Strategic Management: Analysis of Wesfarmers, Coles, and Woolworth

This report analyzes the impact of Aldi on the operations of Woolworth and Coles, and the market dominance of Wesfarmers in the retail industry. It includes a macro-environmental analysis, Porter's five forces model, competitor analysis, and business level strategy. The report provides recommendations for Wesfarmers to maintain its competitive advantage.

STRATEGIC MANAGEMENT

Executive summary
With the increasing cutthroat competition in the industry, Woolworth and Coles suffered due
to technological advancement of Aldi. While analysing all the competitors, it can be said that
Coles and Woolworth suffered from a huge loss but Wesfarmers who already operates in
other several business apart from supermarket. The below report is based on the given case
study which have analysed that how Aldi affected the operations of Woolworth and Coles.
Wesfarmers always enjoyed a market share and it contributes a good sum of return on equity.
To the existence of Coles and Woolworth, Aldi became a threat in the industry. It affected the
profits of the Woolworth and Coles. Undoubtedly, Wesfarmers will win as its earning and
market share will not be affected much due to diversified offering.

Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................4
Macro-environmental analysis...............................................................................................................4
Porter`s five forces model......................................................................................................................6
Company analysis..................................................................................................................................7
Competitor analysis...............................................................................................................................8
Business level strategy..........................................................................................................................9
Recommendation and suggestion..........................................................................................................9
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11

Introduction
Wesfarmers limited is a renowned retail supermarket that is engaged in several business
operations such as liquor, convenience stores, home improvements, coal mining, energy and
fertiliser, office suppliers, supermarkets and hotels. Wesfarmers operates its business through
eight reportable segments named as Coles, Kmart, Resources, WIS (Wes farmer industrial
and safety groups), Chemical, fertilizers, and energy of the same group. The company
operates in Australia, UK, and New Zealand and it is headquartered in Australia. The report
is based on the given case study. According to case study, several competitors in the retail
industry are compared and this case study explains how Aldi (a German outlet) outperformed
Coles and Woolworth by attaining a competitive advantage through technology (Marketline,
2018).
Macro-environmental analysis
Political and legal factors- Legal implication imposed on the emission of carbon has
restricted the production of certain products across Australia. Carbon Tax (fair tax policy)
affect the performance of Wesfarmers. Political stability in the country is necessary that have
impact on Australian supermarkets. Wesfarmers has increased competition among small
retailers, different businesses, and created dominance of individual retail supermarkets.
Rights to the shareholders and laws has restricted monopoly in market. Similar decisions such
as removal of barriers on interest rate for electricity and lucrative side in coal industry was
favourable for Wesfarmers. Although among the competitors, Woolworth enjoys political
stability in both New Zealand and Australia. Various governmental campaigns urged big
companies such as Wes farmers and Woolworth not to affect small existing supermarkets by
conducting any unfair competitive activities (Australian food news, 2014).

Economic factors- economic conditions has affected the performance of Wesfarmers due to
buying decision and customer demand. Global crisis is still being affecting the consumption
pattern of market due to less disposable income. The GDP of the Australia has been
increasing with an annual rate of 2 percent. Unemployment remains between the range of 5.4
to 5.6 percent (Beveridge, 2015).
Social factors- Wes farmers has the large base of employers and employees working with it.
Moreover, it also has enough shareholders when as compared to other competitors.
Wesfarmers acquired Coles and started targeting large population of around 22 million. The
company undertook various initiatives especially for Torres islanders to uplift the society.
Social factors such as cultural trends, population analytics, and demographics plays a crucial
role in success of the organisation. Citizens generally rely on one-stop shopping and prefer to
purchase the necessary products in large number in a week (Greenhalgh, 2018).
Technological factors- technology advancement plays an important role in the success of the
organisation in Australia. With the increasing competition in the retail stores, it strived to
invest in making it store smarter by promoting One-shop. Wesfarmers are required to focus
on technological progressive means of production, which will further help in maintaining
ecological sustainability (ProcessPolicy.com, 2018). Wesfarmers should undertake the use of
low emission coal technology that will assist to sustain in business. Nevertheless,
Woolworths was the first retailer who subscribed electronic marketing and merchandising
network. As per the case study, it can be said that Coles and Woolworth may start simplifying
their supply chains and building a strong relationship with the stakeholders. The competition
is undoubtedly cut-throat as these companies strive to improve the online sales process which
is based on data collection in a system (Zalengera, Blanchard, Eames, Juma, Chitawo, and
Gondwe, 2014).

