Reference no: EM132653419

CASE STUDY: WOOLWORTHS AND THE DAVID JONES ACQUISITION.

South African based Woolworths has refuted suggestions that it would consider divesting troubled Australian department store David Jones. Woolworths purchased David Jones, a prominent fashion retailer with operations in Melbourne and Sydney. The takeover came at a cost of $ 2.1 billion in 2014. The idea was to make a leading Southern hemisphere retailer. Since then the profits of the large department store business have more than halved. Several factors appear to have been the source of the problems at David Jones. A sluggish economy was one reason cited. A second one related to a move by consumers away from department stores. A global trend to online shopping, accelerated by the COVID-19 pandemic, has been another factor. At this point, a turnaround is not expected for at least 18 months. A David Jones exit from Australia would see Woolworths join the ranks of other South African retailers that have underperformed in foreign countries such as Shoprite and Mr Price in Nigeria, and Truworths and Famous Brands in the United Kingdom.

Question one

1.1 Identify and explain the key macro environmental forces that are of strategic importance for a business organization such as Woolworths, support your answer with an example.

1.2 Many South African organizations, such as Woolworths and others, have often not been successful in pursuit of overseas takeovers. Analyze the impact of the environment on the success of such takeovers. Illustrate you answer with examples of where South African organizations have succeeded, or where they have failed in respect of overseas acquisitions.

Question two

2.1 The vision and mission statements of many organizations refer to the creation of shareholder value in a sustainable and responsible manner. Such statements suggest that there is a clear-cut business case for a sustainable organization. Critically review this perspective.

2.2 Evaluate the role of leadership in developing a sustainable strategy. Illustrate your answer with examples from the South African business environment.