consumer’s preferences changed. Although, prices were higher for organic products than for non-organic, Woolworths though that consumers will be still buying their products but it seemed that for customers were no longer interested in environmental issues then otherwise, they just cared for price of products. However, in transformation area the challenge include finding appropriate BEE suppliers. Due to low number of suppliers it was hard to source locally.

In addition to this, they had high prices and they did not offer quick turnaround. In 2008, there was a clear need for the learning centres which can help to attract, develop and retain black managers. Important to realize, that environmental challenges fights against a lack of education of consumers and employees regarding recycling and waste management. It also includes unwillingness of consumers in recycling. Another unrealistic target was to reduce electricity usage. They did not consider that reduction by 30% by 2012 will demand investments in new technologies (Bowen and Luiz, 2009).

On the other hand, they took advantage of pilot programme with implementation of new refrigerant technology, which positively results in drop of electricity usage. Important to realize, that for doing strategy implementation successfully there is a need of ‘communicating the strategy’. It has to be ensure that all communication is carried by formal communication channels. For example, in-store staff should receive information only regarding their parts.

In our case, I think that employees received more information then needed. Moreover, they established good relationship with suppliers. Woolworths was working closely with its suppliers in order to archive high quality products and offering incentives in terms of technical assistance. On the other hand, they set very strict targets for suppliers in a short period of time. They wanted to archive 100 percent of compliances to the code but had archived just 74 percent.

To add, they expected from suppliers to change their own policy, so to increase their standards regarding safe disposal and manufacture of dyes (Bowen and Luiz, 2009). To conclude, I think that this is an instance of well-developed strategy but their implementation, by far is not so well. In some aspects I consider that the goals are set up too ambitious because they had to give more time for some changes. As I mentioned before, this strategy represents a major change in many aspects such as changing benchmark, transformation within the company, adopting new policies by suppliers etc. Another key point which is missed is a document with specifically defined strategic actions for implementation together with planned budget and decentralised management.


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