Coles Supermarket: Methods, External Analysis, And Critical Success Factors - Business Essay.

1. Introduction

This section provides some background and context to your report. Your introduction should include:

• A brief description of why we undertake this study, i.e. the value of undertaking a strategy review of the business and how will it be beneficial for the business.
• An introduction to the business, its industry, and its macro environment,
• A brief outline of the following sections of this report and their contents, and
• Any serious limitations or restrictions on the report.

2. Strategic Analysis

2.1 Methods

Provide a brief description of the data collection and analysis used in this section, including an outline of the sources used to gather the data upon which the report is based. Data may be collected from sources within the business (business documents, questionnaires, interviews) and from industry reports, media sources, the internet and database searches.  It is important to describe the types and quantity of your data sources so that the reader can evaluate the breadth, quality and validity of the data on which your analysis is based. At least eight data sources should be collected and analysed.

2.2 External analysis

Conduct a PESTEL analysis of your business’s macro environment, evaluating whether each of the PESTEL factors is positive, neutral, or negative for the industry. Provide an overall evaluation of the impact of these factors on growth and consumer demand in the industry.

Identify and explain the two most significant influences in your analysis that are likely to be the main drivers of change in the future.

Using Porter’s five forces framework, evaluate and briefly describe two key forces at work in the industry environment of your business.

Draw a strategy canvas for your business and for two main rivals . Describe briefly the three most critical success factors for your business . The three most critical success factors are a subset of the total critical factors impacting business.

Evaluate the influence of innovation on the industry.

Strategic Analysis

The objective of this assignment is to conduct a business analysis of Coles supermarket. Coles supermarket is a consumer supply chain whose headquarter lies in Melbourne. The organization was established in the year 1914. This assignment will discuss why the supermarket has been successful in the industry. The assignment will begin by giving a brief discussion about the methods how the data has been collected for this assignment. Data collection method consists of data collecting from primary and the secondary sources. In this assignment the secondary sources will be taken. The secondary sources are those, which consist of questionnaires, interviews, business documents, media sources, database searches, reports and etc. Past researches will help in getting the information easily and will also help to understand about their rival competitors the present situation of the organization. An external analysis will also be conducted. The external analysis will be done with the help of PESTEL analysis. PESTEL analysis will help to understand the political, economic, social, technological, environmental and the legal factors that affect the operation of the business organization. This analysis will help in understanding how the change in these factors affects the production and the profit margin of the organization. Porter’s 5 force analysis is also applied in this case which will help to understand the various external factors that exert its influence on the company. The external factors such as the external competitions and the customer’s power to effect a particular business deal is understood through this mechanism. This model was developed by Michael Porter who had the aim to understand the competitive environment of the business and the competitive advantage of the particular company.

Australia is a developed nation with rapid urbanisation and sophisticated commercial system. There are many supermarket chains in Australia and the total Australia’s food and beverage, grocery and fresh produce sectors turnover for the year 2017 had been $123.4 billion (Afgc.org.au 2018).  The super markets play a very crucial role in the buying and selling of food and beverage, grocery and fresh produce. In Australia there are big companies in the same field and Coles is one of these. The store has various categories such as groceries, children products and stationaries. The shop has an online presence and that infrastructure helps the company to distribute its product through digital media. The company has close competition with others in the field one of which is Woolsworth. In this paper detailed analysis has been made about the competitive advantage of Coles over its nearest competitors.

Methods

Coles supermarket is an Australian subsidiary supermarket. They are one of the largest consumer service and retail chain in Australia. The organization’s headquartered lies in Melbourne. The company was founded by George Coles in the year 1914 at Collingwood. Now the organization is owned by Wesfarmers. Coles currently operates 807 supermarkets across Australia. In 2016, the organization earned revenue of 33 billion Australian dollars from food & liquor. The operating income of the organization is accounted as 1.9 billion Australian dollars in the year 2016 (Coles.com.au 2018). The organization has total assets of worth 22.1 billion Australian dollars. Coles currently employs more than 100,000 employees in the organization. Coles has huge brand reputation in the market which has been made possible for their excellent sales and after sale services. The supermarket got its brand recognition as they are in the market for more than 104 years; this has helped them to operate their business in different location. The organization is expected to grow and expand their business in different nations in near future.

