HI6006: Essay on Competitive Strategy of Coles (T1 2019)

This essay provides a comprehensive analysis of Coles' competitive strategy, a prominent Australian supermarket chain. It begins with an introduction to strategic development tools and their importance in understanding the business environment. The essay then applies the PESTLE analysis to assess the political, economic, social, technological, legal, and environmental factors impacting Coles. Following this, Porter's Five Forces model is utilized to evaluate the competitive forces within the retail industry, including the threat of new entrants, bargaining power of buyers, rivalry among competitors, and the threat of substitute products. The analysis further explores Porter's generic strategies, focusing on cost leadership and differentiation strategies employed by Coles. Additionally, the resource-based view is applied to examine Coles' unique store design and its ability to deliver fresh products. The essay concludes by summarizing the key findings and emphasizing the role of strategic tools in achieving organizational objectives.

Running Head: COLES 0
Competitive Strategy

COLES 1
Contents
Introduction................................................................................................................................3
Pestle strategic tool....................................................................................................................3
Porter’s five forces strategic tool...............................................................................................4
Porter’s generic strategy.............................................................................................................4
Resource based view of Coles....................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

COLES 2
Introduction
Strategic development tool plays a significant role in identifying the business environment. It
is also essential to devise the several strategies for the organization. Strategic planning means
framing the developing action plan and strategy in order to achieve the long term objective of
the enterprise. The essential element included in the process of strategic planning is the firm’s
mission, vision, and values in the internal as well as external environment (Rauter, Jonker
and Baumgartner, 2017). For ensuring the proper research, Coles, Australian supermarket has
been selected.
Pestle strategic tool
Pestle analysis is done for analysing as well as exploring the drives of changes in the strategic
environment of business. By taking the assistance of this tool, it becomes easy for the
organization to assess the current condition as well as the potential changes required.
Pestle strategic tool of Coles retail supermarket chain
 Political factors: the increasing government rules and policies against the duopolistic
market.
 Economic factors- as the number of retailers has increased substantially, bargaining
power of the suppliers as a result reduced speedily (Frost, 2013).
 Social factors: Coles effectively contributing its efforts to the cancer patients
including young individual as well as children. Besides this, Coles is also giving its best in
order to find out the several solutions related to the issue of food insecurity (Waldhuter,
2017).
 Technological factors: In recent time, customer mostly prefers to buy the food online
with the help of mobile apps or internet. Similarly, Coles have successfully used the relevant
technology by putting emphasis on facilities of self-checkout by using cloud infrastructure so
that customer gets the better experience.
 Legal factors: Coles has called for the several stringent codes. In addition to this,
Coles has also faced the several legal actions that are carried on Coles by ACCC (Knox,
2015).
 Environmental factors: This factor includes using the sustainable products in the
supermarkets. It also commits itself by ensuring corporate social responsibility.

COLES 3
Porter’s five forces strategic tool
It is known as competitive force model that states that five combination of the competitive
force determines the profit of any potential firm in respective industry. Every force puts the
pressure on industry that makes difficult for any organisation for achieve the competitive
advantage. Besides this, this model also assit the organization in assessing the level of control
that it made between the influencing forces as well as company throughout the whole process
of production.
Threat of new entrant- In Coles, the threat of new entrant is low. Therefore, the market
competitiveness of Coles can be affected due to the changes made by federal government or
ACCC law. It is also required by the new entrant to compete with the Coles marketing power
and economies of scale. It is also essential for them to make investment in infrastructure and
facilities.
Bargaining power of buyers- the bargaining power is high in retail supermarkets of Australia
sue to presence of several suppliers. It assists the entire customers in properly comparing the
quality as well as prices of all the industries. However, the buyers can also easily find out the
substitutes such as Woolworths if they do not get satisfaction.
Rivalry among the current competitors: In the retail industry of Australia, competition is
increasing at a higher phase. Due to this, organisation especially that is not able to possess the
sufficient capital can be easily moved out form the market. The biggest competitor of Coles is
Woolworths. Therefore, in the future, company can also face the competition from several
international retailing brands (Sims, 2016).
Threat of substitute product: Coles has high degree of threat of substitute goods and products.
Customers have various alternatives available in the Australian supermarket from IGS,
Woolworths, and pharmacies. Besides this, it is also seen that the presence of alternative
products in the industry is moderate to high. It is essential for Coles to ensure its dominant
position in the market by making use of information technology. It is used by Coles in order
to maintain the competitive advantage as well as retail its customers.

