Mgt703 Strategy Governance And Ethics-The Assessment Answers

Answer:

The report is succinctly elucidates how Coles Supermarket has been practising its strategic management in different organisational aspects.  Strategic management is the unremitting planning, monitoring, evaluation and analysis of all that is essential for a company to reach to its organisational objectives and goals. As a matter of fact the basic needs for the strategic management frame work are to detect the prevalent setbacks of the company thus venturing into an innovative process with the help of virtual and intellectual devices so as to bring in accomplishment within it.

Coles Supermarket, Australia is a supermarket chain that is regulated by Wesfarmers. The organisation was founded in 1914 in Collingwood by George Coles. 776 supermarkets are being operated now by Coles in the entire country. They include re-branded BI-LO Supermarkets. Conceiving more than ten thousand employees in the entire business chain, Coles accounts for 80% or more of the entire Australian supermarket business.  

As a matter of fact, there has been a positive understanding pertaining to how the basic needs for the supermarket needs to be created to the entire business unit.  Apart from retail manual business, the company also facilitates the customers with online service provision. After the takeover by Wesfarmers in the year 2007, Coles Supermarket has reached to its upgraded version with the help of different operational changes and re-amendments in the company’s policies.  Acquiring 50 % of the interest from National Australia Bank Coles has dived into the country’s largest loyalty program FlyBus by giving it 100 % ownership.  With the help of its strategic slogan “nothing over 2/6” the organisation has been creating a positive marketing appeal to the customers.

 Current Growth Strategy of Cole Supermarket:

Growth strategy of the company aims at winning larger market share within a short- term earning period. In order to analyse the growth strategy of the company, processes like diversification, product development, market penetration and diversification has been taken into consideration. As per the statement of Bob Every, the former Chairperson of Wesfarmers, the company has properly positioned the diversified conglomerate that has been properly segmented as per the company need.

The objective has been to take advantage of the future growth of the market and the industry.   After a successful financial year in 2015 with effective net profit of AUD$ 2.4 billion, the financial support of the company has increased up to 3.8 %. With effective sales of AUD$ 7.6 billion in food and liquor in the financial year 2016, the company has moved a step ahead of Woolworths, its prime rival in the supermarket chain business. As a matter of fact, there has been a positive check in terms of getting the things done with effective market and business strategies.  In the oligopolistic competition, the company has strategized different marketing plans in terms of creating a business rush among the customers.

2.1 Diversification and Market Share:

As per the news report analysis of the Australian, it has been clearly understood that the basic change in the market has been done in order to remain competitive with Costco and Woolworths.  Pricing and availability of the products in the markets has been the main difference in terms of the diversification of the market.  So far the market share is concerned, Coles stands in a satisfactory position with AUD$ 20, 056 million half yearly revenue in the year 2016. The EBIT margin of the company has 4.6 %.  

More than 80 % of the revenue has been generated through its liquor sales.  The growth strategy in trms of its market share has been effective with the increase in the stock of the liquor products and the basic diversification lies in the fact that the company has proceeded with the fact of changing rather extending the stock of different products. As a matter of fact, there has been a clear indication of the company that it would further perform its business with the help of food products as well.  The result was vividly exposed as the revenue increased up to AUD$ 400 million thus having a comparable sales growth of 1.3 % in a single financial year.

Lean Retailing:

In order to put a step ahead of Woolworths, Coles Supermarket has put an extra effort with the help of lean retailing model. This model has helped the company enable the investment with efficiency by ensuring savings in all business aspects.  Lean retailing works on different procedures and models. These are: elimination of waste, minimization of inventory, maximization of flow and full product from the customers. In this aspect it can be stated that th basic need for the lean retailing is to fulfil the aforesaid principles.  The strategy through the lean retailing process are functioned with the help of efficient business foundation i.e. fixation of business basics; good prices, efficient and satisfactory service and best & fresh product delivery i.e. delivery on nucleus customer offer; creation of future with step- change store rejuvenation programs and customer prior team culture.  

