Business Analysis of Coles Supermarket

This assignment conducts a business analysis of Coles Supermarket, discussing methods of data collection, PESTEL analysis, Porter's five forces theory, drivers of change, critical success factors, and the influence of innovation.

Running head: BUSINESS ANALYSIS
BUSINESS ANALYSIS
Name of the Student
Name of the University
Author note

BUSINESS ANALYSIS
Table of Contents
Introduction:.....................................................................................................................4
Discussion:........................................................................................................................5
Methods:.......................................................................................................................5
PESTEL analysis..........................................................................................................6
Porter’s five forces theory:...........................................................................................8
Drivers of change:.........................................................................................................9
Critical success factor:............................................................................................10
Influence of innovation:..............................................................................................10
Conclusion:.....................................................................................................................11
References:.....................................................................................................................12

BUSINESS ANALYSIS
Introduction:
The objective of this assignment is to conduct a business analysis of Coles supermarket.
Coles supermarket is a consumer supply chain whose headquarter lies in Melbourne. The
organization was established in the year 1914. This assignment will discuss why the
supermarket has been successful in the industry. The assignment will begin by giving a brief
discussion about the methods how the data has been collected for this assignment. Data
collection method consists of data collecting from primary and the secondary sources. In this
assignment the secondary sources will be taken. The secondary sources are those, which
consist of questionnaires, interviews, business documents, media sources, database searches,
reports and etc. Past researches will help in getting the information easily and will also help to
understand about their rival competitors the present situation of the organization. An external
analysis will also be conducted. The external analysis will be done with the help of PESTEL
analysis. PESTEL analysis will help to understand the political, economic, social,
technological, environmental and the legal factors that affect the operation of the business
organization. This analysis will help in understanding how the change in these factors affects
the production and the profit margin of the organization. Porter’s 5 force analysis is also
applied in this case which will help to understand the various external factors that exert its
influence on the company. The external factors such as the external competitions and the
customer’s power to effect a particular business deal is understood through this mechanism.
This model was developed by Michael Porter who had the aim to understand the competitive
environment of the business and the competitive advantage of the particular company.

BUSINESS ANALYSIS
Australia is a developed nation with rapid urbanisation and sophisticated commercial
system. There are many supermarket chains in Australia and the total Australia’s food and
beverage, grocery and fresh produce sectors turnover for the year 2017 had been $123.4 billion
(Afgc.org.au 2018). The super markets play a very crucial role in the buying and selling of
food and beverage, grocery and fresh produce. In Australia there are big companies in the same
field and Coles is one of these. The store has various categories such as groceries, children
products and stationaries. The shop has an online presence and that infrastructure helps the
company to distribute its product through digital media. The company has close competition
with others in the field one of which is Woolsworth. In this paper detailed analysis has been
made about the competitive advantage of Coles over its nearest competitors.

BUSINESS ANALYSIS
Discussion:
Coles supermarket is an Australian subsidiary supermarket. They are one of the largest
consumer service and retail chain in Australia. The organization’s headquartered lies in
Melbourne. The company was founded by George Coles in the year 1914 at Collingwood.
Now the organization is owned by Wesfarmers. Coles currently operates 807 supermarkets
across Australia. In 2016, the organization earned revenue of 33 billion Australian dollars from
food & liquor. The operating income of the organization is accounted as 1.9 billion Australian
dollars in the year 2016 (Coles.com.au 2018). The organization has total assets of worth 22.1
billion Australian dollars. Coles currently employs more than 100,000 employees in the
organization. Coles has huge brand reputation in the market which has been made possible for
their excellent sales and after sale services. The supermarket got its brand recognition as they
are in the market for more than 104 years; this has helped them to operate their business in
different location. The organization is expected to grow and expand their business in different
nations in near future.
Methods:
This part will describe the different method of data collection. Data for this assignment
will be collected from the secondary sources (Palinkas et al. 2015). The secondary sources will
help to give past information that will assist the organization in making effective decision
making. The data collection method should be error proof so that the management can take
accurate decisions. The data that is collected are based on eight different sources. Industry
reports are analysed properly which helped in providing a lots of information about the present
industry scenario. Business related journals have also been examined to understand that what

