Strategic Management Report: Coles in the Australian Retail Industry

This report provides a strategic analysis of Coles, an Australian supermarket chain, within the competitive retail industry. It examines the macro-environmental factors, industry dynamics using Porter's Five Forces, and Coles' internal resources and capabilities through a VRIO analysis. The report identifies challenges such as negative publicity, competitive rivalry with Woolworths, and evolving customer demands. It further explores Coles' cost leadership and differentiation strategies, offering recommendations for improved efficiency, market research, and customer engagement. The analysis concludes with the importance of strategic planning and continuous improvement for Coles to maintain its market position and generate value.

Running head: STRATEGIC MANAGEMENT
Strategic management of Coles
Name of the student:
Name of the university:
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Executive summary
In the present age of competition, strategic management is needed for carrying out the
activities according to the goals and objectives. Lack of awareness about the generic
differences of the products aggravates the competitive rivalry between brands ruling in the
Australian market. This is a broad aspect; therefore the assignment focuses on the retail
industry. Competitive rivalry between Coles and Woolworths has been taken as an example
for shedding light on their strategic management towards achieving customer satisfaction.
VRIO framework proves apt in terms of excavating technological contribution towards
fulfilling the needs, demands and requirements of the clients. Recommendation of store
development is appropriate in terms of assisting the customers, who lack trust in online
shopping. This approach is an initiative towards expanding the scope and arena for
penetrating into the foreign markets.

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Table of contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Macro-environmental analysis...............................................................................................3
Industry analysis.........................................................................................................................4
Porter’s five forces.................................................................................................................4
Life cycle stage of the retail industry.........................................................................................6
Company analysis......................................................................................................................6
Cole’s resources and capabilities...........................................................................................6
VRIO analysis........................................................................................................................7
Competitor analysis....................................................................................................................8
Strategic analysis........................................................................................................................9
Recommendations......................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
Bibliography.............................................................................................................................12

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Introduction
Coles is a public company, operating under retail industry. Negative publicity
provides competitor brands like Woolworths with the opportunity to enjoy competitive
advantage. Hostile relation with the suppliers regarding hard line negotiation has adversely
affected the public sentiments of the Coles personnel. Operating on lower margin is a
challenge in terms of increasing the sales revenue for the food products (Coles.com.au 2018).
Communication gaps through improper advertising confuse the customers regarding the
brand image. As a result of this, some portion of the buyers might prefer the products offered
by local retailers, which degrades the position of Coles. Apart from this, ever changing needs,
demands and requirements of the clients along with innovation dwindles the position of Coles
in the Australian market. This discussion attempts to address these issues.
Discussion
Macro-environmental analysis
Political  Political instabilities
Economic  Low profit margin
 Easy switching costs
Social  Consciousness towards health and
wellbeing
 Farms and niche market
Technological  Social media marketing
Legal  Consumer Protection Act
Environmental  Reduction of carbon footprint

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 Greener marketing
Political unrests aggravate the complexities for Coles in terms of conducting the
import and export activities. This deprives the customers from getting branded products.
Along with this, harsh tax obligations turn the professional relationships into a hostile one.
Low profit margins results in customer turnover. Along with this, negative publicity for the
products degrades the relationship with the suppliers (Hill, Jones. and Schilling 2014). This
degradation stalls the productivity. This is a challenge in terms of fulfilling the altering needs,
demands and requirements of the clients and the customers. Within this, if social media
marketing is adopted, it indicates increase of the trafficking of the audience towards the brand
image. Uploading the image of the products on the website and social networking site is
productive in terms of enhancing the awareness towards the current trends.
Adherence to Consumer Protection Act is beneficial for Coles in terms of preserving
the privacy and security of the customers. According to the protocols of the act, the personnel
are to maintain ethical codes of conduct in advertising the marketing strategies. Within this,
Wheelen et al. (2017) proposes that environmental directives are crucial in terms of
preserving the ecological diversity. This is in terms of preventing aggravation of pollution.
This is conducted through the adoption of farm and niche marketing, where natural
ingredients are used for the production of the food products. Along with this, reduction of
carbon footprints is also one of the good practices of Coles towards preserving the ecological
biodiversity.

