Allworld Foods is an Australian institution. For almost 100 years it has weathered many storms including aggressive competition from its major rivals, Smith’s Pty. Ltd. And United Grocery Group Pty. Ltd. (UGG). About twenty years ago, Allworld Food embarked on an expansion program based on a successful American model. The expansion included the establishment of budget clothing stores in major malls and the purchased of a chain of travel agents. Its most recent development was the creations of its own upmarket department store under the banner ‘Montague’ in honour of the founder of Allworld Foods, Montague Wilmot. Montague proved to be more successful than imagined and it was not long before it, too, seemed destined to become an institution. Nonetheless, and despite the success of the other operations, the grocery business accounts for 70% of all income. This percentage, however, seems certain to increase because Montague, like many retail business, is facing increased competition from online sales.
About ten years ago, Allworld Foods major competitor, Smith’s, was bought out by the private equity firm, Mercury Consolidated. Within a year, Mercury had installed its own management team. Mercury’s aim was clear – to dethrone Allworld Foods as Australia’s premiere grocery chain. Mercury was not without experience in this regard having embarked on similar and successful strategies in New Zealand, South Africa, and France. Allworld Foods, however, was unfazed; they had neem in this position before and had always come out on top. They were confident their traditional customers would not desert them but, to be on the safe side, the company embarked on its tried and proven ‘weather the storms’ strategy of increased advertising and aggressive pricing. They knew they might lose customers for a while but experience showed that they always came back. The board was also confident that Allworld Foods other interests (clothing, travel and Montague) would act as a buffer if things took a bit longer than usual.
This time, however, it was different. The new team at Smith’s streamlined operations, changed the product mix and aimed to develop loyalty from a traditionally fickle demographic, namely, Generations X and Y. In particular, they embarked on an aggressive online purchasing strategy. Within two years, it was apparent that Allworld Foods was losing market share, dividends were down and customers were not returning. To make matters worse, feedback from middle level and low level staff showed a significant decline in job satisfaction and a lack of identification with the company. Staff were particularly critical of the poor lines of communication. Anecdotally, the message from staff was that it was ‘all about the shareholders’. On top of this the union was also agitating for Allworld Foods to significantly increase the proportion of permanent staff. This, though, was begin resisted by Head Office who liked the flexibility afforded by causal staff. Customers were also unhappy, with surveys revealing increasing dissatisfaction with service and product knowledge. The group most dissatisfied were the older shoppers who unanimously rejected the idea of self-service checkouts which was the only option for the first and last hour of each day. At the most recent shareholders meeting, difficult questions were asked in relation to the remuneration of board members and executive pay and there were calls for a shakeup of senior management. In the aftermath, senior management was taken to task by the board. Senior management retaliated by condemning the board as little more than a comfortable clique with little vision and having too much control.
The CEO, Lily Chambers, knew that her position was precarious. Appointed only three years ago after the long-serving incumbent died suddenly, she was only too aware that if Allworld Foods was to regain its market shares, a ‘weather the storms’ approach was not good enough.
Questions – Refer to the above case study
Summary: This question is related to a case study on Allworld Foods Company. Explains issues faced and primary and secondary problems faced by Allworld Foods.
Total word count: 665
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