Risk Management Strategies and Analysis for Coles Retail Business

This report provides a comprehensive risk management analysis of Coles, a major Australian retail business. It begins with an introduction to the company and its current market position, followed by an examination of its organizational processes, including the roles of producers, wholesalers, retailers, and customers. The report identifies both internal and external stakeholders, emphasizing the significance of customers. A PESTLE analysis evaluates the political, economic, social, technological, legal, and environmental factors impacting Coles. The critical success factors and objectives, primarily focused on increasing market share and offering quality products at competitive prices, are outlined. The report then describes Coles' risk management activities, including the use of external consultants and technological advancements. A detailed analysis of major risks, particularly the price war with Woolworths and its impact on profits and shareholders, is presented. The report proposes strategies to mitigate these risks, such as implementing an economy pricing strategy and addressing shareholder concerns through new benefit plans. An action plan is provided, detailing risk probabilities, impacts, scores, and contingency measures. The report concludes by emphasizing the importance of leveraging Coles' market position and goodwill to manage competition effectively.

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Title: Risk Management
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Contents
Introduction................................................................................................................................1
Analysis of the Organization......................................................................................................2
Organizational Processes.......................................................................................................2
Internal & External Stakeholder Involved.............................................................................2
PESTLE..................................................................................................................................2
Critical Success Factor or Objectives....................................................................................3
Risk Management Activities..................................................................................................3
Analysis of Major Risks.............................................................................................................4
Treating the Risk........................................................................................................................5
Conclusion..................................................................................................................................6

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Introduction
The organization Coles is one of the most popular retail stores in Australia and
provides customers with a wide variety of products. The organization has been in action since
1914 and have spread its branches in over 807 locations. The company offers health products,
food products, business products, and household products to the customers. In recent, years
the competition in the market has intensified which has forced the organization to drop its
prices to attract more customers. This strategy of the organization has created a few risks for
the organization.
Analysis of the Organization
Organizational Processes
The organizational process of Coles can be broken down into four layers, which are a
producer, wholesaler, retailer, and customers. But, with the expansion of the organization
Coles have also taken the role of a producer and a retailer over the years. Though this has
helped the organization in attaining more success, the risk factor has also increased.
Internal & External Stakeholder Involved
Internal – The employees and the management team at Coles are well trained and have the
main focus of fulfilling the organization’s objectives.
External – The main external stakeholder of Coles, who directly or indirectly governs the
functioning of the organization is the customers.
PESTLE
Political The formation of the Australian
Competition and Consumer Commission
has intensified the competition in the

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market.
Economic There is a huge price war that is taking
place in the market.
Social The increasing awareness and consciousness
towards health and living a healthy life.
Technological Coles utilize the fastest technology, to
monitor their stocks and also to evaluate the
changes in the customer’s preferences.
Legal The new addition to the tax policies can
affect the organization’s processes.
Environmental The companies have to follow the different
environmental regulation to fulfill their
CSR.
Critical Success Factor or Objectives
The main objective of the organization to increase their market share and offer the
customers with the best quality product at reasonable prices. This has been the critical
success factor of the organization.
Risk Management Activities
For managing the risk in the organization, Coles has appointed BJL consultancy for
managing risks and monitoring the different operations of the organization. In addition to
this, the organization has an effective supply change management and utilizes the new
technological advancements for their benefits. Also, Coles believe in building a transparent
structure for which stakeholders and all the other crucial entities are informed about all the
strategies and operation of the organization. Coles also regularly conducts meeting along with
the BJL consultancy and also the different shareholders and stakeholders of the organization

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for discussing the different emerging issues in the organization. The consultancy firm
educates the various stakeholders about the problems and provides with an efficient solution.
Analysis of Major Risks
The major risk which Coles is facing is the price war with Woolworths. In an attempt,
to extract more customers both the organization has slashed their prices and due to this, they
have cut down their profits by a great margin. The other risk that has emerged due to this, is
the loss which the shareholders of the organization are facing due to reduced prices. The
down down campaign by Coles was in an attempt to attract more customers, but this further
reduced their profit margin. Due to this campaign, the consequences of this risk can be rated
as very high.

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There are two risks
 Loss of Profits – it is a major risk with a very high possibility of adverse effects on the
organization.
 Loss of shareholders – This risk is moderate and but the likelihood of it very high.
Treating the Risk
For the organization Coles, it is crucial to reduce the impact of this campaign and the two
major risks that the organization was almost facing. Therefore, immediate measures have to
be taken –
 The organization has required a new pricing strategy that provides Coles with the
opportunity to attain appropriate profits and also successfully retain the customers.
For this, it is crucial that the organization implements economy pricing strategy. This
will reduce the cost of marketing, which will help in attaining funds for the
organization. Also, Coles will be able to retain the customers in the organization.
 The organization has to address the need of the shareholders and stakeholders. In this
initiative, it is crucial that the organization builds a new plan for them and provide
extra benefits, which will compensate with the losses the shareholders have suffered.
 It is crucial that the risk management plan should be conveyed to the internal and
external shareholders involved in the organization. The action plan should be
presented in front of them and the necessary instructions made by the various
shareholders should be taken into consideration. The meeting with the shareholders
should be conducted regularly, during the tenure of the risk management plan.
Action Plan
Risk Probabili Impa Risk scoreContingen Actio Resources By Status

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name ty (a) ct (b) (a) * (b)cy n by whe
n
Loss of
profits
Very high
- 5
Very
high -
5
25 Increase in
losses
20th
Marc
h
2019
A new
pricing
strategy
and better
discounts
from the
wholesaler
s and
producers
20th
July
201
9
Very
High
Loss of
sharehold
ers
Moderate
- 3
High
- 4
12 Loss of
prominent
shareholde
rs &
stakeholde
rs
20th
Marc
h
2019
A new plan
that offers
benefits to
the
shareholder
s as a
compensati
on
20th
June
201
9
Modera
te
Conclusion
Thus, this can be concluded that with an approach to attract the customers, the
organization Coles, which has a prominent share in the market, implemented strategies under
the pressure of emerging competitors that led to high risks. Thus, Coles should utilize the
power of their position in the market and also use their goodwill to build strategies that help
in managing the competitors.

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