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Application Of Theoretical Concepts

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Question:

Discuss about the Coles Supermarkets Australia Pvt Ltd,  a Leading Supermarket Chain in Australia Pvt. Ltd.
 
 

Answer:

Introduction

The study has identified Coles Supermarkets Australia Pty Ltd, a leading supermarket chain in Australia as the organisation to be described. The supermarket chain business is owned by Wesfarmers. The company operates in multiple industry i.e. retail, consumer services, and supermarket chain business including 776 supermarket stores in Australia (www.coles.com.au, 2017). By identifying the current strategic management practices of the firm, the study has evaluated the impact of theoretical concepts on the existing management of Coles.

Apparently, Coles Supermarkets Australia Pty Ltd has to deal with other market competitors such as Woolworths and Aldi as the price war of products increases in the recent years. Through the identification of theoretical concepts utilised by the supermarket chain, Coles Supermarkets Australia Pty Ltd has established its market authenticity. Therefore, the study evaluates the industry attractiveness, resource based review, and competitive advantage of the farm. Lastly, a list of recommendation has been provided to improve the current strategic practices of the firm leading to growth (Jie, 2010).

 

Application of Theoretical Concepts

Industry Attractiveness

In order to understand the influence of industry attractiveness over the operations of Coles, the Porter’s five force analysis has been conducted. Due to the huge number of buyers and alternative options available in the market, the bargaining power of the buyers is too high for Coles. However, loyal consumers of Coles Supermarkets have been the major plus point for the business (Hawthorne and Low, 2017).  On the other hand, Coles purchases goods directly from the farmers and manufacturers that reduce the bargaining power of the suppliers. Decisively, Coles Supermarkets Australia Pty Ltd has targeted the suppliers so that the profit margin of the company can be enhanced. For instance, the company has located producers and suppliers of products such as milk, vegetables, beef, meat, and other products that can be cost-effective for the business. As a result of the outcome, the pricing of products and quality of the items can be offered at the best rate. In this way, strategic cost-saving practices and low bargaining of suppliers have helped the business structure of Coles. Reportedly, the supermarket sales data in Australia has voted that the leading supermarkets chains have discounted the prices of products to be the first choice of the customers. Meanwhile, such aggressive pricing strategy of Coles has increased the market potentiality of the company (Ridge et al., 2015).

The level of current rivalry is quite high in the supermarket industry. The supermarket chain business in the Australian market has attracted so many firms to take advantage of the target demographics all over the country. As a result of the increasing number of market participants, leading organisations associated with the industry have to face significant challenges. By considering the tough market challenges from the leading business competitors such as Woolworths and Aldi, Coles Supermarkets Australia Pty Ltd has implemented conceptual theoretical framework to draw finest strategic interventions.

On the other hand, the level of substitution is high because Coles deals with a particular range of products that have a huge number of substitutes in the market. Coles Supermarkets Australia Pty Ltd has identified the market opportunities and the demand of the target demographics. Precisely, the company has valued the pricing strategy, facilities and services to get the attention of the target demographics. Meanwhile, the company has utilised the pricing theory in the product pricing to improve the business environment (Rotha?rmel, 2017). Precisely, Coles Supermarkets Australia Pty Ltd has never compromised with quality, to say the least. Hence, the goodwill of the brand has worked in favour of the company (Hawthorne and Low, 2017). Hence, it becomes quite difficult for a new firm to enter the supermarket business and stand against a market leader like Coles.

 

Resource Based View

The resource based views have been analysed in this particular section as follows:

Resources

Coles Supermarkets Australia Pty Ltd has aggressively utilised the human resources as well as financial resources to good effect. The management of Coles has utilised the employee skills to the serve the customers in a better way. The human resources have been given adequate sales training so that the workforce can influence the customers to change their purchasing behaviour. On the other hand, the financial resources have been utilised so that the condition as well as infrastructure of the business such as marketing, transportation of products and other facilities in the stores are improved as per the requirement (Hawthorne and Low, 2017).

Capabilities

The supermarket chain business of Coles has correctly identified the organisational capabilities such as brand name, quality of services, stores at major locations and professional workforce. As a result of the scenario, the management has increased targets for the employees so that the overall productivity and market share of the firm will be improved (Heizer, Render and Munson, 2017). Recently, the organisation has been awarded for showing exceptional corporate social responsibility towards the community. Understandably, such sustainable organisational capabilities have improved the image of the business towards the target demographics.

Core Competencies

Customer loyalty and satisfaction of the target demographics have been the prime core competencies of Coles. The company value the customers and respond to their demand so that the supply chain will be maintained at the highest order. On the other hand, the employee engagement has improved the overall performance of the firm. Decisively, the core competencies of the firm have elevated the performance of the retail business in the target market so that the company can stay a step ahead of the other market rivals operating in the Australian market (Pitts and Lei, 2010).

