Coles Group Limited Strategic Analysis: A Comprehensive Report

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STRATEGIC MANAGEMENT
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Table of Contents
Introduction......................................................................................................................................3
Location...........................................................................................................................................4
History of Coles Group Limited......................................................................................................4
Names of Businesses.......................................................................................................................5
Rationale..........................................................................................................................................6
Internal analysis of Coles Supermarket...........................................................................................6
External Analysis of Coles Supermarkets.......................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
Appendices....................................................................................................................................12
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Introduction
Strategic management involves the planning and implementation of strategies for attaining
significant goals and objectives of an organisation. The decision-making in strategic
management undertakes by the top management. Coles Group Limited is an Australia-based
public company engaged in the retailing industry.
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Coles Group Limited
Location
Coles Group Limited is an Australian retailing company having its headquarters at Hawthorn
East, Victoria, Australia. The company operates more than 2,500 retail outlets within the
boundaries of Australia.
History of Coles Group Limited
Coles established in 1914 when the first store was opened in Victoria by G. J. Coles. The
opening proved successful after which the stores were started transforming as self-service stores
in the mid-'50s. The company launched the first freestanding supermarket of Australia in 1960 at
the location of Balwyn, Victoria. Coles Myer Limited was developed in July 1985 when the
company acquired Myer Emporium Limited Group (Colesgroup, 2019). Coles adopted new
technologies by entering into online shopping industry in June 1999. In 2006, Myer got sold by
Coles while Wesfarmers entered into the contract of Coles Group Limited’s acquisition in 2007.
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Names of Businesses
Coles Group Limited operates nationwide with different businesses. The critical businesses of
Coles are as follows as per Appendix 1:
(Figure: Main Businesses of Coles Group Limited)
(Source: By Author, 2019)
Coles Supermarkets: Meat, dairy, bakery, fresh products, seafood, drinks, and fruits &
vegetables and so on.
Coles Express: Good quality Shell fuel, firewood, Shell oils and lubes, groceries, and
snacks and more (Bloomberg.com, 2019).
Spirit Hotels: Bars, gaming rooms, function venues, restaurants, and accommodation
venues.
Coles Online: Products related to Home entertainment, frozen eatables, household
products, baby, pet, drinks, dairy, school, meat, seafood, bakery, fruits & vegetables,
health & beauty, liquor, healthy living, and international food and so on.
Flybuys: The most famous and used loyalty program in Australia. It involves signing up,
a collection of flybuys points, and getting rewards after payment.
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ColesSupermarketColesLiquorColesFinancialservicesColesOnlineSpirithotelsFlybuysColesExpress

Coles Liquors: Brands such as First Choice Liquor, First Choice Liquor Market,
Liqourland, and Vintage Cellars (Colesgroup, 2019).
Coles Financial Services: Insurance, personal loans, prepaid cards, and credit cards
facilities.
Rationale
Coles Group Limited is a popular business in Australia and running as one of the leading retailer
companies in Australia. It considers as one of the largest food retailing companies of Australia
that owns more than 620 convenience stores and gas stations combined, 785 liquor stores, and
740 supermarkets nationally. Not only has this, but it is also competitive in online shopping as
well as the hotel industry with more than 90 hotels within Australia. Coles is actively dealing in
the Australian retailing sector, and it is very well aware of strategic management (Jie, Parton, &
Cox, 2013). The market position of Coles is inherent from the fact that it ranked the second
position in the grocery and supermarket industry in 2017-2018 with 30.3 percent.
Internal analysis of Coles Supermarket
Coles Supermarkets operates in consumer service, supermarket, and retail industry. The internal
analysis of Coles Supermarkets involves the identification of the strengths and weaknesses of the
company.
(Figure: SWOT Analysis of COLES Supermarkets)
(Source: By Author, 2019)
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WEAKNESSESTHREATSOPPORTUNITIESSTRENGTHS

