Business Background

Coles is one of Australia’s leading retailers that offer the fresh food, general merchandise, groceries, liquor, financial services and fuel through more than 21 million purchaser transactions. The company is an Australian Supermarket and retail chain with the headquarters in Melbourne and owned by the parent company Wesfarmers. The company long-term commitment is to help Australia to grow more for which the company is working for the sustainable future and forming a long-lasting relationship (Coles, 2018).

The industry in which the company falls is the Supermarket and Grocery Stores industry which is rising continuously. Along with this, Coles takes the second position after Woolworths with the market share of 30.3% in the year 2017-2018 (Retail World, 2018).

Coles Company needs to conduct the general environment analysis which will help them in understanding the external factors that can affect the working of the company.

The political and legal factors can affect the working of the company in the coming five years due to which the company needs to be very careful. The federal government of Australia has established the Australian Competition and Consumer commissions (ACCC) who is controlling the industry effectively (Tootill, 2012). The ACCC has brought the change in the different policies as it has allowed the new companies to expand their business which leads to tough competition for the company.  

Australia population has increased by about 1.8% in 2012 and they live in urban areas. The people of Australia include the white people and indigenous populations. Coles Company offers their products to each and every member of this the company is present in the capital cities. The focus of the country is on people with the age group of 15 to 67 years (Deloitte, 2012).

The rapid change or advancement in the technology can affect the working of the company. Coles offers the employment to those people who can easily make use of the updated system and technologies to enhance the competence of their processes (Hattersley, 2013). The company make use of the latest technology with the help of which they can easily track the stock.

In Australia, a maximum number of people are getting conscious towards the well and health which leads to the shift to the normal food products to organic food products. Coles can bring the changes in their product range according to the needs of the customers by bringing the organic food products. This will help the customers as they can get the products easily and company will also be able to generate the effective amount of profit.

Industry Analysis

The economic factors include the changes in the purchasing power which take place due to the GDP growth or decline in the country. The GDP of the country was equal to the 1323.42 billion US dollars in the year 2017 which showed a rise because earlier it was 1208 billion (Trading Economics, 2018). Coles has a good opportunity because the purchasing power of the people has increased over the past few years.  

The changes in the global environment take place in rapid due which Coles is obliged to follow the changes on the regular basis. The globalisation has brought the opportunities for free trade which is one of the factors due to which most of the companies are setting their business operations in the Australia which leads to competition for Coles.

The physical factors include the effect on the environment of the country. Coles ensure that they follow all the obligations related to the environmental act. Coles follow the entire act due to which they stopped making use of plastic bags and initiated with the paper bags. Along with this, the company don’t further deal in any product that can harm the environment (Coles, 2018).

The section includes the analysis of the competitive forces with the help of Porter’s five forces that reflect the forces that affect the working of the Coles (Rothaermel, 2015).

The threat of substitutes: – Coles faces high threat of substitutes due to the availability of the alternative for the products and also due to the direct competition. The customer in the today’s era makes the purchase of products from where they get it conveniently or at a low price.

The threat of new entrants: – The new entrants threats in the Australian market are low because it needs the obligations of law and a huge amount of capital which is difficult to be fulfilled by the other foreign player (Tan, 2012). Moreover, Coles and Woolworths have acquired the major market share due to which it will be tough for the competitor to set their business.

Bargaining power of customers: – Coles finds moderate customer bargaining power in the market because most of the retailer offers the products at the same price or competitive price but due to the emergence of the website like grocery.bestpricedirectory.com.au, the buyers are switching at low cost.

Bargaining power of suppliers: – Coles find the low bargaining power of suppliers because it is considered as second leading retailer in the market due to which the supplier contact the Coles so that they can sell their products in bulk. In addition to this, the company also ensure that they are able to form the effective and long-lasting relationship with the suppliers which are good for their future.

General Environment Analysis

Competitive rivalry: – Company faces the high competitive rivalry in the market of Australia because there is the presence of numerous retail stores (approx. 140,000) with supermarkets. Woolworths is the biggest competitor of the company as it is holding 37.2% of the market share in the year 2017-2018 (Retail World, 2018).

The environment of Australia retail and supermarket is extremely competitive. Cole’s brands find its major competitors as Woolworth. Woolworths is positioned supermarket with more than 870 stores (Baker and Saren, 2016). Along with this, the company is growing as it has created their own brand with the names Woolworth’s “Home Brand” and “Select”. Both the companies make use of different strategies with the help of which they can attract the customers. Woolworths apply rewards cards, Qantas Flyer points and other. On the other hand, Coles offer Flyboys which helps in attracting the customers.

Opportunities

• The company is operating a business in Australia but it is the time when the company need to reach out to newer regions on a global level.
• Coles have the opportunity to make use of the sponsorship and marketing exercises that can help the company in boosting the sales and revenue (MBA Skool, 2018).
• The company has the opportunity and they can focus on the Coles Express plan that is mainly Food-To-Go which is a convenient healthy option.

Threats

• The convenience factor is becoming a threat for the company because are shifting to small retailers who are near to their home.
• Intense competition in the marketplace has brought threat of the little margins for Coles.

