MGMT19128: Strategy and Enterprise Analysis of Coles and Woolworths

This report presents a strategic analysis of Coles and Woolworths, two leading Australian retail companies. The analysis begins with an executive summary outlining the importance of strategy in gaining a competitive advantage. It then delves into the external environment, examining economic, global, political/legal, socio-cultural, demographic, and technological factors impacting both companies. An industry analysis is conducted using Porter's five forces model to assess competitive forces. The report also includes an internal analysis, incorporating a SWOT analysis to identify strengths, weaknesses, opportunities, and threats for each company. The conclusion summarizes the key findings, highlighting the competitive dynamics and strategic considerations within the Australian retail sector, and the importance of adapting to changing market conditions and customer preferences. The report utilizes academic sources to support its findings.

Running head: STRATEGY AND ENTERPRISE 0
Strategy and Enterprise
Student’s Details-
7/16/2019

STRATEGY AND ENTERPRISE 1
Executive Summary
A strategy is plays a vital role in the Enterprise. Strategies are the courses of actions
taken by companies to get competitive advantage and also survive in the market. There are
different model and techniques of building strategies which can benefit the companies in many
ways. It is very important for business as it provides direction, outlines and guidance of the
activities in order to achieve the objectives of the organization. The results of the strategies are
used for analyzing the position of the company and the results also depict the capabilities of the
company that it can use to beat competitors and overcome the negative aspects to get higher
profits in this report.

STRATEGY AND ENTERPRISE 2
Contents
Introduction......................................................................................................................................3
General Environment Analysis........................................................................................................3
Economic Factors.........................................................................................................................3
Global Factors..............................................................................................................................3
Political/Legal Factors.................................................................................................................4
Socio-cultural Factors..................................................................................................................4
Demographic Factors...................................................................................................................4
Technological Factors..................................................................................................................4
Industry Analysis.............................................................................................................................5
Bargaining Power of Buyers........................................................................................................5
Bargaining Power of Suppliers....................................................................................................5
Threat of New Entrants................................................................................................................5
Threat of Substitute Products.......................................................................................................5
Rivalry among existing firms.......................................................................................................6
Internal Analysis..............................................................................................................................6
Strength........................................................................................................................................6
Weakness.....................................................................................................................................7
Opportunity..................................................................................................................................7
Threats..........................................................................................................................................8
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

STRATEGY AND ENTERPRISE 3
Introduction
Coles and Woolworths are the leading retailing companies of Australia dealing in food
and general merchandise products. Both the companies are rivals of each other as they have same
product to offer. Both are aggressive competitors and have duopoly in the supermarkets industry.
The food and merchandise retailing sectors of both the companies have greatly contributed
towards the success of the Australia’s retailing industries (Knox, 2015). In the report, strategic
analysis is discussed for Coles and Woolworths. For that, external environment is analyzed for
both the companies along with economic, global, political, socio-cultural, demographic and
technological factors. The impact of these factors on the company is also discussed. Further,
Industry analysis is also made by using Porter’s five force model to analyze the competitive
forces that may affect the performance of the company. Further, internal analysis is made along
with SWOT analysis to use the strength and opportunities to overcome the threats and
weaknesses of both the companies.
General Environment Analysis
In general environment analysis, macro-environmental factors are analyzed to visualize
their impact on the company in order to make strategic plans to overcome the negative impact of
these factors on the company (Wang & Kang, 2017). However these micro-environmental
factors for Coles and Woolworths are discussed below:
Economic Factors
The economic factors for both companies are same as they are in the same country.
Exchange of currency, economic fluctuations in Australia and the rate of GDP growth affects the
retailing industry of both companies. The inflation rate of Australia 2.2% and is expected to
grow 2.3% in 2019 giving opportunities for the businesses to expand the business (Wang &
Kang, 2017). The unemployment rate is very low of Australia and hence the companies can
employ workforce at cheaper rates.
Global Factors
These factors define the contribution of the companies towards environmental protection.
The climatic changes and seasonal variations affect the transportation and the delivery of the

STRATEGY AND ENTERPRISE 4
final product. Woolworth actively makes contribution towards global issues and recycling
activities and has also decreased the carbon footprint and prevented natural resources like water.
Political/Legal Factors
These factors include the laws and regulations, taxation policies, recruitment regulations
and other policies of the government of Australia affect the retailing business of the companies.
The policies of the government are in favor of the business and also have negative impact on
both the companies. The policies like food licensing are mandatory to comply and the quality of
the food products both Coles and Woolworths are producing should be under the prescribed
guidelines.
Socio-cultural Factors
These factors include the attitudes and behavior of the people in Australia that affects the
companies. Socio-cultural factors include the customers and their cultural patterns that are
analyzed by both companies in order to examine their impact. Coles and Woolworth have taken
crucial steps in identifying the needs of customers in social context in order to sell the products
at low prices (Castano, Mendez, & Galindo, 2015).
Demographic Factors
These factors include age, gender, education and population of Australia that affects the
industry. These factors define the customers and their buying patterns. Coles and Woolworth
have same customers and both concentrate on understanding the diverse patterns of
demographics which is a challenge for the companies. Changes in the demographics affect the
customers which ultimately affects the productivity of the companies.
Technological Factors
Being up to date with the technology helps a company for taking a step against
competitors. The improvement and advancement in technology differs Coles from its
competitors. Service Oriented Architecture is incorporated by Woolworths to contribute towards
technology and has also made certain innovations like self-service checkout which have positive
and negative responses from the customers (Coeurderoy, Guilmot, & Vas, 2014).