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Industry analysis
Porter’s five forces
Threat of substitutes
Threat of substitutes is high for Coles due to the emergence of convenience stores,
grocery stores and farmer markets. These stores pose as a threat for Coles in their business
operations (Coles.com.au 2018). These alternatives provide the customers and the clients
with easy opportunity to switch brands.
Competitive rivalry
Coles faces intense competition from brands like Aldi, IGA and Woolworths. Lack of
perceivable differentiation disrupts the balance between the brands in the competitive
ambience of the market. Price is the main factor for competition, however, choice of the
products and store location also influences competition. GPRS in the remote areas provides
Woolworths with more competitive advantage than Coles (Coles.com.au 2018).
Bargaining power of the suppliers
Bargaining power of the suppliers is low in case of Coles. The suppliers have limited
power in case of selecting the intermediaries. Coles or Woolworths is the sole purchaser.
Mention can be made of the brands like Kelloggs or Nestle, which do not interfere into the
business of retail. For example, The Australian Competition and Consumer Commission has
increased the competition barriers for the industry, which provides Coles with the opportunity
to reform their strategies and secure the market share (Coles.com.au 2018).
Bargaining power of the buyers
Currently, buying power of the buyers is low for Coles. Federal government and
ACCC intervene to push the competitive barriers, adding to the competitors. This allows the

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customers to select their favoured brand. Uploading the images on the social media and the
websites offers the clients and the customers with the opportunity to bargain (Morschett,
Schramm-Klein and Zentes 2015).
Threat of new entrants
Threat of new entrants is also low. Lease agreements and loans have increased the
number of grocery store sites. Overseas brands have expanded the scope and arena of the
industry. Social media marketing has enabled Coles to increase the trafficking of the audience
towards the brand image. Location enabled sites proves advantageous for Coles to attain
competitive advantage (Coles.com.au 2018).
Life cycle stage of the retail industry
Retail or supermarket industry can be ranked as moderate to high for Coles. The
major drive behind this is the monopolistic nature of the market, which provides it the
opportunity to rule the market. High barriers to entry and weak bargaining power of the
suppliers provide opportunity to Coles to rein the Australian market. These aspects points out
a high profitability for Coles. According to the challenges, Coles is on the post maturity
stage. In the maturity phase, the Coles emerged successful in accumulating 80% of the
market shares in the industry (Coles.com.au 2018). Widespread presence has added to the
competitive advantages, securing the position within the market.
Currently, there is a decline in the sales revenue and profit margins, stalling the
productivity. These issues have resulted in the switching brands, creating a downmarket
scenario. However, planning for convenience style stores, acts as an opportunity in terms of
attracting more customers towards the brand image (Morden 2016).

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Company analysis
Cole’s resources and capabilities
Wide supply chain network is both a resource and capability for Coles. This is
because of the inbound and outbound logistics. Usage of efficient technologies by the
suppliers helps in maintaining the balance in cost savings. Offshore management helps the
personnel in strengthening the stability in the professional relationship. Cost saving benefits
is irreplaceable by any other resource, unless and until skilled and efficient workers are hired.
Negative publicity aggravates the complexities in the supply chain network, indicative of
hostile relationships. This negativity contradicts the food quality. As per the opinions of
Engert, Rauter and Baumgartner (2016), consideration of the consumer experiences reflects
the effectiveness of the procedures through which quality is assessed. This approach projects
the initiatives towards maintaining the smooth functioning of the network.
Advertisements like Super Saver Weeks, Happy Hours add value to the brand image.
These advertising campaigns enhance the buying power of the customers. This is mainly due
to the effective management, which strives to enhance the efficiency in the business
operations of Coles. Strategic management helps in regulating recessionary pressures and
inflations. Effective coordination with the top level managers is assistance in terms of
maintaining the pace with the current trends of competitive brands like IGA (Coles.com.au
2018).
VRIO analysis
Value
Using latest technologies helps Coles in conducting the in-bound logistics programs.
These technologies are assistance in terms of quality procurement for the food items.
Transportation services widen the scope and arena of Coles in terms of distribution. This

