Strategic Analysis Of Coles Supermarket - Essay On Opportunities And Threats.

Write a strategic analysis report of NOT more than 2500 words. The report should demonstrate that the student has thoroughly researched their topic. Students should use examples of business practice from the scholarly journals papers, conferences, books and professional magazines to support their arguments. The strategic analysis will be on a local company. The report consists of two parts and should cover the following requirements:

PART 1 (External analysis)

1. Business background

2. What industry is it?

3. General environment analysis (economic, physical, sociocultural, global, technological, political/legal and demographic – and work out what the important facts are).

4. The industry environment ((i.e., supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each).

5. Competitive environment (Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?) 6. Opportunities and threats

PART 2 (Internal analysis and proposal)

1. The firm’s resources, tangible and intangible

2. Capabilities identification (explain the capabilities carefully to indicate what the firm really does.)

3. Core competency analysis (For each capability, indicate which of the four tests for a core competency it meets).

4. Propose a suitable information system solution that meets the chosen company needs.

5. Evaluate the proposed system and provide your recommendations

PART 1 (External Analysis)

Strategic information systems are the information systems which assists an organization in an effective management of information and strategic decision making. These systems play an important role in changing or supporting the enterprise’s strategy. It is easily aligned with the structure and strategy of the business (Arvidsson, Holmstrom and Lyytinen, 2014).

This report focuses on the strategic analysis of Coles supermarket. It covers the business background, industry, general environmental analysis, industry environment, competitive environment along with the opportunities and threats of Coles. Furthermore, this report provides resources, capabilities and core competency analysis. On the basis of this analysis, a suitable information solution has been recommended for Coles.

Background of the Business

Coles Supermarkets Australia Pty Ltd is the retail, customer service and the supermarket chain of Australia having its headquarters situated in Melbourne. The company trades under the name Coles. However, the company is owned by the parent company Wesfarmers.

The company was founded in the year 1914 in Collingwood, Melbourne by George Coles. There are approximately 807 supermarkets of Coles throughout Australia. Some of its stores are also re- branded as BI- LO Supermarkets. Furthermore, the company has employed more than 100,000 employees for the effective performance of its operations. The market share of Coles along with its competitor Woolworth amounts to approximately 80 % of the total market share of Australia. Coles also has its online store where it provides different offers to its customers including click and collect and home delivery options (Coles, 2018).

Industry

Coles belongs to retail, consumer services and supermarket industry. This industry offers a wide variety of products to the customers but has a small range of merchandise as compared to that of a big- box market and hypermarket. The industry is based on the strategic level decisions undertaken by the retailers which play an important part in the market positioning.  In the digital age, broader markets are being reached by the increasing number of retailers in the industry by making sales through multiple channels such as online retailing and bricks and mortar.

General Environment Analysis 

Political/ Legal- the performance of Coles supermarket is greatly affected by the political condition of Australia. The competition policy of Australia prevents the elimination of competition by the major market players i.e. Coles and Woolworths. The market dominance of these players have increased the struggles of small retailers in the industry (Webster, Bargon and Carter, 2015).

PART 2 (Internal Analysis and Proposal)

Economic- the economic market conditions of Australia have significantly affected the performance of Coles. This is due to the fact that the markets of Australia have suffered a decline in the economic activity. The retail operations of Coles is also adversely affected by the weakening of Australian dollar and currency exchange rates fluctuations (Vinkeles Melchers, Gomez and Colagiuri, 2009).

Social- high societal and community development across Australia have affected the Australian retail industry. Customers increasingly demand a socially responsible organization. Various social initiatives undertaken by Coles have resulted in creating a significant impact over the customers.  

Technological- Retail industry is significantly affected by the technological developments across Australia. Green refrigeration technology has also been adopted by Coles for storing the perishable products for a longer period of time. It is also taking steps for enhancing the online shopping experience of the customers (Webster, 2015).

Physical- The business practices and consumer behavior have changed over a period of time which affects the retail industry of Australia and Coles supermarket. Coles has taken various initiatives for the society and its upliftment and ensures that its business operations do not leave a negative impact on the environment.   

Global- Millions of Australians have already been served by Coles in Australia for over 100 years. However, it is further planning to expand its operations in different parts of the world in the near future.

Demographic-Due to the Australian immigration policy, the population structure of Australia has completely changed. There are some ethnic and religious groups which constitutes the population of Australia. The composition of older adults is also increasing in the population of Australia. Coles and the entire retail industry is affected by these factors (Williams and Connell, 2010).