The current business strategy of the company is to provide the customer value is to provide an effective business value with the help of its entre business ethics that has been understood with the help of its external business culture.  Empowerment of business portfolio has also been taken in to certain consideration in order to deliver the value towards the existing shareholders. Building a great retail team that would efficiently address to the greater number of customers, creation of suppliers’ team that would address to the entire performance of the suppliers- have been the major diversified changes in order to ensure core business performance.  The teams are responsible in creating business offers to both the customers and the suppliers. As a matter of fact the understanding level of the team has to be ensured with the help of its creation of values of the products in relation to the customer demand.  The following diagram clearly shows the business strategies of Coles Supermarket.

2.1.1 Business Model:

Coles is presently targeting on every market segment ranging from the lower socio-economic status to the higher income group. More families are buying their daily requirements from Coles. The purpose of Coles is to build up long-term sustainable association with the Australian customers.

The mainstay products are manufactured in Australia The organisation also manufactures the product range. This is to accomplish economy in a long run scale. The strategy of the company is useful to pull their customers towards them by offering endorsement of wide range of products. The main purpose of the company is to provide the customers with wide range product and to meet the demand of the customer the company also offers Indian and Chinese grocery. The trend of online purchase has also impacted upon the strategic sense of creating opportunity of the same. By providing Coles app to the customers the company has now put a step ahead to the business by reaching to the greater number of the customers. The company has also collaborated with the suppliers to provide goods at a very reasonable rate.

The distinctive business model by the company helps them to attain desired results. The value mechanism of the company has created abundant efficacies and improvement for the brand at different levels. Coles held a memorable position through many generations and it has developed into one of the two most popular supermarket chains and located throughout Australia. Also, online shopping option gives customers and absolutely favourable shopping experience. Unlikely Woolworth’s delivery charge which is usually at fixed rate, Coles delivery system provides customers cheaper rates at flexible delivery time. These factors together with Fly buys card system helps Coles attract more and more customers.

Last but not least thing is that the special Buys in which a wide range of products is on sale at different level even more than half their normal prices.

Coles operating 780 store overall in Australia for providing superior products and services. Coles always ready to offer best prices with offering weekly promotion, Fly buys rewards points.

As per the diagram, it can clearly be depicted that there has been a positive understanding of how the entire business method is processed with the help of the suppliers in the company. Value chain in this context depends on the infrastructure of the rim, human resource management, development of technology, procurement of resources. The aforesaid contexts are the support activities for a firm. On the other hand there are inbound activities as well that determines the core business performance of the company. These are inbound logistics, operations, outbound logistics, marketing and sales and service provision. In this aspect it can be stated that there is a clearly understood segment in terms of performing core business activity and the evaluation depends on how a company deals with each and every segment of the business. Performing each of the segments in the value chain is the prime objective of the company.

Logistics Distribution and Marketing in Value Performance:

There are differences define the individual retail formats of the company. As a matter of fact, there has been a clear understanding of the circumstances provided by the suppliers and affected by the customers. Selection of the distribution centres (DC) is one of the most important nodes that determine the strength of supply chain. The company performs its supply chain management with effective and stay-worthy warehouses, sustainable packaging system and bringing change in customer demand.

3.1 Need For Innovation:

Coles have had the luxury of being the principal and most profitable supermarkets within Australia, and in that timeframe, little has been modified for the betterment in supermarket shopping. Readymade meals have become the new weapon for Coles and Woolworths in their batter for supremacy over the Australian grocery market. Coles has already twofolded the size of its ready-made range of meals, improving the quality factor and lessening the prices by around 28 per cent, a strategy that would weaken Woolworths renewed push into the $600 million category of chilled meals (Ball et al. 2015).

