Strategic Management Assignment: Case Analysis Of Coles

Question

Task:
Write a strategic management assignment critically presenting a strategic analysis on Coles Group.

Answer

Executive Summary
The following strategic management assignment provides strategic analysis on Coles group. The report outlines two internal and external factors that affected the company’s strategic aspect and environment and also explains the major challenges the company faces in due course. Based on such a proposed remedies i.e. recommendations are drawn that can help the company to overcome the challenges that the company is facing.

Introduction
Strategy is the most important aspect that helps to make the business sustainable and deliver the results that helps to grow and expand the organizations in future. To cope up with the changing landscape of the market and customer’s needs companies adopted various forms of strategies(Campbell, Edgar and Stonehouse, 2011). The following report is based on the largest supermarket chain that has global business footing called Coles.

Company Background:
Coles Group has more than 2,900 stores. The company’s Group operations cover a wide range of Australian markets, the New Zealand commercial sector and online sales. The company has with more than 2,440 stores across Australia and employs more than 118,000 people in all its shopping malls, hotels supermarkets, and liquor stores and provides online sales as well as financial services (Coles Group, 2021).

Internal factors impacting Coles:
Tangible factors
Coles has been extremely successful in generating significant returns on capital expenditure by developing new projects and creating new revenue streams. The company has a strong cash flow that provides the company with the resources to expand into new projects (Coles Annual report, 2020).The company has a successful record of merging agreed companies with mergers and acquisitions. Over the years many technological companies have been successfully integrated to simplify Cole’s operations and create a reliable and resilient supply chain (AKDOGAN and KALE, 2017). The company has invested to build a strong portfolio of its product for several years. This product portfolio is very useful even when the company expanded into new product categories. The company has developed innovative technologies to gain success in new markets (Glennie and Lodhia, 2013). The company has a very successful in Go-To-Market strategies for its products (Fern Fort University, 2016).

The company’s product marketing is need variety of rooms that need to be improved. While the company’s product is increasingly successful in terms of sales, the design and promotion is not well defined which can lead to increase competitive unsustainability (Fern Fort University, 2016). The company has a long inventory process period which increasing the amount of money the company invest and such can affect Coles it’s the long-term development. The investment is not aligned with company’s vision. The financial resources of the company are not properly utilized (Galende and de la Fuente, 2015). The current usage of fixed and liquid assets and other various resource usages indicate that the company can use more efficiently than at present. The company’s profit margins and percentage of total contribution (net) are below the sector average (Coles Annual report, 2020).

Intangible factors:
The company is very dedicated to the customer relationship and achieved customer satisfaction very highly among existing customers and successfully developed good brand equity as well(Chen and Mohamed, 2018). The company has created a culture among its supply chain network where the retailers assigned to promote the products. The company also provides necessary investment to train the sales team to explain to the customers how to get maximum profit from the products (Coles Annual report, 2020).

The company has failed to mitigate new entrantsthreat and loses various niche category markets. To address these challenges, Coles should develop an internal response strategy directly to the sales team (Galende and de la Fuente, 2015).The company is the 2nd largest in its industry, but it faces issues to move in other segments with the current culture and strategy that company implies.(Fern Fort Universit, 2016).

External factors impacting Coles:
Political Factors: The company along with its biggest competitor Woolworths has a duopolistic shareholding in Australian market. In this regard, they have raised legal issues several times by some government institutions, including the ACCC. Coles is accused of strangulation make their suppliers competitivewith intent to maintain competitive edge and outperform itscompetitors. The political parties used such issues in their election campaigns which cause problems for other supermarket companies in the future (McKinna, 2019). A recent government regulation that forced companies’ worth over $100 million will considered as modern slavery in supply chain and mustbe reported accordingly. Such regulations causes threats for Coles. The law has prompted company’s shareholders to change the labour and procurement policies.

Economic Factors: The company currently holds the market share of around 34% in Australian supermarkets and is considered a low growth, yet stable and mature business. The company’s threat may be due to Aldi, a German based low cost offering supermarket chain that is steadily expanding its market footprint across Australia. The German company focuses exclusively on independent labels that help to maintain high margin with low costs. Such puts a lot of pressure on Coles to maintain its competitive edge (Osegowitsch and McCabe, 2018). Any attempt by Coles that can increase its market share can face immediate action from its competitors, which is why the company has decided to focus on maintaining the market share they currently possess.

