BA313 Auditing: Coles Competitive Environment Analysis

This report provides an analysis of Coles' competitive environment, focusing on the challenges posed by new market entrants and changing consumer preferences. It examines the impact of economic trends, including global slowdowns and local factors like household consumption and taxation on the grocery industry. The report discusses Coles' strategies to address these challenges, such as imitating successful strategies of new players, and adapting to shifts in consumer purchasing behavior. It also explores industry-specific economic trends, including GDP, interest rates, financial market efficiency, and employment levels, and their influence on Coles' operations. The report references key market research and industry publications to support its findings.

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Coles
Competitive environment
When the new players enter into an industry it becomes difficult for the existing ones to
continue its regular business activities. However, a firm can remain unaffected of these new
entrants if it makes alterations in its operations and expands its business. The best technique
that can be used by the Coles in such a scenario can be to imitate the strategies of these new
players with a touch of little uniqueness. Big players in the grocery industry Coles,
Woolworths are suffering from similar contractions arising out of the entrance of new
players.
It is very rare that Coles and Woolworths have different pricing for the same product. Pricing
of product is same together with online shopping. Both the company offer the same rules for
delivery that is the delivery is free when the amount exceeds $100.
Changing tastes uptrend value chain arrangements
The supply chain arrangements of Coles are suffering largely due to the alterations in what
Australians are purchasing during the time of checkout (IBIS world, 2018). This is also why
the retailers are unable to plough higher profits in comparison to the producers that are
manufacturing foods that are better in quality and has a lot of health benefits. As the
Australians are more aware of what goes into making of a product and are well versed with
the health benefits of various products, therefore, they are less likely to purchase products
that are unhealthy and fattening. This is ultimately impacting the businesses of grocery
retailers (Morgan, 2018). Their sales are declining and as a result of which there profits too
are showing a downward trend. This indicates the need for the retailers to become extra cost
competitive and focus on increasing its sales.
Innovation is disrupting business models
Technological innovation brings about a revolution in an industry. It allows an organization
to not only transform the products its offers but also itself as well. It is important to analyse
the level of popularity of a new technology before implementing the same. Also, it must be
ensured that how rapidly such technology can impact the revenues of the rivals of an
organization (Morgan, 2018). Analysing these aspects of a new technology before its
implementation will allow an organization to evaluate the level of urgency that is needed so
as to match the technology or detect its better version or an alternative.
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General and industry-specific economic trends and conditions
The growth of Australia is bullied by the global slowdown and various other local factors.
The slowdown in the household consumption followed by the major reverse of dwelling
investment was the major cause. Food, as well as sales of liquor was subjected to high tax
that increased from 1.9% to $25.1 billion. In tune to this Coles remain behind Woolworths in
terms of the growth of sales.
Economic Factors that Impact Coles
Industry-specific economic trend pertains to the economy where Coles operates and
comprises of situations such as the rate of inflation, the rate of foreign exchange, the rate of
interest, the GDP and the present stage of the economic cycle. These are the factors that play
a major role in aggregate demand, investment and the climate of the business. Such factor has
a tendency to make the company profitable or incurs a loss to the company (Ketchell, 2017).
The industry-specific economic trends that impact the operations of Coles are as follows:
• The economic scenario in which the company is operating that is the operational sector
that may in the form of monopoly, oligopoly or perfect competition.
• The GDP of the country will ascertain the manner in which Coles is expected to grow.
Further, the rate of interest is an important consideration that will endorse and answer how
individuals are likely to borrow. The higher rate will lead to higher investments giving an
insight that Coles will have a favorable growth (Ketchell, 2017).
• The efficiency of the financial market will play a dominant role because it is as per the
scenario prevailing in the capital market that Coles will be able to raise capital. On the other
hand, the exchange rate of the country will influence the profitability of Coles. If Coles
engage in international trade then the currency stability will play a determining role. The
stability of the currency determines the step of the investors and hence the growth of the
company (IBIS world, 2018).
• The level of employment is another important factor that will help in knowing the supply
of jobs and demand. If the rate of unemployment is settled properly then there would be a
higher number of jobs and this will help in lower the cost of Coles.
The business of Coles is not cyclical in nature rather the business is regular. However, the
performance of the business is impacted by different conditions prevailing in the economy.
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References
IBIS world. (2018). Supermarkets and Grocery Stores - Australia Market Research Report.
Retrieved from https://www.ibisworld.com.au/industry-trends/market-researchreports/
retailtrade/food-retailing/supermarkets-grocery-stores.html
Ketchell, M. (2017). Company results: how competition is transforming Australia’s
retail sector. Retrieved from https://theconversation.com/company-results-how-
competition-is-transforming-australias-retail-sector-72844
Morgan, R. (2018). Woolworths and Aldi grow grocery market share in 2018. Retrieved
from http://www.roymorgan.com/findings/7936-australian-grocery-market-
december-2018-201904050426
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