Analysis of Competitive Strategy

This document provides an analysis of the competitive strategy of Coles and Woolworths, two major supermarket chains in Australia. It covers the history, development, and growth of the companies, their internal strengths and weaknesses, analysis of the external environment of the Australian retail industry, Porter's five forces analysis, evaluation of SWOT analysis, corporate and business level strategies, and analysis of the structure and control systems of the companies.

Running head: ANALYSIS OF COMPETITIVE STRATEGY
ANALYSIS OF COMPETITIVE STRATEGY
Name of the Student
Name of the University
Author Note

1ANALYSIS OF COMPETITIVE STRATEGY
Table of Contents
1. History, development and growth of Coles and Woolworths....................................2
2. Identification of the internal strengths and weaknesses of Coles and Woolworths...2
3. Analysis of the external environment of Australian retail industry...........................5
Porter’s five force analysis of Australian retail industry...........................................5
4. Evaluation of the SWOT analysis of Coles and Woolworths....................................7
5. Analysis of corporate level strategies of Coles and Woolworths..............................7
6. Analysis of business level strategies of Coles and Woolworths................................8
7. Analysis of the structure and control systems of Coles and Woolworths..................9
8. Recommendations......................................................................................................9
References....................................................................................................................11

2ANALYSIS OF COMPETITIVE STRATEGY
1. History, development and growth of Coles and Woolworths
Coles Supermarkets Australia Pty. Ltd. is an Australian firm that functions in the
supermarket based industry and the headquarter is located in Melbourne. The organization
had been established in the year 1914 by George Coles. Coles currently functions more than
800 stores in the different areas of the country. The company has employed more than
100,000 employees and has been able to gain a huge share in the retail market of the country
(Coles.com.au 2019).
Woolworths is the biggest supermarket based chain of retail industry of Australia and
operates more than 900 stores across the country. The organization mainly relies on 115,000
members of the team who are placed in the distribution centres, stores and the support offices
of Woolworths. The company is able to provide the customers with a range of superior levels
of services, convenience and value (Woolworthsgroup.com.au 2019).
Woolworths and Coles have been able to grow their position in the retail industry of
the country and have gained more than 80% of the total shares in the market. The
organizations have however faced some major levels of challenges based on their operations
in the highly competitive retail industry of Australia. The impact of the operations of the two
organizations on the small organizations in the industry is considered to be quite high
(Aguinis, Edwards and Bradley 2017). Coles is an important part of the Australian
conglomerate named Wesfarmers that has been functioning in the industry for a long period
of time. On the other hand, Woolworths has also been able to develop a major position in the
country based on the stages of profitability and revenues that have been gained (Albers,
Wohlgezogen and Zajac 2016).
2. Identification of the internal strengths and weaknesses of Coles and Woolworths
SWOT analysis of Coles

3ANALYSIS OF COMPETITIVE STRATEGY
Strengths –
The supermarkets that have been developed by Coles are able to fulfil the
liquor and food based needs of the Australian consumers.
Different advertisement methods have been implemented by Coles in order to
increase awareness of its products.
The distinct brands are developed in order to cater to different types of
consumers or buyers (Albers, Wohlgezogen and Zajac 2016).
Weaknesses –
The margins that have been gained by Coles in the industry are low.
The negative publicity that had been received by Coles had an impact on the
consumers.
Different types of problems exist from the suppliers.
Various issues have an impact on the management (Baumgartner and Rauter
2017).
Opportunities –
The expansion of business operations of Coles in various locations is a major
growth opportunity of the company.
The implementation of advertising and marketing based strategies have an
impact on the growth of the business organization.
The development of private label brand is also a huge opportunity of growth
for Coles (Donate and de Pablo 2015).
Threats –

