Woolworths as the Largest Company in Australia (1924)

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Executive summary
Woolworths is one of the largest companies in Australia that has been started in the year 1924 by Percy Christmas. The company has over 200,000 employees working in its over 3000 units around Australia and New Zealand. Its winning formula lies in the wide product and services, ranging from petro, hotels, consumer electronics, discount stores, food, groceries, and liquor and night clubs among others. The company has been planning to take part in the international market and some of the investment opportunities in the world relate to the emerging Chinese and Indian markets. In the past, the Western countries including the USA and the European block have been the top economies, but this has now changed. Since the recession, these economies have been quite slow and China and India are picking up. These two are the fastest growing economies and are the best investment opportunities. For Woolworths to secure the future, they would have to consider them in their strategic plans. This also means that they have to have their contingency plans ready, noting that most of the emerging markets are riddled with bottlenecks.
Company background
Founded in the year 1924 by the founding CEO Percy Christmas, the Woolworths Limited is one of the largest companies in Australia. With its headquarters in Bella Vista, New South Wales, as of the year 2011, the company was home to more than 200,000 employees that work in its huge number of retail shops totaling upwards of 3000 units. The bulk of the company’s income comes from the retail shops that are found in both Australia and New Zealand. It is known playing a major role in the retail of liquor, food and groceries, petrol, hotels, home improvement such as electronics and other consumer goods (Investmart, 2014).Other than the consumer merchandise, hospitality and energy industries, the company also ventures in the gaming sector.
Foods and liquor are sold through their supermarkets, Thomas Dux groceries, BWS and the Langton’s in Australia. As an extension of the liquor business, the company also owns and operates chain of night clubs and pubs in Australia. There are also some of the common house brands that include the baked products, branded meat products, fresh produce as well as the other food products. Most of the supermarkets in New Zealand are operated under certain brands that are recognizable, such asWoolworth, Supervalue, Countdown, Foodtown and the Fresh Choice. In the energy sector, the company has formed a joint venture with Caltex to form petrol stations operated under the brand names Caltex Safeway and the Caltex Woolworths. In total there are more than 550 petrol stations under this partnership and the number may grow in the future.
In Australia, there are more than 160 discount departmental stores called the BIG W. Through this outlets, the company retails merchandizes such as the sporting goods, toys, books, clothing, software, beauty products, pet foods, stationery, hardware, homewares and automotive spares.
The consumer electronics in both Australia and New Zealand are retailed through various electronic shops such Dick Smith Electronics Powerhouse, Tandy Electronic retails shops and the Dick Smith Electronics. Through these retail shops the customers are able to purchase the common home and personal electronics such as computers and peripheral gadgets, audio visual equipment, mobile phones, tablets, faxes as well as other accessories and tools. The hotels that are run by the company owned subsidiaries at the rate of 75%. They are operated by the Australian leisure & hospitality group, which currently runs more than 280 venues that are licensed as well as the gaming units that are spread out across Australia. The company has also ventured into the horse and betting sports across Australia among other minor ventures, bringing the total of industries that the company has invested in to more than thirteen (Amritt ventures, 2014).
Since the year 1993, the company has been listed in the stock exchange as WOW, and is one of the most successful retailing business and with the best consistence. Some of the strategies that made the company such a success in the industry are the Everyday Low Prices and the Fresh Food People. With this adoption, the company has managed to save on costs within a period of ten years, in the tunes of $ 8 billion. Consequently the cost of doing business to the sales ratio has also come down to about 20%. As of the year 2013, the company made profits in the range of $2.35 billion after tax, while the sales that year was upwards of $58.5 billion.
Current international trade patterns
There has been continuous growth in the global economy since the Second World War. This growth came with some patterns of trade that gave rise to the economic powers houses of the western nations being the rapid growth economic countries. These are patterns that define the structure of the global economy. In the recent past the world went through one of the worst economic slumps and most of the countries were affected. While some have been recovering fast other were not heavily affected and are now showing some strong signs of growth and dominance. This has had impact on the global trade as most of the common trends have now shifted. Much of the wealth in the world today is now moving away from the rapid growth economic countries such as the United States and the European block. Most of the countries in the European block suffered the worst blow of the economic recession and have been having a hard time trying to bring back the speed in economic growth. While much of the investment ventures have always been to the west, there is now a shift in the balance and most of the investments are being made in the east.
