Strategic capability
The paper will highlight the strategic capability, the strategy and culture and the competitive strategy of Coles Private Limited based in Australia. The paper will also include the business strategy statement of the chosen company. Understanding the strategic capability of the company is crucial in fathoming its market position as compared to its competitors. The leader is the one who has the important responsibility of enhancing the company’s strategic capabilities. Strategy on the other hand, refers to the current strategy followed by the company (Wu et al. 2015). It meant that without a cohesive culture, having a strategy also is of no value. Competitive strategy can be defined as the strategy that the company makes to stay ahead of its competitors for long term. The paper will shed light on all these aspects of Coles Pty Ltd.
The strategic capability of Coles could be analyzed using the VRIO (Value, Rareness, Imitability, and Organization) analysis and the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.
|
Value |
Rareness |
Imitability |
Organization |
Competitive consequences |
Performance implications |
|
No |
No |
No |
No |
Competitive disadvantage |
Below-average returns |
|
Yes |
No |
No |
Yes/No |
Rivalry |
Average returns |
|
Yes |
Yes |
No |
Yes/no |
Temporary advantage |
Average or above average returns |
|
Yes |
Yes |
Yes |
Yes/No |
Sustainable advantage |
Above-average returns |
Table 1. VRIO analysis and implications
(Source: Created by author)
The RIO matrix below demonstrates Coles’ current strategic capability.
Figure 1. VRIO Analysis of Coles
(Source: Created by author)
Value – The supermarket is unique in terms of its store design. It attracts the customers to visit the store and buy variety of items at affordable prices. With a strong online presence and availability of fresh food as well, Coles has been able to waive off competitions coming from Tesco, Metro, Waitrose and other such supermarket giants (Ferguson et al. 2016).
Rareness – The uniqueness of Coles regarding its capability to deliver fresh food products at lower prices is quite rare when it comes to other supermarket firms. Nonetheless, the firm has not been able to expand this facility to customers who are outside its periphery, which is in places where Coles is not present.
Imitability – As it is evident that Coles belongs to the retail sector where other companies are there as well (Richards, Kjærnes and Vik 2016). This factor cancels out the imitability aspect of the company. The sustainable competence of the business comes from the value chain it possesses by which it integrates it distributors and suppliers.
Organization –In this regard, Coles Supermarket has both succeeded and failed in organizing its resources to incur maximum benefit. It has to be mentioned that if it was not for Wesfarmers’ decision to acquire Coles, the company could have faced serious problems despite having available resources.
From the above analysis, it is thus clear that the chosen firm faces rivalry in the market, which would result in average returns.
|
Coles SWOT Analysis |
|
Strengths 1. The Australian base of the company and its long history gives it remarkable advantage within the domestic supermarket area 2. Exceptional branding with target on the patriotism and feeling of nationality of Australians, using slogans such as “Proudly Australian since 1914” 3. Remarkable hold in the online market 4. With over 800 stores and 100,000 employs across Australia, its dominance is evident |
|
Weaknesses 1. Public sentiment marred by negative publicity caused due to involvement in controversy with Australian suppliers 2. It functions on lower margins despite confronting stiff competition |
|
Opportunities 1. It could grab better control of the supply chain to channel the manufactured product and yield profit at numerous point 2. Expanding to other markets other than Australia could opportune the company with more options to garner profit 3. Focusing on selling goods with private label could encourage growth in revenues |
|
Threats 1. Rapid fall in food prices due to intense competition within the supermarket arena 2. Lack of clear and distinctive communication causing confusion amongst consumers regarding generic brands 3. Presence of small and independent retailers rising as consumers prefer convenience 4. Retail market is rapidly evolving and new competitions are entering the market with innovative business models |
Table 2. SWOT Analysis of Coles
(Source: Created by author)
Significance – Analyzing the SWOT of Coles Pty Ltd reveals several aspects about its strategic capability. The findings disclose the current position of the company within the retail industry and the steps it needs to take. While weaknesses of the company are, marginal but might influence other aspects as well. In terms of its strengths, Coles has a significant hold in the Australian market however it must think of expanding to other markets (Sutton-Brady, Kamvounias and Taylor 2015). This is because of the growing threat from emerging businesses and business innovation. Opportunities like selling private label goods could help in removing the threats such as confusion regarding generic goods amongst customers.
VRIO Analysis
Coles has adopted an aggressive strategy related to marketing that helps it to raise its brand value and visibility of consumers. One of the most effective strategies of the company was to target the patriotism feeling of the customers by promoting the “Australianness” of its brand. Further, the firm employs the strategy to sell items that are healthy and hygienic thus targeting the health conscious customers. It also focuses on promotional strategies that continue to change with the changing market environment. Coles Organic and Coles Simply Less are two strategies that have really helped the company flourish in the face of stiff competition (Coles.com.au 2018).
Culture of the company includes the stories associated with it, the routines and rituals, organizational structure and control systems. At Coles, the organizational culture is based on five fundamental ideals. These include, simplicity, inspiring customers, being bold, work as one team and have passionate care for everyone (McCarthy 2015). In addition to that, Coles encourages a culture where new ideas are always welcomed and the employees are allowed to participate in the decision-making process. The prime motive of the company is to sell with passion and personality, which also reflects its culture.