Major challenges faced by Coles:

1. The company faces a variety of market complaints - different regulations regarding productivity levels and persistent instability in those markets.
2. The shortage of skilled workers in other global markets threatens the steady increase in Coles' profits in those markets. The increase of wage, around $ 15 per hour and rising global prices, even in countries in Asia, and Africa put a lot of pressure on Coles. The company’s profits is also at risk due to an increase in raw materials.
3. Profit stability in the industryin last two years have increased the number of players in the industry, thus increasing the pressure not only on profits but also on sales for the company(Fern Fort University, 2016).

Proposed approach to overcome the issues:
Based on the analysis the following recommendations are provided that can help Coles to overcome its current challenges:

1. The company must consider adopting cost leadership strategy that helps to maintain a competitive pricing so the company can overcome challenges that poses by competitors like Aldi.
2. Major focuses on providing organic and eco-friendly products can attract customers more. The company must focus on expanding to other product segment as well(Pinto et al., 2017).
3. The company’s promotional strategy is weak. The company must focus to promote product on digital platform. The company must increase its presence in social media and interact more with customers (Pinto et al., 2017). Promoting products and offers in social media platforms deliver a efficient yet beneficial approach for Coles.
4. The company must adopt a lean management process and Just-In- Time (JIT) approach for inventory to minimises the turn-around-time (TAT) for Coles.
5. The company also needs to adopt a contemporary product and marketing mix that can serve based on the market the company focused. While operating in a global scale such product and marketing mixes can proves more successful because of its unique and specific design.

Conclusion:
Base on the above analysis on strategic management assignment, Coles must focus on making major changes that can help the company to overcome the issues the company is currently facing.

Reference list
Akdogan, A. And Kale, E. (2017) “Impacts Of Internal Factors In Organisations On Creative And Innovative Performance In Hospitality Companies,” International Journal Of Innovation Management, 21(06), P. 1750049. Doi: 10.1142/S1363919617500499.

Campbell, D., Edgar, D. and Stonehouse, G. (2011) Business Strategy: An Introduction, Google Books. Macmillan International Higher Education. Available at: https://books.google.co.in/books?hl=en&lr=&id=LqUcBQAAQBAJ&oi=fnd&pg=PR12&dq=business+strategy+definition&ots= 09fazG9L9J&sig=vYcTL83zMIbwk40I4Shd4hLLn88 (Accessed: August 18, 2021).

Chen, L. and Mohamed, S. (2018) “Impact of the internal business environment on knowledge management within construction organisations,” Construction Innovation, 8(1), pp. 61–81.doi: 10.1108/14714170810846521.

Coles Annual report (2020) 2020 ANNUAL REPORT - Coles Group. Available at: https://www.colesgroup.com.au/DownloadFile.axd?file=/Report/ComNews/20200924/02284766.pdf (Accessed: August 18, 2021).

Coles Group (2021) About us | Coles Group, www.colesgroup.com.au. Strategic management assignment Available at: https://www.colesgroup.com.au/about-us/?page=about-us#:~:text=Coles%20is%20a%20leading%20Australian (Accessed: August 18, 2021).

Fern Fort University (2016) Coles SWOT Analysis Matrix [step by step] Weighted SWOT, Fern Fort University. Available at: http://fernfortuniversity.com/term-papers/swot/1433/1248-coles.php (Accessed: August 18, 2021).

Galende, J. and de la Fuente, J. M. (2015) “Internal factors determining a firm’s innovative behaviour,” Research Policy, 32(5), pp. 715–736. doi: 10.1016/s0048-7333(02)00082-3.

Glennie, M. and Lodhia, S. (2013) “The influence of internal organisational factors on corporate?community partnership agendas,” Meditari Accountancy Research, 21(1), pp. 52–67.doi: 10.1108/medar-07-2012-0022.

McKinna, T. (2019) Coles and Woolies have killed Australian brands, Farm Online. Available at: https://www.farmonline.com.au/story/6129157/coles-and-woolies-have-killed-australian-brands/ (Accessed: August 18, 2021).

Osegowitsch, T. and McCabe, A. (2018) “The secret to Aldi’s success is choosing what not to do,” ABC News, 2 August. Available at: https://www.abc.net.au/news/2018-08-02/aldi-supermarket-coles-woolworths/10065018.

Pinto, G. L. et al. (2017) “Innovation strategies in retail services: solutions, experiences and meanings,” European Journal of Innovation Management, 20(2), pp. 190–209. doi: 10.1108/ejim-06-2015-0049.