This part will describe the different method of data collection. Data for this assignment will be collected from the secondary sources (Palinkas et al. 2015). The secondary sources will help to give past information that will assist the organization in making effective decision making. The data collection method should be error proof so that the management can take accurate decisions. The data that is collected are based on eight different sources. Industry reports are analysed properly which helped in providing a lots of information about the present industry scenario. Business related journals have also been examined to understand that what can be done to increase the revenue of the organization. Interviews with the employee of the organization and the customers have also been conducted which helped to understand what can be done to better the workplace condition and the customer relationship (Budworth, Latham and Manroop 2015). Business documents have also been examined to understand the position of the organization in the market. Online questionnaire helped to understand the needs and expectations from the supermarket. Online database gave us lot of information about the product and the services that the organization is offering and understand about the target market of Coles. Media and other different media helped to understand about the competition in the market and what the competitors are doing to gain the customer market from them.

External Analysis using PESTEL and Porter's Five Forces frameworks

PESTEL analysis will help to understand the external factors that affect the organization. This analysis will help to understand the political, economic, social, technological, environmental and the legal aspects that have effect on the organization and the industry (Jurevicius 2013).

Political factors: Coles is a recognizable brand in the retail industry and is fulfilling the needs and wants of the consumer through various retail outlets. Country’s political environment is directly linked with organization’s performance and the retail outlets are affected by the political climate of the particular region. The political environment shapes the company with growing opportunities. Stable political environment helps the organization to grow as the investor’s shows interest in the political stable countries. The political condition of Australia is stable which a positive factor for the organization (Rix 2013).

Economic factor: Economic factors like higher unemployment rate and recession has direct impact on the financial performance of the business organization as these leads to lower revenue and sales which ultimately cause declination in the financial performance of the company. Coles condition have been affected due to the shrink in the global financial condition. The organization has been highly affected during the global financial condition and the company have to cut down its operation causing a lot of unemployment (Serricchio, Tsakatika and Quaglia 2013). However, the stability in the Australian retail industry is more than other countries.

Social factors: Customer is the most important stakeholders of any organization. Understanding the needs and the behaviour of the customer is essential for making the sustainable revenue. Coles have understood the importance of recognizing the needs and the wants of the customer and have made business plan according to that. The management has recognized the social changes and came to conclusion that the customers want the retail shopping experience, which includes product availability of wide range and prices. The organization has identified that the customer wants are changing towards healthy lifestyle. As per this assessment the organizations are including products which are healthy.

Technological factors: The advanced and the most updated technology that increases the shopping satisfaction are the main focus for the retail industry. The RFID technology is one of the examples, which is used by most of the organization nowadays that helps in efficient inventory management and helps in availability of the product for the customer (Costa et al. 2013). Apart from this the organization has also integrated the Service Oriented Architecture, which helps in supplying the products in the different retail outlets.

Critical Success Factors

Legal factors: Employee recruitment, employee management and the taxation policy re some of the primary framework for the retail industry. Apart from this the food licensing are vital in the retail sectors. The food and the beverages that are available in the store should follow the proper food regulations of the country.

Environmental factors: The environmental factors are reflected on the use of the environmental friendly business practices. Coles have been investing on reducing the carbon emission as well as reducing the wastage of various natural resources like water and other resources. The organizations have been also investing in the recycling activities to decrease the landfill wastage.

Porter’s five forces theory helps in the industry analysis. The five forces of Porter are:

Threat of new entries (High):

The threat of new entrants is high in the retail industry. New organization in the industry brings innovation and new ways of doing business in the organization, which is a big threat for the existing company and also for Coles.

