Strategic Management in Coles Supermarket: A Comprehensive Analysis

This report offers a comprehensive strategic management analysis of Coles Supermarket, examining its market size and trends, financial and corporate performance, and competitive advantages. The analysis includes an evaluation of Porter's Five Forces and a SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats. The report delves into the characteristics of the general environment and their impact on Coles. It also investigates the company's core competencies, strategic options, and provides strategic recommendations for future growth. The analysis covers financial performance, corporate performance, and competitor analysis, offering a detailed understanding of Coles' position in the market. The report also explores the sources of competitive advantage, strategic competencies, and the types of competitive advantages gained by Coles. This report offers a detailed overview of the strategic position of Coles Supermarket.

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1STRATEGIC MANAGEMENT IN COLES SUPERMARKET
Executive Summary
The report analyses market size trends along with its financial and corporate performance and
focuses to critically analyse the characteristics of the general environment and the various
ways by which they affect the functioning of the Coles Supermarket. Five major forces are
discussed such as barriers to entry, power of buyers, power of suppliers, threat of substitute
products and the intensity of rivalry. A competitor analysis is done to know the future
objectives, current strategies, assumptions and capabilities of the supermarket Coles. The
sources of competitive advantage are discussed such as resources, capabilities and
competencies of the supermarket. The report analyses whether these competencies are
strategic or not by checking whether these strategies are valuable , rare, hard to imitate and
non-substitutable. The type of competitive advantage gained is discussed, whether they offer
no competitive advantages, whether temporary or sustainable advantages are gained by the
supermarket or whether competitive parity is achieved where standard or average results of
the firm are compared to others in the industry. Sustainable advantages are those which the
firm possesses which keep it ahead in competition. The report, at last, conducts a SWOT
analysis of the supermarket COLES by considering the strengths, weaknesses, opportunities
and threats of the firm. The strengths of Coles are its advantages over competitors,
weaknesses are the characteristics that put Coles at a disadvantage to others and opportunities
are elements that Coles can use to its disadvantage while threats are elements that trouble the
firm.

2STRATEGIC MANAGEMENT IN COLES SUPERMARKET
Table of Contents
INTRODUCTION......................................................................................................................3
FINANCIAL AND CORPORATE PERFORMANCE.............................................................5
Financial Performance analysis..............................................................................................5
Corporate performance analysis.............................................................................................8
SWOT AND COMPETITIVE ADVANTAGE.........................................................................9
STRATEGIC OPTIONS..........................................................................................................31
STRATEGIC RECOMMENDATIONS..................................................................................32
REFERENCES.........................................................................................................................33

3STRATEGIC MANAGEMENT IN COLES SUPERMARKET
INTRODUCTION
The report analyses five different forces affecting the market Coles is explained along with
strengths, weaknesses, opportunities and threats to the company by conducting an analysis of
Porter’s Five Forces and SWOT analysis of the company .The structure ,segmentation,
distribution channels, competitors and trends of the Coles supermarket .The concept of
internal environment of a firm is explained along with the concept of core competencies .The
report also focuses to critically evaluate four criteria which determine whether resources and
capabilities can be considered core competencies or not. This report tries to identify resources
and capabilities by value chain analysis .It discusses the use of outsourcing to understand the
above topics regarding Coles supermarket by explaining the concept of outsourcing in
relation to the given market of Australia. The competitive advantage gained by the market
using core competencies is explained and are evaluated to check whether these are
strategically important or not. The report focuses to do a situational analysis by considering
the market size trends of Coles, its financial and corporate performance and by evaluating the
results by giving strategic recommendations. (Ariyawardana & Collins, 2013).

4STRATEGIC MANAGEMENT IN COLES SUPERMARKET
MARKET SIZE AND TRENDS
Coles Supermarkets is Australia’s leading grocery store headquartered in Melbourne. It was
founded in 1914 in Collingwood, Melbourne by George Coles. As far as the market size of
Coles is concerned, it has over 807 supermarkets throughout Australia having over 1, 00,
000employees. (Martin, 2015). Among the different parts of the Coles Group ,there were
approximately more than 18 million customer transactions each week which gave the
company an overall earnings of around 24 billion dollars revenue from their supermarkets.
The market expansion of Coles is scattered all over Australia. Coles is the central
marketplaces from where suppliers distribute products as well as customers are able to
purchase products directly. This facilitates convenience to the purchasers. Coles
Supermarkets was a brand of Coles Myers Limited between 1986 and 2006 before
Wesfarmers purchased the market in 2007.In 2019, the share price of Coles Supermarket has
underperformed by 11 %. (Ariyawardana & Collins 2013). On a retail calendar basis, the
overall sales revenue increased by 2.6 % and reported comparable sales growth of 3 %.
(Lawley, Birch & Craig 2016). The main reason for its decline was from Coles Express or
Eureka Operations Pvt. Ltd. The trading got lowered as transactions were impacted by fall in
fuel and unfavourable weather.
Coles used Marketing trends like Down -Down and Cheap- Cheap pricing strategies to sell its
products. These included the lowering of prices of products to achieve more sales .The
supermarket is now planning to compete with its competitors by shifting away from low
prices to focus on other attributes such as sustainability, local production and communities.