BUSINESS ANALYSIS
can be done to increase the revenue of the organization. Interviews with the employee of the
organization and the customers have also been conducted which helped to understand what can
be done to better the workplace condition and the customer relationship (Budworth, Latham
and Manroop 2015). Business documents have also been examined to understand the position
of the organization in the market. Online questionnaire helped to understand the needs and
expectations from the supermarket. Online database gave us lot of information about the
product and the services that the organization is offering and understand about the target
market of Coles. Media and other different media helped to understand about the competition
in the market and what the competitors are doing to gain the customer market from them.
PESTEL analysis
PESTEL analysis will help to understand the external factors that affect the
organization. This analysis will help to understand the political, economic, social,
technological, environmental and the legal aspects that have effect on the organization and the
industry (Jurevicius 2013).
Political factors: Coles is a recognizable brand in the retail industry and is fulfilling the
needs and wants of the consumer through various retail outlets. Country’s political
environment is directly linked with organization’s performance and the retail outlets are
affected by the political climate of the particular region. The political environment shapes the
company with growing opportunities. Stable political environment helps the organization to
grow as the investor’s shows interest in the political stable countries. The political condition of
Australia is stable which a positive factor for the organization (Rix 2013).

BUSINESS ANALYSIS
Economic factor: Economic factors like higher unemployment rate and recession has
direct impact on the financial performance of the business organization as these leads to lower
revenue and sales which ultimately cause declination in the financial performance of the
company. Coles condition have been affected due to the shrink in the global financial
condition. The organization has been highly affected during the global financial condition and
the company have to cut down its operation causing a lot of unemployment (Serricchio,
Tsakatika and Quaglia 2013). However, the stability in the Australian retail industry is more
than other countries.
Social factors: Customer is the most important stakeholders of any organization.
Understanding the needs and the behaviour of the customer is essential for making the
sustainable revenue. Coles have understood the importance of recognizing the needs and the
wants of the customer and have made business plan according to that. The management has
recognized the social changes and came to conclusion that the customers want the retail
shopping experience, which includes product availability of wide range and prices. The
organization has identified that the customer wants are changing towards healthy lifestyle. As
per this assessment the organizations are including products which are healthy.
Technological factors: The advanced and the most updated technology that increases
the shopping satisfaction are the main focus for the retail industry. The RFID technology is one
of the examples, which is used by most of the organization nowadays that helps in efficient
inventory management and helps in availability of the product for the customer (Costa et al.
2013). Apart from this the organization has also integrated the Service Oriented Architecture,
which helps in supplying the products in the different retail outlets.

BUSINESS ANALYSIS
Legal factors: Employee recruitment, employee management and the taxation policy re
some of the primary framework for the retail industry. Apart from this the food licensing are
vital in the retail sectors. The food and the beverages that are available in the store should
follow the proper food regulations of the country.
Environmental factors: The environmental factors are reflected on the use of the
environmental friendly business practices. Coles have been investing on reducing the carbon
emission as well as reducing the wastage of various natural resources like water and other
resources. The organizations have been also investing in the recycling activities to decrease the
landfill wastage.
Porter’s five forces theory:
Porter’s five forces theory helps in the industry analysis. The five forces of Porter are:
Threat of new entries (High):
The threat of new entrants is high in the retail industry. New organization in the
industry brings innovation and new ways of doing business in the organization, which is a big
threat for the existing company and also for Coles.
Bargaining power of the suppliers (Medium):
The bargaining power of the supplier is one of the major factors that affect the
operation of the management. The bargaining power of the supplier is low for Coles as Coles is
one of the reputed and well known brands in the market. Supplying a retail company like Coles
will help the supplier to increase, so they will not look to break contract with Coles.
Bargaining power of the buyer (High):

