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Importance of Business Strategy
Independent Grocers of Australia or IGA is one of the leaders in Australian chain of Supermarkets .The Independent Grocers of Australia or IGA is headquartered in Canning Vale, which is the suburb of Perth, Western Australia (IGA Supermarkets. 2018).The products catered by IGA are groceries and general products .It is presently the fourth largest supermarket chain in Australia. It is the subsidiary and Australian branch of American company Independent Grocers Association. The report discusses the various business strategies of Independent Grocers of Australia or IGA. The report details about the business strategies undertaken by IGA in order to meet their goals and objectives.
Importance of Business Strategy
The concept of Business Strategy in an organization can be stated as the organization’s high-level plan that is aimed to reach particular business objectives (Bentley , Omer and Sharp 2013). The business strategies can be deemed as a success when it leads to growth in business provides a strong competitive position and also ensures a strong financial position. When the business strategy fails, the organization may chalk out new business approach or strategy or may decide to move out of the business.
The strategies of an organization are the reflection of the company’s strength, weakness, resources and opportunities .They also reflect the competitors of the firm in the market (Ozkaya et al. 2015). The strategies are formulated primarily to meet the goals and objectives of the organization, which includes sustaining and earning in the profits.
A Brief Overview
The Supermarkets in Australia have a major role to play in the Australian food marketing industry. The Australian Supermarkets have gone through various changes over the last four decades. The retailers have played a significant role in the food distribution chain of Australia (Manzini and Accorsi 2013). The major leaders of super markets in Australia are Woolworths, Coles, Aldi ,IGA and Franklin (Knox 2015). Woolworths have been the major and top supermarket retailer for more than a decade in Australia .
Coles is the second best supermarket retailer after Woolworths, it is also thriving in Australian market for more than a decade. The Independent Grocers of Australia or IGA is one of the leaders in Australian supermarket chains. However, the market share of IGA in Australian supermarket is far behind that of Woolworths, Coles and Aldi, they are still growing and it is expected to reach greater heights in future. It has the capabilities and prowess to be the leaders in the supermarket chain of Australia.
A Brief Overview
Business Strategy of IGA Supermarkets
In order to become the leaders and to thrive in the Australian super markets, IGA follows certain business strategies for achieving their goals. Some of the business strategies of IGA are as follows:
Generic or General Strategies
The general or the generic strategies of IGA or Independent Grocers of Australia include the growth, globalization and retrenchment.
- Growth –The strategy of growth involves addition of new products by the company. It also involves adding new features to the already existing products offered by the company .The products offered by IGA are marketed by different brand names that includes Black &Gold, IGA Signature and No Frills. The Black & Gold offers extensive range of products that includes several grocery products like Corn kernels, Almonds, confectionary and others. It is one of the biggest brands in Australia presently .There are around 1400 stores of IGA in Australia .The brand IGA signature offers products that includes insect repellent, pet products and others. Retail giants like Woolworths and Coles dominate the Supermarkets in Australia. To keep pace with these leading supermarkets IGA is compelled to modify their products by adding new features to the existing products as well as they introduce new products to survive in the competitive market of Australia.
- Globalization – Globalization or Internationalization involves shifting or moving of operations of a particular firm or organization into different country or countries (Steger 2017) .In other words it is aimed to expand the business of an organization or firm. Considering the competitive market in Australia, it is necessary for Independent Groceries of Australia or IGA to expand its operations and business in other parts of the world as well (Bremmer 2014). The globalization strategy of IGA has been very organized .They have around 5000 stores in around 30 countries across the globe.
- Retrenchment – Retrenchment involves reducing or curtailing the cost of business in accordance to the economic difficulty present in the market(Aithal 2015). Sometimes considering the economic atrocities in the market IGA adopt retrenchment strategies in order to prevent any loss in their business.
Competitive Strategies
Competitive strategies are very important for any organization in any sector or industry of operations (Madsen and Walker 2015).The competitive strategies includes the set of plans that are responsible for giving them an edge over the competitors or rivals in the market. Competitive strategies involves following a approach of performing things that are better than the competitors in the market .But there are some factors that are important and plays a significant role in ensuring a proper competitive strategies . The factors include resources and infrastructure. The competitive firm or organization should not just follow or copy the business idea of rival companies present in the industry .