5STRATEGIC MANAGEMENT IN COLES SUPERMARKET
FINANCIAL AND CORPORATE PERFORMANCE
Financial Performance analysis
Financial Performance is the extent to which financial objectives are being
accomplished by an organization .It is the process by which a firm’s policies and operations
are measured in terms of monetary objectives. It is used to measure a firm’s financial health
over a length of time. By using this parameter, performances of similar firms across the same
industry can be compared. This analysis can be done by giving Income Statement, Balance
Sheet and Cash Flow Statement of the Coles supermarket from 2018 to 2019.
The income statement of Coles supermarket shown below compares the profits earned by the
supermarket in 2018 and 2019. It can be seen that profit for the year 2018 (1578 million
dollars) is more than profit for the year 2019 (1435 million dollars), thus creating a profit
margin of 143 million dollars. This may be due to sales earnings and merchandise costs. By
increasing merchandise costs, the net profit margin is increased thereby increasing sales of
products .Taxation is an underrated variable that can affect the margin of profits.

6STRATEGIC MANAGEMENT IN COLES SUPERMARKET
Source : (Knox, 2015).
Source: (Perrone & Wodonga, 2015).
Source: (Sutton-Brady, Taylor &
Kamvounias, 2017).

7STRATEGIC MANAGEMENT IN COLES SUPERMARKET
Corporate performance analysis
Corporate performance is a combined assessment of the ability of a firm to implement
its most important factors such as shareholder, market and financial performance. An analysis
of corporate performance by a company is important for its strategic management .With
regard to the supermarket Coles; corporate performance analysis can be done in two ways:
 DIAGNOSIS – This aims to provide an understanding of how the supermarket
Coles works and explains the changes that have taken place in its past
performances.
 PLANNING – This aims to determine future courses of action to be taken by
Woolworths to ascertain its implications in improving performance. (Arup, Beaton-
Wells & Paul-Taylor 2017).

8STRATEGIC MANAGEMENT IN COLES SUPERMARKET
SWOT AND COMPETITIVE ADVANTAGE
What are characteristics of the General Environment, and how do they affect the
industry?
Characteristic Factors present in the
characteristic
How do the factors affect the
supermarket Coles?
Political/Legal Factors that affect political or
legal characteristics of General
Environment of Coles are
influence of organizations on the
government, competition and anti-
monopoly laws; taxation, labour
and employment laws,
deregulation and educational
philosophies and policies.
Due to these factors, a sudden
change occurs in existing political
regimes leading to civil unrest.
Entrepreneurs find it risky to invest
in Coles as it has no policies for IP
(Internet Protocol) protection.
Employment laws ensure health,
safety and well-being of employees
of Coles. It has started a
deregulation of retail trading hours.
This has led to online purchase of
products at any time of the day.
Economic Factors that affect economic
characteristics of General
Environment of Coles are
direction of economy, inflation
Due to these factors, the level of
spending has decreased .Customers
are switching to private label brands
and Coles is increasing its private

9STRATEGIC MANAGEMENT IN COLES SUPERMARKET
and interest rates, membership
with trade organizations, trade and
budget deficits and surpluses,
GDP &GNP as well as personal
and business saving rates.
market offerings. This enables Coles
to realize a high profit margin.
Provision of private labels enables
Coles to compete on the basis of
choice convenience by offering a
low cost alternative.
Demographic Factors affecting demographic
characteristics of General
environment of Coles are
population size, age structure,
geographic and income
distribution and ethnic mix.
Due to these factors, there is an
increase in the number of customers
in Coles. Supermarket traffic was
seen to consist of 16 to 24 year olds
in Melbourne and 25 to 35 year olds
were seen in Sydney.
Socio-cultural Factors affecting socio-cultural
characteristics of General
Environment of Coles are women
in the workforce diversity,
Due to these factors, considerable
consciousness is being implemented
by customers in purchasing products
such as organic and healthy food

10STRATEGIC MANAGEMENT IN COLES SUPERMARKET
attitudes about quality of work
life, concerns about the
environment and shifts in work
and career preferences.
alternatives. It will help Coles to
increase its sales as there are few
organic product markets in
Australia.
Global Factors affecting global
characteristics of General
Environment of Coles are new
global markets, existing changing
global markets, important
international political events as
well as critical cultural and
institutional characteristics of
global markets.
Due to these factors, Coles is able to
gain a larger audience for its
products, so that it can expand its
domain worldwide and reach to the
maximum number of customers.
Moreover, political events being
held will enhance the reach and help
in making Coles a renowned global
brand.
Technological Factors affecting technological Due to these factors, prices of

11STRATEGIC MANAGEMENT IN COLES SUPERMARKET
characteristics of General
Environment of Coles are
innovations in products, creation
of new knowledge and new
applications, focus on private and
government supported research
and development expenditures,
implementing internet technology
by introducing global e-commerce
and proposing new business
models.
products of Coles get disrupted. The
market has to continuously innovate
its products to be at par with its
competitors. This needs to be done
to consistently maximise profits, and
become a better market leader.