STRATEGY AND ENTERPRISE 5
Industry Analysis
Industry Analysis is made to analyze the competitive forces in a particular industry and
their impact on that industry. For companies like Coles and Woolworth, Porter’s five force
model can be used which defines five micro-environment factors (Jurevicius, 2013). These are
discussed as below:
Bargaining Power of Buyers
Both Coles and Woolworths are in the retailing industry and they have variety of
products to offer their customers. Therefore customers have high bargaining power because of
the fact that buyers can get the products reduced prices due to stiff competition between retailers.
The strategies for both the companies are same to cope up with the situation. The companies
incorporate innovation their products and restructuring their products in order to bring down the
bargaining power of buyers (Dobbs, 2014).
Bargaining Power of Suppliers
The bargaining power of suppliers is moderate. There are a large number of suppliers in
the retailing industry which means that they have very less control over prices. Woolworths
maintain a respectful relationship with their suppliers on which their business is dependent.
Coles have different suppliers at different geographic locations and they attempt to make the
supply chain effective. However, for handling the bargaining power of supplies Coles and
Woolworths extend their contacts with the suppliers and purchase the raw materials at lower cost
so that they do not switch to other manufacturers.
Threat of New Entrants
Coles and Woolworths face challenges whenever new firms enter in retailing industry. It
persuades the companies to change the policies and product innovations in order to cope up with
the challenges and get competitive advantage. Both the companies take the benefit of economies
of scale as they give lower cost product to the customers without compromising with the quality.
Apart from this, the companies focus on producing differentiate products that makes them
different form competitors and also helps in getting competitive advantage (Wang & Xie, 2011).
Threat of Substitute Products
The company faces threat of substitute products if the new product offering value to the
customers. In case of Coles and Woolworths, there is lesser threat of substitute products. The

STRATEGY AND ENTERPRISE 6
products of both the companies are of regular consumption and therefore the customers are ready
to buy the product with little modifications. The companies make differentiate products by
ensuring that their product is unique in the market in order to attract the customers. Coles and
Woolworths also focus on maintaining the quality of the product at lower cost which creates
customer satisfaction (Chung, 2016).
Rivalry among existing firms
The numbers of competitors in retailing industries are very few for both Coles and
Woolworths. The companies have maintained a loyal customer base and have adopted multiple
strategies for customer engagement which differentiates them from other competitors and the
threat is considered to be moderate. The companies itself face stiff competition among each other
as they have same products and same customers to associate with. In order to fight with the
competitors, the companies either team up with them or make effective strategies to avoid
competition (Yetkin, 2014).
Internal Analysis
Internal Analysis of the companies means the analysis of the company’s resources and
capabilities which can use while doing business. In this, strength and weaknesses are analyzed to
identify opportunities and overcoming threats. This is considered as SWOT analysis. However,
SWOT analysis of both Coles and Woolworth are as below:
Strength
The strength of Coles is as below:
 Coles has good reach with the customers due to strong distribution network.
 Coles have innovative product which enables them to enter in new markets (Phadermrod,
Crowder, & Wills, 2019).
 Coles have qualified and professional workforce working under them.
The strengths of Woolworths are as follows:
 Woolworth has market leadership in Australian retailing market by holding 80% of the
market share.

STRATEGY AND ENTERPRISE 7
 The company maintains dedicated relationship with the customers and has good analytic
tools to track customers.
 Woolworth has strong brand name in the Australian market.
Weakness
The weakness of Coles is as below:
 The profit margins of the company as compared to compared to competitors like
Woolworth is low.
 Less investment in new technologies which can be an hindrance in fighting with the
challenges.
 Coles has poor financial planning which leads the company to face the circumstances of
lack of cash flows.
The weakness of Woolworths is as below:
 Supplier relations are affected due to the dominant position in the retailing industry for
the Woolworths.
 The company has poor demand forecasting capability which leads of shortage and
excessive inventory (Gurel & Tat, 2017).
 The company has a partial behavior as their products are mainly for higher income
people.
Opportunity
Coles has following opportunities:
 E-commerce has given an opportunity to Coles to open online stores and higher revenue
through this.
 The technological development has given enormous benefits to the company.
 Coles can sell their products in the emerging niche segments of the market and take
advantage.
Woolworth has following opportunities:
 Woolworths focus on in-store experience for the customers by giving personalized
services to them.

STRATEGY AND ENTERPRISE 8
 The company can use strategic acquisitions and mergers to grow in emerging economies.
 Woolworths can make their brand recognizable by promotion and advertising.
Threats
Threats of Coles are as follows:
 New technology of the competitor can be a threat for Coles.
 Changing of the taste and preferences of the customers can be a threat for the company as
it can fail to satisfy the customer’s needs.
 Increasing promotions by competitors is threat for Coles when the strategies for
competitors are successful.
Threats for Woolworths are as follows:
 Intervention of the government is a major threat for the company as it affects their growth
(Schooley, 2019).
 When there is a shortage of skilled workforce, it can hinder the profits of the company.
 The company faces threats of changing trends in the customer’s behavior which forces
the company to change product portfolio.
Conclusion
To conclude, it can be said that Coles and Woolworths are the growing retailing
companies of Australia and simultaneously face strong competition among each other. The
companies have strong brand image and have given a significant contribution towards the
success of retailing industry of Australia. The report discusses the general environmental factors
that affect both the companies. Further, Industry analysis is undertaken to analyze the
competitive forces existing within the industry and their potential impact upon the profitability of
both the companies. Further internal analysis is made to analyze the internal capabilities by using
of SWOT analysis which gives an overview of the strengths, weakness, opportunity and threats
that the companies have in order to stand in the market.
References

STRATEGY AND ENTERPRISE 9
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