Some of the trends that have rocked the international scene include the emergence of regional trading blocs. In this case, the members of the blocks are allowed to trade with the other members freely; however there are barriers for all the states that are not members to the block. This has had very significant impacts on the trend of the global trade. While the creation of the trading blocs has greatly enhanced the economic powers of the member states, the rest of the states that are not members have been suffering from trade diversion. The European Union is one of the blocks that have been enjoying massive trade growth within the bounds of the region. However much has changed in the recent slump, most of the European nations are now looking to expand in the east after massive losses within the block. The United Kingdom is one of the many super powers that have felt the blunt of the recession. It has experienced significant slump in the commercial and financial services. This has been the trend with most of the developed countries in the western blocks as the go through the rough deindustrialization as well as poor national outputs through the manufacturing sectors.
As has been the case with most of the nations that were communists, after the fall of communism most of them have broken free. Of late these are countries that have increased their share in the global trade, by taking advantage of their low cost of production as well as the low level of wages. On the rise now are countries such as India and China, which industrialized and spectacularly increasing their market share at the global trade platform. Of the two countries, China hascome out looking like the next super power ahead of the rest of the nations. One of the indicating factors is the fact that the market share commanded by China is not just within the realms of the low tech goods and clothing but also in the manufacturing industries.
The global trade trends are crucial for countries that wish to remain relevant in business. As for the Woolworths limited, this is even more crucial due to the fact that they are considering going into the international arena of trade. Investing in the west at this time would mean that the company will have a rough time trying to remain sustainable. For any of the business leaders that are looking to expand territory such as the Woolworths, the most promising investment prospects are in the east. The trend where the Chinese and the Indians are the leading investment harbors in the world at the moment and in the future, should be incentive enough for investors looking to join the prosperous markets. By the year 2020, it is estimated that Asia is going to be the next rapid economy and any of the business that are looking to survive should consider the trend. For Woolworths, one of the key indicators that China and India are the next big economies is the fact that the Western nations are also moving most of their investments to the east.
Surveys that have been conducted on the projection of the exports expected from Asia in the next five years indicate that there is going to be more than 60% of output from the region, compared to less than a fifth from America. Given the current influence that the Indian and Chinese economies have at the moment, they are going to contribute to the rise of other rapid-growth economies and together they will be better that both the American and European economies. These are important cues for Woolworths, especially due to the fact that the new emergent global trade superpowers are going to create concentration resurgence in the global demand. As of the year 2013, China had exceeded the Foreign Direct Investment by $ 100 billion compared to that of the USA, for the 20th year running. As such the country has maintained a growth rate of more than 20%. At the same time the non-financial direct investment has also been very high, amounting to more than $77 billion.
While in the past most of the countries in the western block have relied on the commercial blocks at the regional level, China and India are not block restricted. This means that the investors do not have to be from a specific block to trade. This also implies that companies like Woolworths that are looking to expand in the region can do so without restrictions. This is a good opportunity for the Woolworths to invest in countries that are not restricting trade and therefore offer fair ground for business.
The development of the e-commerce platform has brought revolutionary changes to the way businesses and their customers interact. This is a platform that influences the value that trade has, the cost of doing business, accessibility of products across the continent, creating tides in the international market. When the platform first came into being, the USA and UK has the lion’s share of the proceeds from the trade, today the rest of the world are enjoying the same rights. This has come at the increase of the internet access and connectivity in most of the nations. This has resulted in increased imports and exports among the countries thereby influencing the global market.
One of the commonalities between China and Australia is the fact that both are growing at a rapid rate and their relationships are getting even stronger. For both countries their aim is to strengthen the relationship even further, to make sure that they maintain their impressive investment and trade performance, ...