Environmental factors- In the entire retail industry, range of products offered as per portfolio
keep a preventive measure that do not harm to the environment. Moreover, among its
competitors, it has already made considerable investment in employing the technology that
can avoid resources, adequate usage of water, and improve the flexibility of climate changes.
Porter`s five forces model
Threat of new entrants- Wesfarmers remained a popular company among Australian
supermarkets. It deals with production and retail dealing of several items like industrial,
energy, fertilizers, insurance, and safety chemicals. It can be easily predicted from the case
study that Wesfarmers has become a highest obstruction to all its competitors. As far as
recognition is considered among the competitors, the threat of new entrants is low to the Wes
farmers (Karupaiah et al., 2014).
Bargaining power of suppliers- Wesfarmers provides its resources to different markets. Due
to diverse variety of products, it can be said that it bear a limited competition among the
supplier market. Limited, restricted, and particular suppliers of the Wesfarmers can create
major obstruction to the operation of Wes farmers, as the company is dependent on many
suppliers.
Bargaining power of customers- Wesfarmers conducts a market research to understand the
expectation and relative trends of the buyers. Wesfarmers promote a sustainable approach
that conducts business, which automatically fetches recognition to the renowned company
“Wesfarmers.” Although, the bargaining power of buyers is moderate as per the strategy of
Wesfarmers as it keeps offering a considerable discount offers among the regular customers.
Threat of competitors- Although, Wes farmers is one of most renowned supermarket in
Australia. It is understood that Wesfarmers dominates the retail market of Australia. On the
other hand, Woolworth can suffer from the competitors especially Wes farmers because

another competitor “Coles” has collaborated with Wesfarmers and Coles is subsidiary.
Wesfarmers enjoys a competitive advantage over all these retail supermarkets. As it only
operate as a food product retailers, it deals in several businesses. Competitors such as
Woolworth, Aldi, and Coles keep fighting to establish a considerable market share.
Nevertheless, in regards to retailing, Coles helps the Wesfarmers to conduct a proper market
research and build its products more efficient. As per the case study, the profitability of the
Woolworth was reduced as Aldi started offering more quality efficient goods and fast
services. Among all the competitors, financial position of Wesfarmers is most favouring as its
return on equity is quite high. As of now, among service staff and price reduction strategy,
Coles uses met mash that involves effective marketing to remain competitive and continue
the market share (Chhabra, and Kiran, 2015).
Threat of substitutes- the threat to Wesfarmers is undoubtedly high and it is emerging in these
last few years because of emerging Woolworth and Aldi. Aldi is a German company that is
well known for its technology as it stroked the existing share of Coles and Woolworth in the
Australia with its competitive advantage in technology. Wesfarmers adopt energy efficient
and environment friendly method. Moreover, it has introduced high quality consumer
services, which provides competitive advantage for the organisation. Therefore, the
substitution threat is low to Wesfarmers.
Company analysis
VRIO analysis
It is a complementary model to PESTEL analysis. It is used to assess the internal
environment of the organisation. This framework considers the resources, possible
improvement, and competitive implication. Managers use this framework to focus on