4ANALYSIS OF COMPETITIVE STRATEGY
The low price margins are considered to be major threats to the operations of
Coles.
The generic brands have an impact on the business due to the lack of proper
communication.
The convenience levels offered to the customers are low in comparison to the
environment that is provided by the small organizations (Baumgartner and
Rauter 2017).
SWOT analysis of Woolworths
Strengths –
The market leadership position and share that has been gained by Woolworths
in the retail market is a major strength.
The ability of the company based on proper exploitation of the market
potential is another major strength of Woolworths.
The technological resources that have been gained by the company are also
important strengths of Woolworths (Frow et al. 2015).
Weaknesses –
The impact of external environment on the growth strategy that is developed
by Woolworths is a major weakness of the organization.
The restrictions that have been provided by the government in the operations
of Woolworths in retail market are also important weaknesses of the company.
The price wars have led to the lack of proper levels of revenues that can be
gained by Woolworths (Frynas and Mellahi 2015).
Opportunities –

5ANALYSIS OF COMPETITIVE STRATEGY
The growth potential of Woolworths is high due to the implementation of
major technologies.
The levels of abilities of the organization have an impact on the operations of
Woolworths.
The multi-option retailing options can increase the profitability levels of
Woolworths (Galpin, Whitttington and Bell 2015).
Threats –
The high levels of competition are considered to be major threats to
Woolworths in the retail market.
The intervention of government in different aspects and operations of
Woolworths are major threats offered to the company (Gond et al. 2016).
3. Analysis of the external environment of Australian retail industry
Porter’s five force analysis of Australian retail industry
The external environment of Coles and Woolworths can be analysed with the
implementation of Porter’s five forces framework. The retail industry of the country can be
analysed in detail with the help of proper understanding based on the environment in which
the organizations are able to uphold their processes.
Bargaining power of the buyers – The buyers or consumers in the retail industry of
Australia have a key influence on the prices of different products that are offered by the Coles
and Woolworths. The number of supermarkets that operate in the country are high and the
customers are provided with huge number of options as well. The wide range of options that
are offered to the customers have an impact on the ways by which prices of different products
can be decided by the organization (Hanson et al. 2016).

6ANALYSIS OF COMPETITIVE STRATEGY
Bargaining power of the suppliers – The suppliers are able to play a key part in the
methods by which the retail firms are able to reach the customers. The concentration of
suppliers in the market is high and the organizations are able to uphold their position in the
industry with the backing that is offered by the suppliers. However, due to the time of
operations of the two organizations in Australian retail industry, the organizations have been
able to develop a highly efficient supply chain (Helfat and Martin 2015).
Threats of the new entry – The threats based on the entry of new companies in the
retail industry is quite low. The case study of Coles and Woolworths has been able to depict
that the processes of different small organizations in the Australian retail industry are affected
in a negative way due to the requirement of high levels of capital investments. The small
organizations have not been successful in developing the operations in the industry or provide
competition to the large organizations. The high competitiveness of the Australian retail
industry has an influence on the methods by which the organizations can uphold their
positions in the industry (Hitt, Ireland and Hoskisson 2016).
Rivalry among the existing firms – The competitiveness levels in the retail industry
of Australia are high and the price wars that have taken place between the two major
organizations have been able to depict the competitiveness of the retail market. The margins
that can be gained by the two organizations are also quite low due to the levels of operations
of the modern organizations. The new players in the retail industry are not able to uphold a
major place in the industry due to lack of effective operations (Rugman and Verbeke 2017).
Threats of the substitutes – The products that are offered to the consumers by
different retail organizations cannot be substituted by any other types of products. The daily
grocery based needs are fulfilled by the products that are offered by Woolworths and Coles.
The consumption of retail products on a daily basis are quite high and the organizations need