 

Competitive Advantage

Michael Porter developed the competitive advantage theory that analyses the competitiveness of a nation and its implications. The competitive advantage theory is an essential management tool used to understand the factors that leads to competitive advantage for a firm (Foss, 2007). It is important to note that a firm competes in the international market and not a nation. Hence, the theory begins with individual firms and builds up to an entire economy as a whole. According to Michael Porter, the four major determinants of competitiveness are presented herein below to understand the influence of the theory on the strategic management practices of the Coles (Doyle, 2009).

  • Factor Conditions: The factors such as human resources, physical resources, knowledge resources, modern infrastructure and good financial position help the firm to seek competitive advantage in the market. Coles focuses on utilising its resources effectively in order to stay ahead of its rivals (Petit, 2012).
  • Demand Conditions: The reputation of the firm and growing demand in the market for daily products is a supporting factor for Coles to seek competitive advantage in the Australian market. On the other hand, the economic boom has resulted in the rise of prices in the last two quarters resulting in price war in the industry (Hawthorne and Low, 2017).
  • Related and Supporting Industry: Coles purchases its raw materials directly from the farmers and manufacturers that help the firm to eliminate the margin taken by the middle agents. Hence, it is the primary factors that help Coles to sell its products in lower prices (Hawthorne and Low, 2017).
  • Firms Strategy, Structure and Rivalry: Coles has highly trained management professionals with modern infrastructure to attract its customers (Cole, 2015). The company has a virtual online store to enhance its market reach. Meanwhile, the high level of rivalry results in a price war that enforces the company to implement competitive pricing policy to gain competitive advantage in the market.

Recommendations

By considering the above analysis, the following recommendations are provided to the management of Coles Supermarket to enhance its market growth:

Product diversification: The product diversification strategy is required to seek competitive advantage over the rivals. For example, the company sells particular brands and category of products that limits the number of customers (Smith, 2014). Hence, increasing the product range will enhance the customers and revenue of the firm.

Focus over marketing strategy: Coles need to focus on digital and innovative marketing strategy in order to enhance the number of customers and retain the older ones. It can make use of social media advertising, Google AdWord and many other to attract more customers.

Competitive Pricing: In order to survive and maintain its market positioning, the company needs to maintain the competitive pricing policy (Smith, 2014). As the company is operating in a price war environment, a hike of price may lead to a high level of profit for the rival firms. Hence, the competitive pricing policy is recommended to the firm to survive and seek growth in the current market.

 

Conclusion

Coles is one of the reputed and largest Supermarket chain businesses in Australia. The core competencies of the firm and the current strategies have helped the company seek competitive advantage in the market. On the other hand, it has several core competencies that have led to the success of the firm. Irrespective of the current success, the company needs to make changes in its current policy in order to enhance its growth in the long run. Conclusively, diversification strategy, modern marketing strategy and competitive pricing policy are the key to success for Coles Supermarkets Australia Pty Ltd in the upcoming years.

 

References

Cole, G. (2015). Personnel management. 1st ed. London: Continuum.

Doyle, W. (2009). Situated Practice: A Reflection on Person-Centered Classroom Management. Theory Into Practice, 48(2), pp.156-159.

Foss, N. (2007). Strategic belief management. Strategic Organization, 5(3), pp.249-258.

Hawthorne, M. and Low, C. (2017). Struggling supermarkets rely on beer, babies and smokes. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/retail/coles-woolworth-aldi-in-battle-for-diminishing-shopper-dollars-20170124-gtxwgq.html [Accessed Mar. 2017].

Heizer, J., Render, B. and Munson, C. (2017). Principles of operations management. 1st ed. Boston: Pearson.

Jie, Y. (2010). The Optimal Supermarket Service. International Journal of Business and Management, 5(2).

Petit, Y. (2012). Advancing project and portfolio management research: applying strategic management theories. Strategic Direction, 28(9).

Pitts, R. and Lei, D. (2010). Strategic management. 1st ed. Cincinnati, OH: South-Western College Pub.

Ridge, K., Weisberg, D., Ilgaz, H., Hirsh-Pasek, K. and Golinkoff, R. (2015). Supermarket Speak: Increasing Talk Among Low-Socioeconomic Status Families. Mind, Brain, and Education, 9(3), pp.127-135.

Rotha?rmel, F. (2017). Strategic management. 1st ed. New York, NY: McGraw-Hill Education.

Smith, H. (2014). Supermarket Choice and Supermarket Competition in Market Equilibrium. Review of Economic Studies, 71(1), pp.235-263.

www.coles.com.au. (2017). Coles History. [online] Available at: https://www.coles.com.au/about-coles/centenary [Accessed Mar. 2017].

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