COLES 4
Porter’s generic strategy
Porter’s generic strategy includes the differentiation, focus and generic strategy. The focus
strategy is also divided into the two parts: differentiation and cost focus. Therefore, each
company is required to look at the whole market from their innovative perspective.
Cost leadership strategy
Companies are required to compete against one another depends on the value of their
commodity. It is also essential that the process meet the ability of customers to pay by
providing maximum profit to the company. Coles also stuck to the low price policy. It
currently lowered down the prices of its commodities such as cheese, sugar, and bread when
it suffered the deflation of around 0.8%. It helped in boosting the sales of Amazon. Company
has also introduced the “everyday low price” that offers the daily necessity products at low
prices as compare to its competitors (Richards and Devin, 2016).
Differentiation strategy
Through the unique business strategies by including the distributed customer base and cheap
prices, Coles easily manage to hold its position at the market for longer time duration. In
addition to this, by decreasing the customer’s cost while increasing their sales has assisted the
Coles to sustain its position in the market (Gupta, 2013).
Resource based view of Coles
Value- capability or resources of the Coles supermarket is its unique store design. The unique
and attractive design of store provides several opportunities to attract the customers in order
to avail the reduced pricing opportunity. In Australia, there are number of multinational
retailers among those Coles with the help of fresh food delivery and online store is able to
minimise the threats. Due to the backward integration with Wesfarmers, it is easy for the
Coles to provide the several vegetables item and raw fruits from the cooperative at low cost.
Rare- Coles has the ability to deliver the fresh products of customers. This aspect of Coles is
not only extended to the customers who are living out of the given edge. Out of this edge,
products can also lose their freshness and will no longer constitute the rare capability of
Coles. “Coles organic” is the innovative brand proposition through which it source the
farmed vegetables and meat to the customers. These organic products do not use the
fertilizers, chemicals, pesticides for the growing vegetable or crops. Such products are made

COLES 5
from the organically certified chemicals only. Moreover, these products are designed for
those customers who are health conscious.
For the Coles, inimitable aspect presents very rare as the business of Coles work as per its
competitors. The sustainable competency in business also comes from the value chain
whereby its distributors and suppliers integrated tactfully. It regularly provides the
competitive advantage to the organization (Grimmer, 2018).
The non-substitutability for Coles products in supermarket is quite low. In the retail
supermarket business, most of the players have made their own private category of brand that
can help it in gaining the market share (Mortimer and Grimmer, 2018). As vegetables items
as well as fresh food is mostly desired by customers of company, therefore other products
also seen. With the help of product development team, Coles tends to work toward the
creation of value for company products.
Conclusion
In the limelight of above discussion, it can be concluded that strategic tool plays an essential
role in achieving the objectives of the organization. By taking the assistance of such tools,
organization can also effectively plan their future practices and actions.

COLES 6
References
Frost, F.A. (2013) The use of strategic tools by small and medium‐sized enterprises: an
Australasian study. Strategic change, 12(1), pp.49-62.
Grimmer, L (2018) The diminished stakeholder: Examining the relationship between
suppliers and supermarkets in the Australian grocery industry. Journal of Consumer
Behaviour, 17(1), pp.e13-e20.
Gupta, A. (2013) Environment & PEST analysis: an approach to the external business
environment. International Journal of Modern Social Sciences, 2(1), pp.34-43.
Knox, M. (2015) Supermarket monsters: The price of Coles and Woolworths'
dominance (Vol. 6). Black Inc..
Mortimer, G. and Grimmer, L. (2018) Love them or loathe them, private label products are
taking over supermarket shelves. The Conversation, (19).
Rauter, R., Jonker, J. and Baumgartner, R.J. (2017) Going one's own way: drivers in
developing business models for sustainability. Journal of Cleaner Production, 140, pp.144-
154.
Richards, C. and Devin, B. (2016) Powerful supermarkets push the cost of food waste onto
suppliers, charities. The Conversation, (29).
Sims, R. (2016) Enhancing competition in retail [ONLINE] Available from:
https://www.accc.gov.au/speech/enhancing-competition-in-retail [Accessed 24/04/2019].
Waldhuter, L. (2017) What the changing food habits of Australians tell us [ONLINE]
Available from: https://www.abc.net.au/news/2017-04-05/australians-are-changing-their-
eating-habits/8415526 [Accessed 24/04/2019].