7ANALYSIS OF COMPETITIVE STRATEGY
to develop the product portfolio based on their different types of demands and needs. The
threats based on availability of substitute products are quite low for the major organizations
like Woolworths and Coles (Trigeorgis and Reuer 2017).
4. Evaluation of the SWOT analysis of Coles and Woolworths
The analysis of internal environment of the two firms have been able to depict that the
strengths that have been gained by them are quite similar and the weaknesses are mainly
based on the rivalry that is a part of the retail industry of Australia. The case study has also
been able to depict that the organizations face major threats based on the entry of the
multinational retail company Aldi. The products and services that are provided by Aldi at
lower prices are able to provide tough competition to Woolworths and Coles (Wolf and Floyd
2017). The smaller organizations like Metcash on the other hand are not able to provide
major levels of competition to the companies based on the stages of profitability that can be
gained by them. The opportunities are also provided to both the organizations so that they are
able to enlarge their operations in different areas. The levels of revenues that have been
gained by the organizations are able to support the investments that are made in order to
advance the product portfolio that is offered to the customers. The differentiation can
however be developed by the organizations in order to compete with the international
companies with the help of services and experiences that are offered to the consumers
(Trigeorgis and Reuer 2017).
5. Analysis of corporate level strategies of Coles and Woolworths
Corporate level based approach that has been applied by Coles is mainly based on the
methods by which the company can become a leader in the market and the retail industry of
the country. The major focus of the organization is on the ways by which different services
can be recognized in order to make effective levels of investments. The major strategy that is

8ANALYSIS OF COMPETITIVE STRATEGY
followed by the organization is based on proper diversification of services and products that
are offered to the customers (Trigeorgis and Reuer 2017).
The major goal related to the corporate level strategy of Woolworths is to put the
customers at the topmost position among different brands. The six major priorities that have
been taken into consideration for development of corporate strategy are,
Customer 1st Team culture.
Personalised, convenient and connected shopping experiences.
Differentiation of the Food Customer Propositions.
Accelerating the innovations in the Drinks Business.
Unlocking value in the portfolio.
E2E Processes (Woolworthsgroup.com.au 2019).
6. Analysis of business level strategies of Coles and Woolworths
The five-year has been recently developed by Coles in order to uphold its business
operations in the industry for a longer period of time. The strategy can be helpful for the
organization so that it is able to develop the future operations along with the members of the
team, the suppliers and partners (Coles.com.au 2019). The principles that are a part of the
business strategy of Coles are,
The innovation levels in operations of Coles are a major part of the strategy
that has been implemented by the organization.
The expectations of different customers of the organization are related to the
changes that have taken place and convenient shopping based facilities that
are provided as well.
Different offers which can be provided to consumers can increase the levels
of customer loyalty in the stores.

9ANALYSIS OF COMPETITIVE STRATEGY
The reduction of costs can play a key part in effective growth of the
organizational processes with the help of effective data usage of the
customers of Coles.
The appropriate recognition of employees of Coles that a major factor related
to proper development of products and services (Coles.com.au 2019).
The business strategy which has been developed by Woolworths is considered to be a
major part of the plans that have been made by the organization for its future operations.
The effective improvement of the offers is helpful in ensuring that the
consumers of Woolworths can help the company to gain the topmost position.
Innovative services and technology implementation is also an important factor
that is able to affect Woolworths and its operations.
Value can be provided to the customers of Woolworths can provide high
levels of success to the organization in implementation of “Lean Retail” model
(Woolworthsgroup.com.au 2019).
7. Analysis of the structure and control systems of Coles and Woolworths
The management structure that has been developed and implemented by Coles is flat
in nature and this is considered to be helpful for the communication that is developed with the
consumers. On the other hand, the structure of the management that is developed by
Woolworths is mainly controlled by the CEO of the organization. The centralised control is
helpful in development of communication between the organization and the management of
Woolworths (Trigeorgis and Reuer 2017).
8. Recommendations
The key recommendations that can be offered to Coles and Woolworths are as
follows,

10ANALYSIS OF COMPETITIVE STRATEGY
The organizations can develop services and experiences that can attract the
consumers from diverse parts of the world.
The communication can be developed in such a manner that can help in proper
revenues and profitability of Woolworths and Coles.

11ANALYSIS OF COMPETITIVE STRATEGY
References
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Albers, S., Wohlgezogen, F. and Zajac, E.J., 2016. Strategic alliance structures: An
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12ANALYSIS OF COMPETITIVE STRATEGY
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