The Industry Environment

Bargaining Power of Buyers- Australian retail industry suffers from high bargaining power of the buyers. This is due to the fact that there are large number of retail stores and supermarkets in the industry that offers basic necessity items to the consumers. Since large numbers of options are available to the consumers to choose from, the bargaining power of the buyers is significantly higher. Coles sometimes loses its customers to the competitor Woolworths (Martin, 2015).

Bargaining Power of Suppliers- the bargaining power of the suppliers in the Australian retail industry is moderate. There are some big players in the market having the major part of the market share. This leads to the increase in the bargaining power of the suppliers. Coles also take number of steps in order to main an effective relationship with the suppliers.

Business Background

Threats of New Entrants- the Australian retail industry suffers from low threat from the new entrants due to the existing industry conditions which will lead to difficulty in their survival. Furthermore, the operations of Coles supermarket are on large scale which does not get affected by new entrants (Zhu, Singh and Manuszak, 2009).  

Rivalry among Existing Firms- The threat of rivalry is higher in the Australian supermarket industry as there are only few big competitors such as Coles, Woolworths, Asda, etc. which compete for a bigger market share in the industry. All the supermarket aims at adopting the competitive strategies in order to attract the customers of the competitors.      

Threat of Substitutes- The daily consumable products offered by retail is very essential and has no other alternatives. There is lower threat of substitutes. Coles face competition when the competitor provides facilities to the customers in the form of easy parking, easy shopping and less queues (Pearlson, Saunders and Galletta, 2016).  

Competitive Environment

Aldi and Woolworths are the strong competitors of Coles supermarkets and are the part of the strategic group. Woolworths is bringing a significant reduction in its prices in order to compete with Coles. The capabilities of these firms include their strong brand reputation. The competitors are coming forwards with innovative strategies which sometimes have a significant impact on the profitability and sales of Coles. The fall in profitability is the result of their strong investment in lowering prices. This has created a threat for Coles Supermarket. The logistic arrangements of Aldi are strong which, in turn, creates a major threat for Coles. Competitive advertising is being adopted by the competitors as a strategy in order to attract the customers. Various discounts and offers along with the adoption of online marketing have brought a new trend in the Australian retail industry.  However, the acquisition of Coles supermarket by Wesfarmers have resulted in creating a strong investment base for Coles. This investment assisted in dealing with the competitors. The number of stores of Coles supermarket are also increasing leading towards increase in the customer reach (Parker, Carey, De Costa and Scrinis, 2017).

Opportunities and Threats

Opportunities- A good growth potential is portrayed by the retail industry of Australia. The changed lifestyle of the customers, increased computerization along with advanced supply chain have significantly affected by the retailers abilities. This, in turn, has offered immense growth opportunities to the Australian retailers. This option is expected to be positively embraced by Coles supermarket by the adoption of multi- option retailing for the purpose of coping up with the dynamic needs of the customers. The technological developments further offer a number of opportunities to Coles as it can assist in enhancing the quality, service and experience of the customers across stores.  It has also been analyzed over a period of time that customers get attracted towards offers and discounts, therefore, some strategies can be formulated in this regard (Tuzovic and Mathews, 2017).  

What Industry is it?

Threats- the biggest threat of Coles supermarket is from Woolworths and Aldi which are its biggest competitors. The needs of the customers are changing constantly which may affect the sales and profitability of the enterprise. Also, government intervention can prove to be a major threat in the smooth operations of Coles supermarket.  The economic turndown has further lowered the confidence of the customers. the competitive strategies being adopted by the competitors from time to time may lead to unfavorable circumstances for Coles (Bailey, Price, Pyman and Parker, 2015).

Tangible and Intangible Resources of Coles Supermarket

The success of any enterprise depends upon its resources whether tangible or intangible. Same is the case with Coles supermarket also. Coles have outstanding tangible and intangible resources in the form of superior management, team of human resources and physical resources required to accomplish its business operations. Coles supermarket has employed more than 100,000 employees across its several stores in Australia. The employees are dedicated and make their best possible efforts for the accomplishment of the objectives of Coles. The outstanding efforts of the employees have led the company towards the attainment of an exceptional brand reputation which is an intangible resource of Coles. The service quality of Coles is also one of the resources of Coles supermarket. The quality of the products offered is also exceptional. Proper management, innovative strategies and wider product range offered by Coles also comprise the resources of Coles supermarket (Lewis and Huber, 2015).