The general manager of Coles meal solutions, Charlotte Rhodes was quick to indicate that the new range that takes in meals like pasta Bolognese, pumpkin soup and seafood chowder was generated for offering the poor families a nutritious alternative in cheaper budget to take-away food. The take-away market within Australia has been very strong but a bit expensive, so Coles has tried to bring the price down to a level to where the poor families can afford to taste their take-away meals.

The Australian chilled meals or readymade market is very under-developed as compared to the UK market, where the chilled meals sales have expanded by more than 50 per cent between the years 2007 and 2016, worth more than £2.7 billion a year. The immaturity that exists within the chilled-meals market of Australia reflects to the fact that the segment of take-away food was more popular with the Australians than to that of UK, with Australians being the better cook.

Moreover, another strategy that Coles tried to focus on is the fresh food segment for overtaking the present market. Coles is focusing on the product differentiation strategy in maintaining the competitive advantage. Low price has become one of the major weapons of Coles as they have understood the significance of such a factor for regular goods.

3.1.1 Analysis of External/Internal Environment:

The external and internal environment analysis can be stated as an approach in detecting the variables existing within the external and internal environment. An organization’s internal environment is obtained through various strategic capabilities of the organization (Price, Bailey and Pyman 2014). These variables are required to be detected in ensuring the strengths and weakness of the company.

PESTLE:

Political:

Coles along with Woolworths have been controlling the lion’s share and making the Australian market duopolistic in nature. The Federal government has been taking strict steps in controlling the duopoly nature of the market, lessening the barrier to entry and lowering the competition factor for the new players to operate and entry with relative ease. This would augment the customer’s bargaining power and help make them better purchase decisions.

Economic:

Australia’s economic downturn has made the country’s people price sensitive, spending much lesser amounts on shopping. Coles have been thriving hard in becoming customer friendly, manufacturing larger product range, decreasing the price to the lowest possible margins (Armstrong et al. 2014). Coles are using combination of several products for their customers to minimize the cost of shopping and buying the products at cheaper rates. Moreover, the bargaining power of the suppliers have been reduced, the market’s duopolistic nature forces them in lessening their power to bargain, with many suppliers wiped out for financial reasons.

Social:

Coles helps in improving the cancer care for the children and younger generation of people, joining hands with Redkite, raising around $ 10 million in helping develop the cancer care services.

Technological:

Direct online shopping is the way to go for Coles customers, augmenting their use of internet. Coles has also brought in hybrid cloud model in developing the cloud infrastructure with more than 40 per cent of the workload being shifted to cloud environment.

Legal:

The price war that is being witnessed between Woolworths and Coles has forced both the players in reducing their prices. However, they have tried in maintaining their profit margin amidst these lowering of prices, squeezing the suppliers owing to their decreased bargaining power.

Environmental:

Coles have been producing sustainable products in their transactions with the consumers. The company has been competent to join hands with different research analysts in their pursuance in using the sustainable and more eco-friendly commodities for their customers. Coles have been magnificent in decreasing the emissions of greenhouse, making its stores eco-friendly, reducing carbon blueprint in the process.  

SWOT:

Opportunities:

1. Scanning of New markets:

Big players in the retail segment like Coles have already positioned their researchers into actions in finding the seasoned grounds for expansion in some of the sectors that are emerging in nature like Asia. In places like such they have the opportunity of leveraging their sourcing and experts of the supply chain segment in tapping the markets.

1. b. Opportunity of growth in the market of national liquor:

Most of the liquor outlets in Australia are being controlled by Woolies along with Woolworths, with Wesfarmers taking control of the 20 per cent National Liquor market. Immense opportunities lie ahead of Coles in entering into the private level brands of liquor in capturing the market share (Sotgiu and Gielens 2015).

1. Private Level Approach:

Apart from selling groceries, Coles is thriving hard in making direct dollars from its customers by selling the goods of private level. As per the reports of IBIS, by 2018 the private level goods would be contributing around 33 per cent of the overall sales in the supermarkets, an augmentation of 150 per cent of what the figure stood at 2009.

