PESTEL Analysis Of Coles And Woolworths Essay In Australian Retail Industry.

Discuss about the Strategic Management for Coles and Industry Analysis.

The report helps in analysing the different kind of macro environmental factors that are impacting the company along with the industry. The company that has been selected is Coles in the case study and it is the comparison between the Coles and Woolworths Supermarket. The industry analysis has to be done with the description of the life cycle stage of the retail industry along with five forces analysis in an effectual manner.

The main aim and purpose of the report is to understand the analysis of the company with the different capabilities and resources along with different core competencies. Proper competitor analysis is required to be done effectively as this will help in analysing the linkage with the Porter’s Five Forces analysis.

Coles is one the Australian supermarket that is headquartered in Melbourne owned by the parent company Wesfarmers. On the other hand, Woolworths is one the largest supermarket chains that is based in Australia as well and it has huge competition with Coles as well.

 Coles was founded in the year 1914 in Melbourne and the company operates more than 801 supermarkets throughout the entire Australia. Coles has more than 10000 employees and their rival is Woolworths that has occupied more than 80% of the market in Australia as well.

Both Coles and Woolworths belongs to the retail industry wherein it is seen that both of them are the top performers in the entire Australian market. Both the supermarkets have gained competitive advantage in the market that has helped them in succeeding as well in the market (Tantalo and Priem 2016). 

In the respective case, it has been seen that Coles and Woolworths dominate the entire Australian market wherein they have 80 percentage of the entire market share. In the case study, it has been seen that there is huge competition between Woolworths and Coles and it is hostile and constant in nature, however there is strategic difference between them in terms of the major prices and moves. However, it is seen that the major challenges in the case study related to Woolworths and Coles is that Woolworths is adding an additional 58000 work hours to the entire system as the customers will receive better kind of service. The case study has revealed that the landscape is now complex in nature and it caused huge loss for both the supermarkets as well. 

Economic Factors

Political factors create huge impact on the retail industry that includes different kind of government policies and regulations that affects the profitability of the companies. The entire political environment affects the economic environment of the entire Australian supermarket as there is political kind of disruption in the performance of the organizations such as Coles or Woolworths. It is seen that the Asian economy is growing at a faster pace in comparison to the other countries in the globe, however red tape and government regulations can create huge issues for the companies as well.

Economic factors are essential in the context of the business and trade and it helps in deciding the different kind of sales and profit for the entire retail industry. The entire economy of the world has been rebounded and it is growing in nature. The labour market and entire economy are in proper shape and this is increasing the disposable income has boosted the satisfaction of the customers.  However, it has been seen that the financial crisis has hit the entire organization massively that had a major effect on overall sales of the economy along with in Coles and Woolworths.

Social trends or the factors create major impact on the entire retail sector especially for Coles and Woolworths. There are different demographic changes along with changing preferences of the customers create huge impact on the retail sector. In order to respond to the different kind of social factors, the respective companies Coles and Woolworths has tried to offer the different items to the visitors in the store. It has been seen that the preferences of the new generation are different from the new ones and this causes huge differentiation in the choices of the customers as well.

The technological factors are essential in terms of the supply chain, customer service and sales. The growth of the technological advancements has helped in increasing the number of firms in the market and it affects several things that include exponential growth as there is additional convenience provided with the help of technology (Brewster 2017). The distributed intelligence has created deep impact on retail sector in the entire Australian retail industry as well. The other kind of innovation that has been popular in the retail industry is self-service check out wherein the customers purchase different kind of services and products on their own as well.

Environmental factors are the other factor wherein it causes huge impact on the different kind of sustainability concerns. The big brands such as Woolworths and Coles have invested in reducing the carbon footprint and in the renewable energy as well. Woolworths and Coles are trying to reduce the carbon foot print in the entire supply chain of these companies along with the different companies in the retail industry (Galliers and Leidner 2014).

Social Trends

Lastly, the legal factors include the different kind of taxation policies along with recruitment that creates basic part of the legal framework. The different requirements for the food licencing in the retail industry and this plays a crucial part in the retail industry as well. The labour laws are the biggest pain for the retailers as this will remain competitive advantage. The opening of the new retail stores need different approval from clients and there are different legal requirements as well.

As per the PESTEL analysis of the entire retail sector along with Coles and Woolworths specifically, it can be analysed that proper ascertainment is essential in nature for them in order to adopt the different changes in the organization and solve them in an effectual manner. The PESTEL analysis helped them in analysing the market uncertainties in an effectual manner (Frow et al. 2015). 

The life cycle of the entire retail industry in the Australian industry includes the following:

Introduction Stage is the first step in the life cycle of the retail industry wherein it is characterized by industry expansion along with innovative strategies. In this particular stage, entrepreneurs develop either new retail store model wherein it is combined with the product mix with new kind of services and there is high cost of development as well (Hill, Jones and Schilling 2014).