Identification of Capabilities

The capabilities of Coles have played a major part in the attainment of its objectives.  With the passage of time, Coles have been able to develop an effective distribution system with the help of which it is capable of distributing the products across its stores. The customers are able to meet its requirements as a result of the effective distribution system of Coles supermarket. Moreover, the orders made online are also distributed to the customers on the defined time leading to the increasing trust of the customers towards the brand (Narayan, Rao and Sudhir, 2015).

The brand reputation is the key behind the increasing sales of Coles its increased profitability.  It offers fresh and healthy products to its customers as a result of which it has been able to develop a brand reputation. This differentiated image has led Coles to have a major share in the Australian market. The social responsibility activities undertaken by the company has also contributed towards its brand image.

General Environment Analysis

However, the brand image is not the result of certain instant action. The contribution and strategies of the top level management and the experience and efforts of the workforce play an important part in building a brand image.  There is exceptional talent in the employees of Coles which makes them able to effectively manage the internal operations. Moreover, the workers working in the stores have the immense ability of dealing with the customers (Mortimer and Ingersoll, 2015).

Core Competency Analysis

Resources- the exceptional capabilities of the human resources along with the innovative skills of the company comprise the biggest resource of the organization. These resources have led the organization towards new heights and have helped in the attainment of larger market share.

Capabilities- the effective distribution system of Coles along with its brand reputation are its biggest capabilities. This has increased the sales of the company and has increased the profitability as well. The distribution system ensures the adequate availability of stock in stores. This leads to the fulfillment of the customer demand whenever they visit the store (Hebden, King, Kelly, Chapman and Innes- Hughes, 2011).

Competitive Advantage- the competitive strategies and the innovation skills of Coles provides it the competitive advantage over the competitors. The brand reputation possessed by Coles has allowed it to occupy a major share in the market. Moreover, the all- time availability of stock provides it the competitive advantage.

Strategies- the talented and experienced workforce of Coles offer outstanding ideas  to the top level management who then implement it in their business operations for gaining competitive advantage. It also offers discounts from time to time in order to attract the customers. The strategies of Coles play a major role in its success in the Australian retail industry (Pantano, 2014).  

Proposal of Suitable Information System Solution

The suitable information system solution in case of Coles supermarket is management information system. The management information system can be defined as the computerized database which organizes and programs the financial information in a way such that reports on operations are produced by the system for each level of management in the company. It will assist Coles in getting the requisite feedback regarding its own performance which can be utilized by the top level management for the purpose of monitoring and taking the needed steps (Galliers and Leidner, 2014).  

When all the departments and levels of management will be aware of the activities, profitability and requirement of each other, it will be able to facilitate effective decision making in the organization. The copy of the data with other departments will also ensure its safety in case of system breakdowns.

Industry Environment

There will be pre- programing of the routine reports which will be run at different intervals of time. The managers of the organization will be able to use the built- in display function of the system for checking the status of the queries through the computers connected with the management information system through the networks. The stock of the company can also be effectively monitored and displayed with the help of sophisticated systems (Gray, Issa, Pye and Troshani, 2016).

Evaluation of Proposed System Solution

After the evaluation of the management information system as the proposed information solution, it can be concluded that the business requirements of Coles for operating in the retail industry of Australia can be effectively facilitated through this system. The security and the decision making of the company will enhance through the adoption of management information system. The system of the all the department and at all the level of management will be integrated through this system solution. This will allow the top level management to monitor the activities and formulate the required strategies on time.  therefore, management information system is the recommended system solution (Price, 2016).

Conclusion

Therefore, it can be concluded that strategic information systems are the information systems which assists an organization in effective management of information and strategic decision making. This report focused on the strategic analysis of Coles supermarket. It covered the analysis of the external and internal environment along with the identification of its resources and capabilities. On the basis of this analysis, management information system has been recommended for Coles.

References

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https://www.news.com.au/finance/business/retail/why-woolworths-is-beating-coles-and-aldi-in-australias-ongoing-supermarket-war/news-story/7c0e1ea754035499f71e6364b465345e

https://in.reuters.com/article/wesfarmers-divestiture-coles/australias-wesfarmers-to-spin-off-coles-as-competition-bites-idINKCN1GS0FZ

https://www.insideretail.com.au/news/new-competitors-set-to-test-102-billion-grocery-sector-201803