The annual report of the company reflects that the resources of the company are categorised in terms of the tangible, intangible and human resource.

Tangible

The tangible resources include the stores of the Coles Company that are available at different places within Australia. This is found in the annual report of the company that over the past year the company has refreshed and rejuvenated 53 of Cole’s supermarket with this they have opened the door of 19 new stores in Australia (Coles, 2018). Along with this, the new goods have additional prominent, open-plan bakeries and abundant fresh produce subdivisions which enhance the experience of the customers. According to the balance sheet of the company, the assets of the company has decreased in the year 2017 which was 21,140 but in the year 2016 it was 22,122. This shows that in the year 2018 Coles company is working to increase the assets by opening new stores.

Intangible

Coles brand image is developed in the market of Australia with the positive customer experience which is strength for the company. The company has the valuable brand image because it provides the substantial differentiation competitors and donates in offering the great level of client satisfaction (Coles, 2018). Coles offers high quality and fresh products due to which it has gained a good reputation in the market. According to the balance sheet, the company was able to trusted value to customer for more than 3,100 customers on daily basis which leads to rise in goodwill of company (Wesfarmers, 2017).

Industry Environment Analysis

Human Resource

Coles effectively make use of their employees in offering the products and services in the Australian market. The company offer the training through which they can enhance the skills of employees. These skills are used by the employees for performing the operations effectively in an organised manner.  

The company has numerous capabilities due to which they are able to survive in the Australian market. Coles online has continued a sturdy progress with the rise in 24.1% sales increase supported by value, convenience, product quality and a complete range. The company has come up with standalone Online Supermarket with the effective utilization of the resources effectively (Chernev, 2018). Coles recognise that their strength is in the variety in the team which is crucial to the on-going progress and success of the company. The below given image reflects that the company is able to offer the convenience to customers with the help of which they are able to attain the store sales growth with +11.1% (Wesfarmers, 2017).

The core competency of the company includes the price of the products on which they offer the products. According to the annual report of the company, they place more than 3,100 products at everyday prices which help the customers in making real differences to the customers in terms of the budget. The company ensure that they offer top quality and tasting products at low prices which fulfil the mission of the company that is to over the lower cost of shopping. This is the fact that the company offer the products at low cost but still as per the balance sheet they are able to maintain the revenue of $39,217 which is almost equal to $39,242 (Wesfarmers, 2017).

This is the fact that the low cost depends on the suppliers. Coles has built in the strong collaborative and long-term relationships with the suppliers (David, 2011). This helps the company to grow their business alongside the company can deliver the great products to customers. The analysis reflects that this core competency indicates the test 2 which states that it allows increasing or dominating the market share.

Competitive Environment Analysis

Considering the balance sheet of company, it is proposed to the company to make use of the management information system. It is a system that practices the facts collected by operation processing system and practices this for preparing the information in a method that the manager can practice it to make the routine corporate decision in reply to their problems. These decisions will help in generating the more revenue. These reports support the company in solving the day to day problems in any of the stores across Australia (Laudon and Laudon, 2016). In addition to this, this report can help the business to forecast the expansion of business in other markets.

The analysis reflects that there are different issues which are faced by the company in the market. Coles Company should make use of the technologies in order to achieve the strategic objectives and goals. Further, it is suggested to the company to grab the entire opportunities which are essential for the company for the achievement of the desired goals. Along with this, the company is aware of the fact that there are changes in the customer needs and preference according to which they should start offering healthy products. These healthy products include the organic items which make the people fit and refresh. In addition, the company need to bring the changes in strategy which will help them in achieving the leading position in Australia.

Conclusion:

In the end, it can be concluded Coles Company is performing effectively in the market of Australia and this is the reason that the company is able to maintain the second supermarket position with the huge market share. Though, the changes in the environment due to which it is decided to conduct the strategic analysis. The strategic analysis includes both internal and external analysis which shows that changes that the company suggested in their business. The general environment analysis reflects that most of the external factors are positive instead of change in preference and technologies. The competitiveness within the industry is very intense which makes the company to bring numerous changes. Further, the opportunities of company are analysed that helps the company in growing the business. The internal analysis has been done which include the resources and capabilities of company and their utilization with the help of balance sheet. In the end, strategic information system that is management information system has been suggested which helps in generating the high profit.  

Opportunities and Threats

Strategic analysis is the course of directing the study on a business and its operational environment to express a plan. The aim of the report is to conduct the strategic analysis on the local company of Australia for which Coles has been selected which is operating the business across Australia. In the current era, it is essential for the company to conduct the analysis which helps the company in conducting the business in the near future because the competition in the market is increasing The report includes the external and internal analysis of the company which comprise the general environment analysis, industry environment, competitive environment with the opportunities and threats to the company. In addition, the internal analysis includes the use of the effective resources and capabilities with the proposal to the information system according to the balance sheet of company. In the end, one of the Startegic information system is suggested which will contribute in generating the high revenue.

References:

Baker, M.J. and Saren, M. eds. (2016) Marketing theory: a student text. California: Sage.

