Strategic Management Analysis of Coles Supermarket in Australia

This report provides a strategic management analysis of Coles Supermarket in Australia, including a PESTEL analysis of the retail industry, industry analysis, competitor analysis, and strategy analysis. The report also highlights the main challenges faced by Coles and provides recommendations for gaining competitive advantage.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has helped in analysing the external environment that affects the Coles
Supermarket and this caused huge impact on the business. The report has helped in
understanding the generic and business level strategies that has helped in understanding the
issues and solve them effectually.
The main aim and purpose of the report is to understand the different strategies that has
helped the company in gaining competitor analysis. Proper PESTEL and SWOT analysis has
helped in gaining knowledge on competitors and helped in solving the issues.

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Table of Contents
Introduction................................................................................................................................3
Description of Coles and industry analysis................................................................................3
Main Challenges.........................................................................................................................4
Macro Environmental Analysis..................................................................................................4
PESTEL analysis of retail industry........................................................................................4
Industry Analysis.......................................................................................................................6
Brief Description of life cycle of Retail Industry...................................................................6
Five Forces Analysis..............................................................................................................7
Company Analysis.....................................................................................................................8
Competitor Analysis.................................................................................................................10
Strategy Analysis.....................................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
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.
Description of Coles and industry 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).

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Main Challenges
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.
Macro Environmental Analysis
PESTEL analysis of retail industry
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

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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).

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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).
Industry Analysis
Brief Description of life cycle of Retail Industry
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

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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).
Five Forces Analysis
Threat of new entrants
Decrease in the independent retailers
Threat of substitutes
Dealing with different kind of products

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Chain stores
Competitive advantage in centralized
buying
Shifting chances is high in nature
Power of suppliers
Less power
Exploiting the relationship
Power of buyers
Bargaining power is less in nature
High quality products and the honesty of the
retailers
Rivalry among the existing competitors
Competition that is cut throat
Reduction in frequent filters and loyalty cards as well
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).
Company Analysis
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,

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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).

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Competitor Analysis
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.
Strengths
Strong brand name and effective operations
Well known retail store in Australia
Operates with various kind of subsidiaries
Weaknesses
Negligible global presence in the world
Brand has failed to sustain the different
kind of competitive advantage
Opportunities
Promote the brand with promotions and
advertising
Seek growth thorugh strategic acquisitions
Threats
More competition in the market
Economic recession
Rising the raw materials
SWOT

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Strategy Analysis
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.

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References
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