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service prevents workers strike, reducing the delays in shipments of the orders (Trigeorgis
and Reuer 2017).
Rarity
Quality assessments and inventory management enhance the convenience of the
customers. These activities are rare, providing Coles with the opportunity to attract more
customers. For example, Sophisticated Point of Sales help the personnel to keep a track of
number of stocks, stock units sold, and re-dispatch of the order once it falls beneath the
stipulated level (Stead and Stead 2014).
Imitability
Coles imitates Woolworths in terms of in-store promotions, which boosts the sales.
Sales catalogues are distributed among the customers to inform them about the discounts and
offers. These activities are done after thorough research of the marketing strategies of
Woolworths, Audi and IGA (Coles.com.au 2018).
Organization
Divisional organizational structure helps Coles in enhancing the efficiency in the
business activities. Effective communication between the management levels results in
development of strategies, which are circulated in the departmental units. The personnel act
according to the plans, which maintain the balance in the business operations. Audits help in
evaluating the effectiveness, appropriateness and feasibility of the plans (Coles.com.au 2018).
Competitor analysis
Australian retail industry is filled with 140,000 stores, which aggravates the
competition for attracting the customers. Lack of understanding towards the generic
difference of the goods intensifies the degree of competition. Woolworths is one of the

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immediate competitors for Coles. Widespread presence along with salary hikes and
development of new stores enabled Woolworths to become one of Australia’s leading
gambling business. Competition between Coles and Woolworths is consistent with little
difference in the prices of the products. Focus on quality helped Coles to overpower
Woolworths (Coles.com.au 2018).
Mention can be made of downmarket scenario for Coles in terms of price, which
enabled Woolworths to sell goods at a cheaper rate. In terms of establishing stores, the
competitive rivalry between Coles and Woolworths is less. Both carry out demographic
analysis before developing any new store (Coles.com.au 2018).
Strategic analysis
Cost leadership and differentiation are the two main strategies, which Coles adopt for
marketing. Advertisements clarify the doubts of the customers regarding the price of the
products. Through cost leadership, Coles generates value for the products, which offers
quality products to the customers at low prices. Scaling the approach of the clients helps in
maintaining the balance between the activities. Within this, market segmentation occupies an
important position (Apenko 2017). For example, campaigning is done in offices, where the
working mothers are interviewed for bringing innovation in the baby products.
Recommendations
If meetings are arranged between the top and middle level managers, strategies can be
developed for enhancing the efficiency in the business operations. Market research would be
effective for gaining an insight into the current trends adopted by the competitors. Street
campaigns would be fruitful for gaining feedbacks from the clients and the customers. Social
media marketing would help in increasing the trafficking of the audience towards the brand

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image. Offshore management needs to be secured with security policies for maintaining the
confidentiality of the organizational data.
Conclusion
Coles is one of the retail companies in Australian market along with Woolworths,
Aldi and IGA. Currently, the sales revenue and profit margin is experiencing downmarket
scenario. Strategic planning is the need of the hour, which would help in maintaining the pace
with the competitors. Within this, market research would be fruitful for analysing the tactics
of the competitors. Considering the viewpoints of the clients would be helpful for upgrading
the standards and quality of the operations. Audits and quality analysis is needed in terms of
securing the market position and generating value for the business.

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References
Apenko, S., 2017. Human resource management of innovative projects in the context of
business strategy. Strategic Management, 22(1), pp.3-6.
Coles.com.au 2018. About us. [online] Available at: https://www.coles.com.au/
Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate
sustainability into strategic management: a literature review. Journal of cleaner
production, 112, pp.2833-2850.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
Morden, T., 2016. Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international
management (pp. 978-3658078836). Springer.
Stead, J.G. and Stead, W.E., 2014. Sustainable strategic management. Routledge.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy. pearson.