Chernev, A. (2018) Strategic marketing management. Chicago: Cerebellum Press.

Coles (2018) About Coles [Online]. Available from: https://www.coles.com.au/about-coles [Accessed on 10^th September 2018]

Coles (2018) Annual Reports [Online]. Available from: https://www.coles.com.au/about-coles/annual-reports [Accessed on 10^th September 2018]

Coles (2018) History [Online]. Available from: https://www.coles.com.au/about-coles/centenary [Accessed on 10^th September 2018]

David, F. R. (2011) Strategic management: Concepts and cases. UK: Pearson/Prentice Hall.

Deloitte (2012) Analysis of the Grocery industry; Cole Supermarkets Australia, Sydney. Australia: Deloitte Access Economics Pty Ltd.

Hattersley, L. (2013) Supermarket power, own-labels, and manufacturer counter-strategies: international relations of cooperation and competition in the fruit canning industry. Agriculture and Human Values, pp. 1-9.

Laudon, K.C. and Laudon, J.P. (2016) Management information system. India: Pearson Education.

MBA Skool (2018) Coles Group SWOT Analysis, Competitors & USP [Online]. Available from: https://www.mbaskool.com/brandguide/lifestyle-and-retail/9926-coles-group.html [Accessed on 10^th September 2018]

Retail World (2018) The state of supermarkets and grocery industry [Online]. Available from: https://www.retailworldmagazine.com.au/state-supermarkets-grocery-industry/ [Accessed on 10^th September 2018]

Rothaermel, F.T. (2015) Strategic management. New York City: McGraw-Hill Education.

Tan, L. P. (2012) Intra-category competition, entry probability, and private label share: Evidence from organic food retailing in Australia. Asia Pacific Journal of Marketing and Logistics, 24(3), pp. 414-432.

Tootill, A. (2012) Cole In The Country. Sydney, Australia: Alan Tootill

Trading Economics (2018) Australia GDP [Online]. Available from: https://tradingeconomics.com/australia/gdp [Accessed on 10^th September 2018]

Wesfarmers (2017) 2017 Annual Report [Online]. Available from: https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-annual-report.pdf?sfvrsn=0 [Accessed on 10^th September 2018]

Aghazadeh, H. (2015) Strategic marketing management: Achieving superior business performance through intelligent marketing strategy. Procedia-Social and Behavioral Sciences, 207, pp.125-134.

Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014) Principles of marketing. Australia: Pearson.

Baker, M.J. and Saren, M. eds. (2016) Marketing theory: a student text. California: Sage.

Chernev, A. (2018) Strategic marketing management. Chicago: Cerebellum Press.

Coles (2018) About Coles [Online]. Available from: https://www.coles.com.au/about-coles [Accessed on 10^th September 2018]

Coles (2018) Annual Reports [Online]. Available from: https://www.coles.com.au/about-coles/annual-reports [Accessed on 10^th September 2018]

Coles (2018) History [Online]. Available from: https://www.coles.com.au/about-coles/centenary [Accessed on 10^th September 2018]

David, F. R. (2011) Strategic management: Concepts and cases. UK: Pearson/Prentice Hall.

Deloitte (2012) Analysis of the Grocery industry; Cole Supermarkets Australia, Sydney. Australia: Deloitte Access Economics Pty Ltd.

Grant, R.M. (2016) Contemporary Strategy Analysis Text Only. New Jersey: John Wiley & Sons.

Hattersley, L. (2013) Supermarket power, own-labels, and manufacturer counter-strategies: international relations of cooperation and competition in the fruit canning industry. Agriculture and Human Values, pp. 1-9.

Hill, C.W., Jones, G.R. and Schilling, M.A. (2014) Strategic management: theory: an integrated approach. Boston: Cengage Learning.

Laudon, K.C. and Laudon, J.P. (2016) Management information system. India: Pearson Education.

MBA Skool (2018) Coles Group SWOT Analysis, Competitors & USP [Online]. Available from: https://www.mbaskool.com/brandguide/lifestyle-and-retail/9926-coles-group.html [Accessed on 10^th September 2018]

Retail World (2018) The state of supermarkets and grocery industry [Online]. Available from: https://www.retailworldmagazine.com.au/state-supermarkets-grocery-industry/ [Accessed on 10^th September 2018]

Rothaermel, F.T. (2015) Strategic management. New York City: McGraw-Hill Education.

Tan, L. P. (2012) Intra-category competition, entry probability, and private label share: Evidence from organic food retailing in Australia. Asia Pacific Journal of Marketing and Logistics, 24(3), pp. 414-432.

Tootill, A. (2012) Cole In The Country. Sydney, Australia: Alan Tootill

Trading Economics (2018) Australia GDP [Online]. Available from: https://tradingeconomics.com/australia/gdp [Accessed on 10^th September 2018]

Wesfarmers (2017) 2017 Annual Report [Online]. Available from: https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-annual-report.pdf?sfvrsn=0 [Accessed on 10^th September 2018]

Wheeler, T.L. and Hunger, J.D. (2017) Strategic management and business policy. UK: Pearson.