Cross Case Analysis

Woolworths Limited (WOW) is the largest retail company in Australia and New Zealand. WOW’s primary activities are Supermarkets within segments of Australian Food and Liquor. The company demonstrated “the resilience and sustainability of its business model by delivering a 5.1% increase in net profit after tax to 2,214 million US dollars” in 2011 (Woolworths Limited, 2011).

WOW’s long-term success is based on sustaining its core competencies supported by strategic marketing management. The factors that are most likely to affect the maintenance of Woolworths’ competitive advantages are the increasing intensity of competitiveness in the market; the growth of online sales, and decreasing consumer spending. Currently, WOW applies an integrated competitive strategy that combines cost leadership and differentiation strategies to compete on its supply chain effectiveness, minimize cost and improve a brand image to differentiate itself. (Woolworths Limited, 2011).

SWOT analysis of WOW allows defining how successfully its strategy takes advantage of opportunities and minimizes threats.

SWOT Analysis

Strengths (Vodanovich et al., 2010; Woolworths Limited, 2011):

• Strong brand reputation;
• Effective top management;
• Effective  Supply Chain Management;
• Great customers loyalty;
• Continual investments in consumer research and staying aware of environmental changes;
• Low operation cost that provides price leadership;
• A strong lead in multi-channel;
• Effective customer engagement strategy;
• Positioning as a community oriented and socially responsible company.

Weaknesses (Productivity Commission, 2011):

• Ageing workforces and skills shortage; a reliance on younger unskilled workforces;
• High employee turnover that increases spending on training;
• High labor cost;
• Low productivity compared with foreign competitors.

Opportunities (Vodanovich et al., 2010; Woolworths Limited, 2011; Productivity Commission, 2011; Coriolis Research, 2005):

• Expanding the range of products and services;
• Introducing new stores format;
• Expanding  business to Asian markets;
• Reaching the dominance in online sales;
• Cost consciousness as an factor of WOW’s operations;
• The growth of customer  base and market share;
• Developing a leading integrated offer through  multi-channel;
• Long term trend of organic food sales to rise;
• Delivering new healthier products;
• The usage of direct and social networking platforms.

Threats (Vodanovich et al., 2010; Woolworths Limited, 2011; Productivity Commission, 2011; Coriolis Research, 2005):

• Fiscal uncertainty;
• The intensification and growth of competition in the retail industry and increased  international online retail competition;
• Lowering consumers spending;
• New competitors entrance;
• A necessity to reduce labor costs as the important competitive factor;
• A necessity to enhance productivity;
• Consumers’ movement towards organic products and healthy alternatives;
• The need of highly skilled workforce with good IT skills.

To conclude, applying the current strategy it allows WOW to stay successful in the industry. However, the SWOT analysis indicates that in future, WOW will need to keep flexible management concerning environmental changes. It refers to increasing productivity, responding to changes in consumers’ behavior trends, and widening the range of products and services.

McDonald’s Case

McDonalds is the leader of the global fast food industry in the Informal Eating Out (IEO) segment. The company franchises and operates 33, 510 McDonald’s restaurants in 119 countries (Form 10-K, 2011). McDonalds focuses on maximizing their core business with the way of providing affordable products and value throughout their menu with highlighting core menu items.

Given the complicated health situation in the U.S.A. that emphasizes obesity and overweighting issues, recently, McDonald’s has tried to diminish negative effects on the brand image and adapt its strategies to changing trends. However, some research showed no signs of improving its brand perception (Deng, 2009, p.37).

McDonalds’ diagnosis of needs for successful changes is conducted by assessing company’s strengths, weaknesses, threats and opportunities through a SWOT analysis. The SWOT analysis allows identifying factors that may affect the company performance.

SWOT Analysis

Strengths (Form 10-K, 2011; “SWOT Analysis”, n.d.):

• The strong brand name and reputation;
• Global convenient locations of restaurants with extended hours and efficient drive-thru service;
•  Strong financial conditions;
• The effective Supply Chain;
• Strong competitive positions;
• Positioning the corporation as a community oriented and socially responsible;
• Adapting business to the cultural differences;
• Providing high food safety standards;
• Providing consumers with nutrition information.

Weaknesses (Form 10-K, 2011; “SWOT Analysis”, n.d.):

• Narrow product lines;
• Associating McDonald’s brand with junk foods;
• The failure to attract an important part of target audience -- teens and young adults;
• High employee turnover that increases spending on training;
• The lack of efforts to use the consumers’ trend towards organic food.

Opportunities (Form 10-K, 2011; “SWOT Analysis”, n.d.):

• Expanding the customer base by attracting the health conscious consumers;
•  Developing new healthier product lines;
• Providing more upscale restaurant settings that would appeal to a more upscale target market;
• Using strong and wide communication channels to emphasize the quality and origin of food and company’s commitment to sustainable business practices.

Threats (Form 10-K, 2011; SWOT Analysis, n.d.):

• The intensification and growth of competition in the fast-food industry;
• Public attacks about unhealthy food and obesity issue
• Contracting the IEO segment in many markets; 
• Increasing average price at company-operated restaurants.

To conclude, the SWOT analysis indicates that McDonald’s necessity for changes refers to achieving and maintaining positive dietary and lifestyle changes (Deng, 2009). McDonald’s has to adapt their strategies to changes in trends of consumers’ behavior to meet the following objectives: to change the company’s image as the junk food establishment to healthy food restaurant; to persuade traditional fast food consumers to change their lifestyle by buying well balanced meal (Deng, 2009). Moreover, to provide positive changes, McDonalds has to communicate nutrition messages “in a scientifically precise, yet practical and motivating manner” that encourage changes in consumers’ attitudes and behaviors that can expand the target audience (Deng, 2009). Nevertheless, the corporation still fails to complete these ambitious tasks due to the lack of some organization changes (Kotter, 1995). 

Cross Case Analysis

Similarities. The strategies chosen by both companies are concentrated mostly on maximizing their core businesses. The companies have the similar strengths: the strong brand name and reputation; the effective supply chain; a strong competitive position. WOW and McDonald realized their strengths through analogous opportunities that include delivering new healthier products and expanding market share. Moreover, on this way, they face some similar threats such as the increasing competition in the industries and consumers’ trends towards healthy alternatives.

Differences. WOW’scritical weakness is a low productivity, but its effective top management enables the company to mitigate a threat related to this weakness. McDonald’s critical weaknesses are a tarnished reputation due to associating brand with junk food and low responsiveness to customers’ trends. Besides, McDonald’s weaknesses are exacerbated by the lack of strong communication channels, in contrast to WOW, that caused the failure to response rapidly to critical changes in customers’ behaviors.

The analysis allows inferring that in order to provide sustainable development, it is vital to sustain its competitive advantages based on strong brand names and distinctive competences. The common critical successful factor in both cases refers to an ability to respond adequately and promptly to changes in consumers’ behavior. However, in a broad term, it is a derivative   factor that include having an effective leader in the top management level as a key factor, the continuous process of organizational changes (Kotter, 1995), which reduce production costs and improve total quality, and  innovations in processes and marketing.