BUSINESS ANALYSIS
The bargaining power of the buyer is high as there are many other competitors
available in the market and Coles will not look to lose its customer to them. The organization
need to continuously analyse the market and make policies and keep the prices on that basis.
Threat of substitute products (Low):
The threat for the substitute products is low for Coles. As most of the products that
Cole deals with does not have any substitute or cannot be substituted.
Competitive rivalry (High):
The competition in the retail industry is very high. Competitors like Woolsworth give
them a tight competition as they are also a well known brand in the industry and have a good
brand reputation (Davey and Richards 2013).
The two main key forces that play a huge role are the competitive rivalry and the
bargaining power of the buyer.
Drivers of change:
The two main drivers of change that may affect the retail industry in the organization
are:
Technology and Healthy alternatives
Technology is one of the factors that will bring change in the retail industry and will
change how the customer’s view on the retail shopping. Online shopping is becoming the trend
in the market and this is affecting the retail industry. Coles need to start developing their own
shopping website, which will help in earning revenue and keeping the customer.

BUSINESS ANALYSIS
Customers are becoming more health conscious nowadays and they are searching for
the healthy alternative in the market. Coles need to pay proper attention on investing more on
the healthy products.
Critical success factor:
The critical success factors for Coles are:
 Branding: Whatever the product the organization is dealing with should be of good
quality and brands.
 Store experience: The store experience for the customer should be satisfying. The
customer experience should be good.
 Inventory control: The organization should highly focus on the inventory management.
They should look that the store does not run out of inventories (Axsater 2015).
Influence of innovation:
Coles should look on innovating more with their products and with the operation of the
business organization. Innovation helps in retaining the customer and helps in bringing more
innovative ideas in the market, which will help in providing better customer satisfaction.

BUSINESS ANALYSIS
Conclusion:
The assignment deals with the business analysis of Coles. Coles is Retail Company that
operates more than 100 outlets in Australia. In this assignment the market analysis have been
done with the help of secondary data that is collected from different sources. PESTLE analysis
has been conducted to understand the political, economic, social, technological, legal and
environmental factors that affect the organization. Porter’s five forces theory helped to
understand why the barraging power of the buyer and competitive rivalry is high in the
organization. Critical success factor have also been discussed in this assignment and the
influence of innovation have also been mentioned.

BUSINESS ANALYSIS
References:
Afgc.org.au (2018). [online] Afgc.org.au. Available at:
https://www.afgc.org.au/wp-content/uploads/AFGC-2017-State-of-the-Industry-Report.pdf
[Accessed 8 Aug. 2018].
Axsäter, S., 2015. Inventory control (Vol. 225). Springer.
Budworth, M.H., Latham, G.P. and Manroop, L., 2015. Looking forward to performance
improvement: A field test of the feedforward interview for performance management. Human
Resource Management, 54(1), pp.45-54.
Coles.com.au 2018. Coles Supermarkets. [online] Coles.com.au. Available at:
https://www.coles.com.au/ [Accessed 5 Aug. 2018].
Costa, C., Antonucci, F., Pallottino, F., Aguzzi, J., Sarriá, D. and Menesatti, P., 2013. A review
on agri-food supply chain traceability by means of RFID technology. Food and Bioprocess
Technology, 6(2), pp.353-366.
Davey, S.S. and Richards, C., 2013. Supermarkets and private standards: Unintended
consequences of the audit ritual. Agriculture and human values, 30(2), pp.271-281.
Jurevicius, O., 2013. Pest & pestel analysis. Strategic Management Insight, 13, p.2013.
Palinkas, L.A., Horwitz, S.M., Green, C.A., Wisdom, J.P., Duan, N. and Hoagwood, K., 2015.
Purposeful sampling for qualitative data collection and analysis in mixed method
implementation research. Administration and Policy in Mental Health and Mental Health
Services Research, 42(5), pp.533-544.

BUSINESS ANALYSIS
Rix, A., 2013. The Australia-Japan Political Alignment: 1952 to the Present. Routledge.
Serricchio, F., Tsakatika, M. and Quaglia, L., 2013. Euroscepticism and the global financial
crisis. JCMS: Journal of Common Market Studies, 51(1), pp.51-64.