decision-making, especially how external and internal process can be advantageous to
organisation further.
Value- undoubtedly Wes farmers offer value added products to its customers. The company
enjoys reputation among all the retail supermarket competitors because it has wide range of
products and services in its portfolio offering, which is even more than Woolworth, Coles,
and Aldi. Moreover, Coles who is already a strong competitor in this industry has become a
subsidiary unit of Wesfarmers (Oraman, 2014).
Rarity- Cut-throat competition among the retailers is rising the rate of inflation. Therefore, it
is trying to fight for its existing market share by offering products at low prices. On the other
hand, Aldi offers weekly special, which heavily are marketed with the help of catalogues in
retail stores. Moreover, the application of Aldi is very well liked among the customers.
Although, Wesfarmers started using the low carbon emission technology from the very
beginning following this Aldi has committed to reduce the carbon footprint, efficiency and
maximising the energy efficiency (Knott, 2015).
Cost to Imitate- the company has succeeded in maintaining and regulating the operations
through data-based human capital. Nevertheless, Wesfarmers cannot operate only though data
based human resource due to operation in different sectors. Wesfarmers have to engage such
technology, software, invest in training of HR team that can be costly in initial years but
finally employees will adapt the new system (Knott, 2015).
Organisation- Wesfarmers operates with highest number of employer and employee base in
the whole industry. Wesfarmers is able to capture the value through its capable workforce.
Technology is very efficient while collecting data and conducting market research. HR
manager, IT department, and various team leaders use the efficient online test and group

discussion to conduct selection and recruitment process to manage, improve, hire, and
promote the performance of the employees (Management mania, 2018).
Competitor analysis
As per the case study, Wesfarmers has increased its fame within the retail industry. Other
competitors Woolworth, Coles, and Aldi has been trying to establish new retail stores in
populated areas. Coles is a giant player in the industry, which is a subsidiary of Wesfarmers.
No other market player can get over others because of collaborating hand of Wesfarmers.
Coles have well established supply chain with tight contracts that are agreed to sign the
minimum loss incurred due to perishable nature of its products. Whereas, Woolworth has
suffered a market struck due to emerging state of Aldi. Poor executing of marketing
strategies, lack of restructuring and their implementation has poorly affected that led to
reverse sales and profit (Chatzoglou, Chatzoudes, Sarigiannidis, and Theriou, 2018).
Business level strategy
While forming the business level strategies, Coles proved that it has already achieved low
prices, targeted loyalty programs, rolled out the new format for the retail store, and developed
several categories. The business need to strategize the growth plans that delivers a better-
networked store, which can focus on fresh food. Moreover, Coles extended its supply chain
and its operations through value leadership to promote more channels that are new and
improve its liquor business. The business level strategies undertake to promote growth
strategies that accelerates the density of sales, drives strong fresh food growth, improves the
supply chain, differentiate its retail supermarket through its several growth channels,
transformation of liquor business, and finally extending the valuable leadership (Oraman,
2014).

Recommendation and suggestion
Although, it enjoys a considerable value among all of its competitors but every organisation
has some point left that can drag them to failure at any time in such a risky external business
environment. According to case study, Wesfarmers should keep evaluating the opportunities
in order to add value to its transaction. Apart from this, it is important to develop the
capabilities of human resource and drive it ultimately to achieve the goal. It will lead to
continue to get success by strengthening the corporate infrastructure that can develop
effective divisional support. It is seen from the Annual reports that it succeeded in reducing
the interest cost and raising equity through refinancing the debt. When best thinking of
recommendation, Bunning (a subsidised part) can position itself that can led to continuous
growth through strong levels of investments. Moreover, it should build strategic agenda that
can enhance the customer offerings. Wesfarmers should focus on strengthening the leadership
team by targeting the execution of transformational plan.
Conclusion
From the above discussion, it can be concluded that Wesfarmers will acquire the market as it
already enjoys a considerable good market share. Although, entry of Aldi has affected the
business of Woolworth and Coles. Nevertheless, Wesfarmers has been affected due to Aldi
technological attack that promoted innovation due to low business operation of Coles.
Moreover, Wesfarmers already operate in other business sectors, which has not affected its
market share and its profitability. The report analysed the external environment that affects
the business of Wesfarmers. Apart from this, it has also undertaken VRIO analysis to find
internal and external processes of the organisation. The report mainly focuses on competitor
and their analysis on the basis of technology, VRIO, and Porter`s five forces model. In a
concluding way, Wesfarmers will undoubtedly have a good standing among all the
competitors and Coles too by the support of collaboration Wes farmers.

References
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