Image 2. The Culture Web of Coles
(Source: Colescareers.com.au 2018)
A look at the strategies employed by Coles and the culture it possesses, it could be observed that both have an intrinsic relationship. In the above picture, it is clearly visible that the strategies of Coles align with its culture. Inspiring customers by building great careers, being bold by transforming the liquor industry, simplifying ways by keeping the simplicity of services intact; working as one team with a sharing network and caring passionately by providing value to money demonstrate the relationship between the company’s strategies and culture (Jie, Parton and Chan 2015).
To analyze and address the issues related to competitive strategy of the company, the industry and external analysis results should be examined. The stable political situation in Australia is a big boost to the company as its business entirely depends on the Australian market (Carey, Parker and Scrinis 2017). In terms of economic factors, the company enjoys a safe haven in Australia as the country’s retail industry has managed to remain stable despite the financial crisis happening globally. Social factors that involve customers are also in favor of Coles because it has succeeded in realizing the needs and demands of the customers, which is healthy living. The strong online presence of the firm demonstrates that it has grasped the technological factors well. The legal and environmental factors concerning Coles further indicate its strong position in the market.
The retail industry in Australia faces threat from new entrants on continuous basis. With that, the customers or buyers are exposed to numerous buying options ultimately increasing the buying power. A low level of supplier bargaining power shows the strength of Coles when it comes to reputation and hold in the market. The product substitute threat being low ensures that the company does not have to invest its time and budget on bringing in new products. However, in terms of competition, the threat is very high with Woolworths being the top competitor followed by other emerging businesses (Hatch 2018). Therefore, customer bargaining power and competitive rivalry, as already mentioned, are the two most crucial factors of its strategic planning.
SWOT Analysis
The internal analysis revealed the most significant strengths and capabilities the company possesses. Amongst those, dominant position within the Australian market and exceptional branding and promotional strategies are vital in utilizing the opportunities that the retail industry presents today. With a successful campaign in Australia, the company could look for expanding in other markets as well, starting with the closest ones like Asia. It could utilize its strong branding and promoting strategies to promote its business in the Asian region and then to other parts.
Thus, from the above analysis, it needs to be stated that the company should follow its current competitive strategy to establish a successful market position.
At present, Coles Pty Ltd strives to provide real value to its customers by offering lowest priced products and deliver at an easier way making the shopping experience amazing, for the customers. The biggest advantage of Coles is its capability to attract customers by aiming perfectly at their feelings and demands. Currently, it operates brands such as Coles Express, Coles Financial Services, Vintage Cellars, First Choice Liquor and Liquorland. To manage such a huge business, Coles must enlarge its employee base. Based on the analysis above, the new vision and mission of the company should focus more on enhancing customer experience by establishing a global brand.
It employs over 100,000 people across Australia to deliver fresh food products and other items to the customers. The focus will be on strengthening its core product, which are fresh fruits and vegetables.
Conclusion
The above analysis brings forth some key features of the retail market company of Australia. The strategic capability analysis revealed that the company has high value within the Australian retail industry. The reason for this is its focus on producing generic products and delivering those to people with ease and care. The SWOT analysis revealed that the company has its market share in Australia as its biggest strength while its controversy with suppliers has been identified as its key weakness. The emergence of new companies is the biggest threat whereas expansion into new markets other than Australia is the best opportunity for the company to capitalize upon. The current strategy followed by the company is to include new ways to serve the customers by introducing lowest pricing schemes. It also reflects the culture of the company that is clearly visible from the culture web. It is recommended that the company maintain its current strategy of focusing on the customers.
References:
Carey, R., Parker, C. and Scrinis, G., 2017. Capturing the meaning of “free range”: The contest between producers, supermarkets and consumers for the higher welfare egg label in Australia. Journal of Rural Studies, 54, pp.266-275.
Coles.com.au 2018. Our History. [online] Coles.com.au. Available at: https://www.coles.com.au/about-coles/centenary [Accessed 14 Sep. 2018].
Colescareers.com.au 2018. Our strategy, values and brands. [online] Colescareers.com.au. Available at: https://www.colescareers.com.au/about-us/our-brands [Accessed 14 Sep. 2018].
Ferguson, M., O’dea, K., Chatfield, M., Moodie, M., Altman, J. and Brimblecombe, J., 2016. The comparative cost of food and beverages at remote Indigenous communities, Northern Territory, Australia. Australian and New Zealand journal of public health, 40(S1), pp.S21-S26.
Hatch, P. 2018. ‘Putting out fires’: Coles’ new plan to beat Woolies. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/companies/putting-out-fires-coles-new-plan-to-beat-woolies-20180306-p4z33i.html [Accessed 14 Sep. 2018].
Jie, F., Parton, K. and Chan, C., 2015. Australian beef supply chain integration: case studies of the two largest Australian supermarkets. International Journal of Supply Chain and Operations Resilience, 1(2), pp.121-138.
McCarthy, B.L., 2015. Trends in organic and green food consumption in China: Opportunities and challenges for regional Australian exporters. Journal of Economic & Social Policy, 17(1), p.6.
Richards, C., Kjærnes, U. and Vik, J., 2016. Food security in welfare capitalism: Comparing social entitlements to food in Australia and Norway. Journal of rural studies, 43, pp.61-70.
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015. A model of supplier–retailer power asymmetry in the Australian retail industry. Industrial marketing management, 51, pp.122-130.
Wu, J.H., Neal, B., Trevena, H., Crino, M., Stuart-Smith, W., Faulkner-Hogg, K., Louie, J.C.Y. and Dunford, E., 2015. Are gluten-free foods healthier than non-gluten-free foods? An evaluation of supermarket products in Australia. British Journal of Nutrition, 114(3), pp.448-454.
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