1. Eco-friendly:

Its eco-friendly nature and approach would be attracting more customers towards them. People have stared preferring the organizations that uses measures in lessening the harmful effects in nature, Coles natural refrigerant use and recycling facilities are not new to customers.

Proposed Option: Disruptive Innovation

Coles’ Flybuys program has been the largest and the oldest form of customer allegiance schemes within Australia. This thing started in 1994, with in the present scenario Flybuys counting for 7.1 million active users. In this cut-throat competition, the Australian supermarket which is price driven, the treasure trove of loyalty data would be critical in Coles forming an edge over its rivals like Aldi and Woolworths (Le et al. 2016).

The Australian supermarket has long seen these price wars between these retailers, but with the simple use of data like filtering out immaterial offers and drilling down of specials would be appealing the customers, showing high effectiveness. The customer does not need to be physically present at stores to shop, with Flybuys- companies would send weekly emails containing lists of the items available on the local shop of the things most purchased by customers (Ball et al. 2015). The customer then does not need to go through everything; it is the company that helps them find the most relevant of things required by them. This database is helping Coles in edging past its rivals in the growing online space, which has been nominated as the biggest disruption in the industry. People have shown immense interest in this scheme and are making the most of it.

3.2 Coles Growth Options:

Cole would be expanding the amount of its products that are its own brand in driving growth, after Woolworths declaration in planning to match the prices of Aldi. Coles have come up with the idea of moving away from the discounted promotional pricing for stabling the ‘everyday pricing’ of its brands (Perrone and Wodonga 2015). Coles have planned in introducing as much of its own brands across the categories at ‘everyday pricing’, which the customers are willing to buy. Adding to that is its option of increasing the number of online stores, including the “Click and Collect” service. Apart from the focus on the online shopping. Coles main objective is to simplify and reduce the cost. In moving to the next phase, the company would continue in rolling out the Liquorland range alterations to more than 150 stores, investing in reducing the prices, especially through their exclusive range of brands (Greenland et al. 2016).

3.2.1 Ansoff Matrix:

The Ansoff model is being used in understanding the strategies within the market made use by organizations in attaining the capacity of market. For sustainability factors, Coles has been able to develop strategies to see off the strong competition in the market.

Mix of Products:

Coles is currently focusing on developing its own range of products. Coles would be availing more spaces on the shelves of its supermarket for more innovative brands building around the taste of the customers, like organic and low-GI food, augmenting the number and range of category reviews it demeanours every year. Coles have been working hard for the past five years in improving the quality of their private label products for delivering fantastic value to the customers every single time they come to shop (Shanbhag, Dutt and Bagwe 2016). The Coles brand of products have regularly outperformed the tests in the industry for the purpose of innovation and taste, being recognized with more than 400 awards on its products like ice cream and bread rolls. Their foods have been fresh and they have been working continuously with their suppliers in ensuring the quality gets improved and there is availability of fresh food for customers everytime they ask for it.

Geographical:

Coles have been trying to expand their operations in certain other countries, which would help them in earning the efficacy. Market expansion strategies would be of immense help for the company in attaining efficiency for employing the expansion strategies in different geographical locations. In the year it came up with capex program in unveiling the company’s plan in expanding and confirming the role of the retail segment as one of the important sources of growth in jobs. It planned in opening around 20 new supermarket stores each year having better facilities and equipments.

3.2.2 BCG Matrix:

Star:

It takes in the high growth in the business or products that are competing in the market where the company has competitive advantage as compared to its competitor. There is requirement of heavy investments in this area. Coles is in this stage as it along with Woolworths has been controlling the grocery market in Australia. Coles have started being innovative in its offerings and products and channelizing their distribution network.

Cash Cows:

It is the high profitability segment with low investment. This generally is the place where they have the highest market share in low growth markets. The excess cash tat is being generated is used to fund the stars for promotion.