Growth Stage is the second step wherein once the store catches on, it will help in entering the growth stage and there will be increase in the profit and the customers will rave about the brand as well. The main challenge in this stage is that proper innovation is required to create something new and excite the customers who visits the stores (Pearlson, Saunders and Galletta 2016).

Maturity Stage is the step wherein the customers are the main focus of the customers and this will increase the competition among the different competitors in the market as well. The competition may increase to the exact point wherein it will lead to declining of the profit and reduce the loyalty among the customers as well. In this case, the prices will drop and the competitors in the market will try to lure down the customers.

Decline Stage is the step wherein the retail companies are not being able to innovate properly and they are not being able to innovate the business fresh and new in nature as well. At this point of time, the business will seem out of the date and this will be boring to the customers. This will create tension for the different customers and this will anticipate decline in the business as well (Krajewski, Malhotra and Ritzman 2015).

Technological Factors

From the five forces analysis, it can be analysed that there are different kind of attractiveness in entering into the retail market. From the analysis, the threat of the new entrants has been high in nature and the independent retailers has been decreased (Frynas and Mellahi 2015). The five forces analysis helps the companies such as Woolworths and Coles in competing in the market with selling high quality products and services effectually. The rivalry of the existing competitors has to be reduced with the implementation of different technological advancement strategies effectually (Stead and Stead 2015).

There are two different kind of strategies that include generic strategies and business level strategies that can be used by the retail industries in order to gain competitive advantage (Bettis et al. 2014). The generic strategies include differentiation, focus and differentiation that can help the companies in analysing the different analysis of the environmental issues and other focuses as well. On the other hand, the business level strategies include consumers, geographic and products of the company that has to be ascertained in order to make the scope broad in nature (Jarzabkowski and Kaplan 2015).

From the analysis, the generic strategies can be applied by the entire retail sector of Australia as this will help them in differentiating the products from other competitors and this will help them in gaining cost leadership in the market (Biemans 2018). It can be seen that Woolworths is one of the largest supermarket wherein the industry scope is high and focus strategy is low in nature as well. When the analysis is done on industry wise, the focus strategy is the differentiation kind of strategy that has to be ascertained in an effectual manner (Slack 2015).

As per the cost leadership strategy, Coles and Woolworths are aiming to become the lowest producer related to cost and they target the broad market as well. Furthermore, the differentiation strategy calls for the entire development of the products or services that helps in providing the customers unique strategies effectually (Lasserre 2017).

 The focus strategy applied by the retailers needs to include and concentrate more on differentiation or cost-effective strategy. With the implementation of the generic strategies, this will help in identifying the different kind of environmental factors in the entire industry and compete accordingly (Bromiley et al. 2015).

From the SWOT analysis and Porter’s Five Forces analysis, it can be seen that there are different threats and rivalries in the market that has to be removed with the proper utilization of resources and technological advancements. The opportunities have to be utilized by Coles as this will assist them in understanding their weaknesses and apply them as the strengths to gain competitive advantage in an effectual manner.

Environmental Factors

The different strategies adopted by Coles and Woolworths Supermarkets in Australia includes the building customer and store led culture and team by generating sustainable level of sales in providing convenience to the customers. Presently, the cost leadership strategy is used by Coles wherein this helps them in gaining competitive advantage and this is working in an effectual manner (Rothaermel 2015).

However, there are different other strategies that can be utilized by Coles wherein low-cost strategy has to be utilized by providing the customers attractive price range for different products in an effectual manner. These are the different kind of current strategies that will help them in reducing the marketing uncertainties and solve them effectually.

Conclusion

Therefore, it can be concluded that the case study helped in understanding the different kind of strategies that will help Woolworths and Coles in competing in the market. Proper competitive advantage can be gained by the company with implementation of different strategies in an appropriate manner.

Therefore, it can be recommended that the companies in retail sector has to implement different kind of strategic analysis procedures in such a manner that will help them in gaining unique experiences and provide it to the customers as well. The generic forces have to be adopted by the companies effectually as this will help in solving the issues appropriately. 

References

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Biemans, W., 2018. Managing innovation within networks. Routledge.

Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management (pp. 22-35). Routledge.

Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk management: Review, critique, and research directions. Long range planning, 48(4), pp.265-276.

Frow, P., Nenonen, S., Payne, A. and Storbacka, K., 2015. Managing co?creation design: A strategic approach to innovation. British Journal of Management, 26(3), pp.463-483.

Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

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

Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.

Krajewski, L.J., Malhotra, M.K. and Ritzman, L.P., 2015. Operations management: processes and supply chains. Pearson.

Lasserre, P., 2017. Global strategic management. Palgrave.

Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.

Stead, J.G. and Stead, W.E., 2015. Management for a small planet. Routledge.

Tantalo, C. and Priem, R.L., 2016. Value creation through stakeholder synergy. Strategic Management Journal, 37(2), pp.314-329.