Strengths of Coles Supermarkets
It considers as the second largest grocery and supermarket player in Australian retailing
industry.
This business successfully runs operations that are environmentally friendly and
sustainable. Coles Supermarket's concerns about effective corporate social responsibility.
Coles Supermarket controls a significant share of food and liquor market of Australia
since its long and strong history in Australia.
It adopts attractive pricing strategies involving promotional offers and frequent price cuts
timely. It offers cost-saving products and services that attract a vast customer base.
There are more than 740 supermarkets under Coles Supermarkets with approximately
10,000 employees all over Australia which provide easy accessibility to the customers
(Truong, 2017).
The company owns a strong brand image due to the availability of excellent brand
portfolio. Such brand portfolio helps the company in expanding into new markets with
effective strategies and competitive advantage of other markets.
Weaknesses of Coles Supermarkets
The company is dealing with persistent problems with the suppliers due to hard-line
negotiation with the suppliers of Australia.
There are low profitability ratio and net contribution percent which is below the industrial
average ratios. It is because the company maintains lower margins for providing cost-
saving products and services (Kizil et al., 2013).
Poor financial planning is evident from the company’s liquid and current asset ratios.
Opportunities for Coles Supermarkets
Expansion geographically can assist the company in reaching to a more significant
number of customers.
There are considerable opportunities in the finance and insurance sector as well as in
national liquor market for growth and expansion.
The company can use marketing tactics such as sponsorships as well as other marketing
exercises to boost the current business level (Kizil et al., 2013).
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Threats of Coles Supermarkets
Rapid enhancement in the competition in the food market compels the company to
operate on lower margins.
Lack of distinctive communication has developing confusions among the various generic
brands.
Other threats are changing habits of food spending by the Australian population, legal
and political regulations, and threats of new entrants in the same segments (Truong,
2017).
External Analysis of Coles Supermarkets
(Figure: PESTLE Analysis of Coles Supermarkets)
(Source: By Subrina, 2017)
Political factors: Launching of the Australian Competition and Consumer Commission
(ACCC) has caused high competition due to regular changes in policies. There are
changes in taxation policies, regulatory laws, and political environment.
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Economic factors: The food spending of the Australian population has been reduced
along with the drastic reduction in the bargaining power of suppliers (Pollard et al.,
2014).
Social factors: It involves issues of food security, assistance to children and young
people who have cancer, and growing awareness towards their health and well-being.
Technological factors: Deployment of smart systems, growing utilisation of internet and
computers, a facility for self-check Out, and cloud infrastructure are the technological
factors for Coles Supermarkets.
Environmental factors: Coles Supermarkets is providing sustainable products and uses
sustainable processes and materials for production. Various laws and regulations for
environmental protection and safety have been operating strictly (Lawrence, Richards, &
Lyons, 2013).
Legal factors: Actions by ACCC against Coles Supermarkets, strict adherence to the
mandatory codes, and different laws such as discrimination, health & safety, and data
protection and so on are significant legal factors.
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Conclusion
Coles Group Limited is a strong company that operates on a domestic level. It is highly
recommended to expand business overseas gradually for protecting the company from the threats
of globalisation. PESTLE and SWOT analysis conducted for scanning the internal and external
business environment of Coles.
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References
 Bloomberg.com, (2019). Company Overview of Coles Group Limited. Retrieved from:
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=262198.
[Accessed on: 12.04.2019]
 Coles group, (2019). About us. Retrieved from: https://www.colesgroup.com.au/about-
us/?page=about-us. [Accessed on: 12.04.2019]
 Jie, F., Parton, K. A., & Cox, R. J. (2013). Linking supply chain practices to competitive
advantage: An example from Australian agribusiness. British Food Journal, 115(7),
1003-1024.
 Kizil, C., Eddy, V., Clary, L., & Crowell, K. (2013). Hershey's Entry to the Australian
Market with a New Brand: An Accounting and Marketing Perspective.
 Lawrence, G., Richards, C., & Lyons, K. (2013). Food security in Australia in an era of
neoliberalism, productivism and climate change. Journal of Rural Studies, 29, 30-39.
 Pollard, C. M., Landrigan, T., Ellies, P., Kerr, D. A., Lester, M., & Goodchild, S. (2014).
Geographic factors as determinants of food security: a Western Australian food pricing
and quality study. Asia Pacific journal of clinical nutrition.
 Subrina, (2017). PESTLE Analysis with Mind Map Tools. Retrieved from:
http://www.mindmapsoft.com/pestle-analysis-mindmap/. [Accessed on: 12.04.2019]
 Truong, B., (2017). Strategic Analysis for Coles Supermarket Australia. Retrieved from:
https://kupdf.net/download/strategic-analysis-for-coles-supermarket-
australia_59e7cf8208bbc53a18e65389_pdf. [Accessed on: 12.04.2019]
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Appendices
Appendix 1: Main businesses of Coles Group Limited
(Figure: Main Businesses of Coles Group Limited)
(Source: By Author, 2019)
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ColesSupermarketColesLiquorColesFinancialservicesColesOnlineSpirithotelsFlybuysColesExpress