Question Mark:

The business in this box is having low share in the market but existing in the high growth market segment, requiring high investments (Phillipov 2016). The Coles management needs to make some strategies on the liquor segment where it has scope to expand immensely.

Dogs:

Businesses or products having lower share in the market, which is generally unattractive. Business within this area might be able to generate profit in coming to the point of break-even.

3.2.3 Time Horizon

There lies enough opportunities for Coles to tap the untapped markets within the next 3 years, especially the Asian market. The supermarket giant needs to improve on its brand strategies in earning an competent marketplace.

Coles already focuses on low pricing strategy. But it needs to counter the growing popularity of German brand Aldi in Australia that offers products at cheaper rate. The company should develop an effective brand strategy through the process of cost leadership. It should not offer any scope or chance to other companies in gaining nay sort of market share.

In the coming 10 years the company needs to improve its market penetration through the strategy of product differentiation. It should bring in more of its original brands that are of fresh foods. People’s taste and preferences change which the company should keep track of through surveys and market study. It should also focus on bettering its online segment and availing for loyalty bonus schemes for its customers to avail.

Conclusion

It can be concluded that the main area of focus for Coles is its low pricing and high quality strategy. The company is looking for expansion in other untapped markets fr which it requires effective strategies and financial power. It should be able to counter the challenges of Woolworths and Aldi in Australian market to sustain.

It is highly recommended for Coles in developing both long-term and short-term strategies for augmenting their market status. Coles would be better served if they are able to focus on the strategy of diversification. It would facilitate the brand in improving on its efficiencies while expanding on its business. It should also focus on the quality of its foods and services. There is availability of various quality management tools, which the company should make, use of in the best possible manner to achieve the desired growth through Total Quality Management tools.

Reference

Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.

Ball, K., McNaughton, S.A., Le, H.N., Gold, L., Mhurchu, C.N., Abbott, G., Pollard, C. and Crawford, D., 2015. Influence of price discounts and skill-building strategies on purchase and consumption of healthy food and beverages: outcomes of the Supermarket Healthy Eating for Life randomized controlled trial. The American journal of clinical nutrition, 101(5), pp.1055-1064.

Cameron, A.J., Sayers, S.J., Sacks, G. and Thornton, L.E., 2017. Do the foods advertised in Australian supermarket catalogues reflect national dietary guidelines?. Health promotion international, 32(1), pp.113-121.

Greenland, S.J., Greenland, S.J., Johnson, L., Johnson, L., Seifi, S. and Seifi, S., 2016. Tobacco manufacturer brand strategy following plain packaging in Australia: implications for social responsibility and policy. Social Responsibility Journal, 12(2), pp.321-334.

Le, H.N., Gold, L., Abbott, G., Crawford, D., McNaughton, S.A., Mhurchu, C.N., Pollard, C. and Ball, K., 2016. Economic evaluation of price discounts and skill-building strategies on purchase and consumption of healthy food and beverages: The SHELf randomized controlled trial. Social Science & Medicine, 159, pp.83-91.

Perrone, A. and Wodonga, T.A.F.E., 2015. Centralian College: Creating a strategic marketing plan for long-term growth. Marketing, p.85.

Phillipov, M., 2016. ‘Helping Australia Grow’: supermarkets, television cooking shows, and the strategic manufacture of consumer trust. Agriculture and Human Values, 33(3), pp.587-596.

Price, R., Bailey, J. and Pyman, A., 2014. Varieties of collaboration: the case of an Australian retail union. The International Journal of Human Resource Management, 25(6), pp.748-761.

Shanbhag, M., Dutt, M.L. and Bagwe, S., 2016. Strategic Talent Management: A Conceptual Analysis of BCG Model. Imperial Journal of Interdisciplinary Research, 2(7).

Sotgiu, F. and Gielens, K., 2015. Suppliers Caught in Supermarket Price Wars: Victims or Victors? Insights from a Dutch Price War. Journal of Marketing Research, 52(6), pp.784-800.