Bargaining power of the suppliers (Medium):

The bargaining power of the supplier is one of the major factors that affect the operation of the management. The bargaining power of the supplier is low for Coles as Coles is one of the reputed and well known brands in the market. Supplying a retail company like Coles will help the supplier to increase, so they will not look to break contract with Coles.

Bargaining power of the buyer (High):

The bargaining power of the buyer is high as there are many other competitors available in the market and Coles will not look to lose its customer to them. The organization need to continuously analyse the market and make policies and keep the prices on that basis.  

Threat of substitute products (Low):

The threat for the substitute products is low for Coles. As most of the products that Cole deals with does not have any substitute or cannot be substituted.

Competitive rivalry (High):

The competition in the retail industry is very high. Competitors like Woolsworth give them a tight competition as they are also a well known brand in the industry and have a good brand reputation (Davey and Richards 2013).

The two main drivers of change that may affect the retail industry in the organization are:

Technology is one of the factors that will bring change in the retail industry and will change how the customer’s view on the retail shopping. Online shopping is becoming the trend in the market and this is affecting the retail industry. Coles need to start developing their own shopping website, which will help in earning revenue and keeping the customer.

Customers are becoming more health conscious nowadays and they are searching for the healthy alternative in the market. Coles need to pay proper attention on investing more on the healthy products.

The critical success factors for Coles are:

• Branding: Whatever the product the organization is dealing with should be of good quality and brands.
• Store experience: The store experience for the customer should be satisfying. The customer experience should be good.
• Inventory control: The organization should highly focus on the inventory management. They should look that the store does not run out of inventories (Axsater 2015).

Coles should look on innovating more with their products and with the operation of the business organization. Innovation helps in retaining the customer and helps in bringing more innovative ideas in the market, which will help in providing better customer satisfaction.

Conclusion: 

The assignment deals with the business analysis of Coles. Coles is Retail Company that operates more than 100 outlets in Australia. In this assignment the market analysis have been done with the help of secondary data that is collected from different sources. PESTLE analysis has been conducted to understand the political, economic, social, technological, legal and environmental factors that affect the organization. Porter’s five forces theory helped to understand why the barraging power of the buyer and competitive rivalry is high in the organization. Critical success factor have also been discussed in this assignment and the influence of innovation have also been mentioned.

References:

Afgc.org.au (2018). [online] Afgc.org.au. Available at: https://www.afgc.org.au/wp-content/uploads/AFGC-2017-State-of-the-Industry-Report.pdf [Accessed 8 Aug. 2018].

Axsäter, S., 2015. Inventory control (Vol. 225). Springer.

Budworth, M.H., Latham, G.P. and Manroop, L., 2015. Looking forward to performance improvement: A field test of the feedforward interview for performance management. Human Resource Management, 54(1), pp.45-54.

Coles.com.au 2018. Coles Supermarkets. [online] Coles.com.au. Available at: https://www.coles.com.au/ [Accessed 5 Aug. 2018].

Costa, C., Antonucci, F., Pallottino, F., Aguzzi, J., Sarriá, D. and Menesatti, P., 2013. A review on agri-food supply chain traceability by means of RFID technology. Food and Bioprocess Technology, 6(2), pp.353-366.

Davey, S.S. and Richards, C., 2013. Supermarkets and private standards: Unintended consequences of the audit ritual. Agriculture and human values, 30(2), pp.271-281.

Jurevicius, O., 2013. Pest & pestel analysis. Strategic Management Insight, 13, p.2013.

Palinkas, L.A., Horwitz, S.M., Green, C.A., Wisdom, J.P., Duan, N. and Hoagwood, K., 2015. Purposeful sampling for qualitative data collection and analysis in mixed method implementation research. Administration and Policy in Mental Health and Mental Health Services Research, 42(5), pp.533-544.

Rix, A., 2013. The Australia-Japan Political Alignment: 1952 to the Present. Routledge.

Serricchio, F., Tsakatika, M. and Quaglia, L., 2013. Euroscepticism and the global financial crisis. JCMS: Journal of Common Market Studies, 51(1), pp.51-64.