The competitive strategies should be robust, organized and efficient enough to out-compete the rival firms and give a competitive edge over the rival companies (Cusumano, Kahl and Suarez 2015). There are primarily two ways of being competitive in the market .First by offering the products at a price which is lower than the competitors in the market .This strategy is followed when the firm or companies are the leaders in the market and they benefit from the economies which they acquire from sales .
The second strategy, which is followed, is the one, which involve differentiation of products from the products of the rivals. Since this strategy, brings uniqueness in the product as the firm not any other company in the market offers those products, the price of the products can be priced high at the desired rate only provides them.
In the supermarket sector of Australia, the retail giants like Woolworths and Coles dominate it. They have been thriving in the Australian supermarket industry over decades. Thus, it is quite evident that they have been enjoying a significant amount of market share for many years .Thus, to out-compete them Independent Grocers of Australia or IGA should undertake strong competitive strategies to become the leaders in supermarkets of Australia. The competitive strategies undertaken by Independent Grocers of Australia (IGA) are as follows:
- Product differentiation Strategy – The product differentiation strategy is one of the best competitive strategies undertaken by many organizations. IGA tries their best to ensure that they offer products that are best in the market so that they can provide a potential threat to the leading giants in supermarkets like Woolworths, Coles and Aldi supermarkets. The product differentiation strategy are made by IGA in order to set themselves apart from the leading and main competitors. The other motive of Independent Grocer of Australia is to build brand royalty by using the product differentiation strategy .The Independent Grocer of Australia markets their products with different brand names so that they can differentiate their products from the competitors (Nambisan 2013).The brand names of IGA are Black & Gold, IGA Signatures and No Frills. The Black & Gold brand is one of the most popular and arguably the best brand in the supermarkets of Australia .Wide range of products are offered by the Black &Gold Brand ,it includes several groceries products like almonds, oil, nuts ,confectionaries and others .
- Price skimming Strategy – Independent Grocers of Australia or IGA follows the price skimming strategy for gaining competitive edge over the rivals (Spann, Fischer and Tellis 2014). Whenever new products are been launch that is during the introductory phase of the product launch, the price of the products are kept very high by IGA. This strategy turns out to be fruitful for IGA as they are able to recover the cost of production and advertisements. The IGA follows this strategy only when they are launching any new product whose features are unique and different from the products that are been offered by major competitors of IGA like Coles, Woolworths and Aldi.
- Acquisition Strategy – Acquisition strategy involves acquisition of other small firms or organization in order to expand their business or to gain competitive edge over the rivals in the market. This is part of the competitive strategy followed by the organizations .The Independent Grocers of Australia (IGA) also follows acquisition strategy to have an upper hand over the competitors like Woolworths, Coles and Aldi.
Conclusion
From the report on analysis of business strategies of IGA Supermarkets, it can be concluded that the supermarket giants like Coles, Woolworths and Aldi dominate the Supermarket industry of Australia. The IGA follows some robust and organized business strategies in order to compete with the leaders in supermarkets who enjoys a significant market value in Australia .The Independent Grocers of Australia should implement their business strategies wisely. They should also improve on some business strategies like acquisition and globalization strategies to come out as the leading Supermarket in Australia and also become a reliable brand in other parts of the world as well.
References
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Cusumano, M.A., Kahl, S.J. and Suarez, F.F., 2015. Services, industry evolution, and the competitive strategies of product firms. Strategic management journal, 36(4), pp.559-575.
IGA Supermarkets. (2018). About IGA | IGA Supermarkets.
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths' dominance (Vol. 6). Black Inc..
Madsen, T.L. and Walker, G., 2015. Modern competitive strategy. McGraw Hill.
Manzini, R. and Accorsi, R., 2013. The new conceptual framework for food supply chain assessment. Journal of food engineering, 115(2), pp.251-263.
Nambisan, S., 2013. Information technology and product/service innovation: A brief assessment and some suggestions for future research. Journal of the Association for Information Systems, 14(4), p.215.
Ozkaya, H.E., Droge, C., Hult, G.T.M., Calantone, R. and Ozkaya, E., 2015. Market orientation, knowledge competence, and innovation. International Journal of Research in Marketing, 32(3), pp.309-318.
Spann, M., Fischer, M. and Tellis, G.J., 2014. Skimming or penetration? Strategic dynamic pricing for new products. Marketing Science, 34(2), pp.235-249.
Steger, M.B., 2017. Globalization: A very short introduction(Vol. 86). Oxford University Press.
