Speaking to shareholders following the announcement of United's second-quarter results, Woodward said the performance of David Moyes' side in the Premier League so far this season has been "disappointing".
However, he said money would be made available to Moyes to strengthen his squad in the summer, with the likelihood that the club would spend far more than normal to rectify the situation.
"The long-term strategy is to build a competitive squad that can challenge for trophies," said Woodward.
"We have the ability to do that. We can buy players to compete at the top level, which is what we should be doing."
With that in mind, Woodward has warned that the usual summer recruitment policy, which he estimated to average out at around three players coming in each summer and other three going out, may rise significantly.
"We are focused on strengthening the squad," said Woodward.
"We will sell some. We wouldn't look to churn a huge number but equally, we are not afraid of moving in the market in a way we haven't seen in previous years.
"It has tended to be three sales and three purchases but it is possible we will do more than that."
Woodward said the club record £37.1million arrival of Juan Mata had already had a positive impact, with United's official Twitter feed gaining an additional 280,000 followers in the week following his arrival from Chelsea last month.
Significantly, Woodward said there was currently "no impact on the wider business from current on-pitch performance".
And, whilst going an extended amount of time without competing at the highest level was not a thought he was considering, Woodward feels it would take some considerable time before United as a club saw a reduction in their huge worldwide following.
"It has taken a long time to build our huge fan base," said Woodward.
"That will not go away for a long time.
"Some of our competitors have not won league for a long time and they still sell a lot of shirts - one of them is just down the road."
Nevertheless, whilst United - who have £72million in the bank - are pledging to invest significant funds in the squad, some credence to Roy Keane's accusation of a club "cutting corners" in the last few years is seen by the rise in the sum spent on facilitating the Glazers' controversial takeover in 2005 to an eye-popping £686million.
Fans question whether United would be in their present state - seventh in the Premier League and out of both domestic cup competitions - had a fraction of that sum been spent on players over the past nine years.
It is hard to make a case against that, even if, as a stand-alone business, United continue to go from strength to strength.
Commercial income alone stands at £42.3million up 18.8% for the quarter to December 31 and 30% for the year so far.
Broadcasting revenue for the period was £46.9 million, an increase of 18.7%, due to a rise in revenue from the Premier League domestic and international rights agreements, and increases in share of the Champions League fixed pool distributions given United won the title last term.
Staff costs were £51.6 million, an increase of 16.7%, primarily due to the impact of player acquisitions and renegotiated player contracts.
As Mata's arrival did not fall within the accounting period, the main signings over the 12 months concerned were Marouanne Fellaini, who joined from Everton on deadline day for £27.5million, and Wilfried Zaha, the winger who was signed from Crystal Palace, immediately loaned back to the Eagles and has just joined Cardiff after failing to impress Moyes.
Gross debt has been reduced by 2.7% to 356.6m.
A reduction in profit by almost 50% has been put down to a £25million 'swing' in tax credits.
"We once again achieved a record revenue quarter with strong contributions from our commercial and broadcasting businesses despite the current league position, which everyone from the team manager down has acknowledged is disappointing," said Woodward.
"We continue to see meaningful opportunities to grow our commercial business and the popularity of football on TV is leading to continued broadcasting revenue growth - all of which bodes well for the long-term stability and financial strength of our business.
"We are also very pleased to have added a world class player in Juan Mata to our squad, who has already made a positive impact."