Business background
Coles Group was established in 1914. The company has since experienced noteworthy growth making it among the leaders in the supermarket supply chain OF Australia. Its products are wide-ranging from home decors and financial services to groceries. It specializes in its operations in both departmental and retail stores. Cole Group was acquired by Wesfarmers in 2007.
Question one
When formulating the strategic advantages, Cole uses four criteria’s namely rare, valuable, non-substitutable as well as costly to replicate. Valuables entail core competencies not present too many others and they support the company in neutralizing threats and the exploitation of existing opportunities. Through this Cole creates value for its customers. While taking advantage of its economies of scale it provides customers with high quality and low-cost goods. Such a strategy is costly to imitate. Cole has come up with this value chain system over a long period and its economies of scale have been acquiring through years of experience. This gives it a competitive edge over its customers. From this strategy we can deduce that goals are structures within the vision and strategy of the company and the implementation of strategies is made to achieve these goals. On the other hand, the top management leadership plays a major role in strategic planning and implementation is done in a top-down way…therefore, Cole takes a planned approach towards strategy formation.
Cole’s strategy is particularly costly for other companies to imitate since it assumes a huge capital outlay. As depicted by Woolworth, the economies of scale are definitely substitutable. However, the value chain analysis strategic advantage is hard to be substituted by any other company as it holds invisible proficiencies. Drawing from the positioning school of thought, such degrees of competency is critical in managing and implementing the goals set. The top management at Cole regulates the competition existing in the market and determines the company’s position in the market. Once this has been determined, the best strategy is employed to ensure that Cole remains the market leader in retail. Cole holds detailed knowledge over her competition when the value chain analysis is concerned. In Australia, only a few retail industries own the strategic combination of core competencies, and this helps Cole get a competitive advantage.
Business Level Strategies Analysis
Coles administers the business-level strategy which involves the establishment cost leadership and the differentiation strategy. When it comes to differencing its products from those of competitors, it uses its brand image. To uphold cost leadership, Coles applies the strategy of curtailing its costs through the use of a superior supply chain. When these strategies are applied the company can thereafter offer value to its customers by offering the lowest costs. Such operations assist the company to have a competitive advantage over its competitors when it comes to the long-run analysis.
Such is accomplished through the company’s economies of scale operations, weighty impacts on producers, the application of innovative technology and effective supply chain. The little perception of goods in the market illustrates that there happens to be little perceived distinction between the products. For Cole supermarket, it applies its differentiation strategy by using the brand image. Its brand image has taken years to develop and it has been influenced by value and satisfaction accorded to consumers.
With Cole being a multinational company with huge recognition in competitive market segments, it becomes challenging for the company to withstand competition and maintain a leadership position without putting in a momentous effort. The existing business environment leaves Cole with no choice but to gain an edge over other competitive advantages. Because Cole is internationally known, it has based its competitive positioning on essential factors giving it an edge over its rivals. Porter’s generic and intensive growth model, is the best model to explains Cole’s competitive advantage strategies.
Cole has assimilated a blend of cost leadership, focus and differentiation strategies to deal with the competitive stress. Expanding the customer base and increasing sales growth goals are achieved by concentrating on the most suitable intensive growth strategies concerning the three above mentioned generic strategy steams. Coles has adopted product development, market penetration, development and diversification as the strategies that will assist achieve growth targets.
Corporate Level Strategies Analysis
Coles corporate-level strategy is to emerge as the market leader in Australia’s retail Industry. Its major focus is that of identifying the services and making investments to the services that offer the most value to its customers. A major strategy employed by Cole to enable it to emerge as the market leader when the retail industry is concerned is diversification. It offers diverse products and services ranging from back to school to dairy products among others. On the other hand, Coles provides courier services as well as online sales that complements its main business. It also has several petro stations and provides financial services and also other connected businesses. Such an adaptable approach assists in mitigating the probable impacts of any alternative service provider. Such a strategy helps in the attainment of a sustainable market position in retail. Also, the strategy assists to gain increased growth opportunities for the core.
When Wesfarmers portfolio management is concerned, its main focus is on capitalizing on value-added services through diversification. This is achieved by making the prevalent companies strong and by recognizing growth opportunities through the sustainability of responsible business operations. In Cole’s supermarkets, the BCG framework is applying in the analysis of its brand portfolio as it holds a substantial market share. What this means is that the company makes use of more cash and as a result gets substantial earnings. The company enjoys economies of scale benefits and years of experience.
The assimilation of cost leadership and differentiation enables the company to focus on a wide segment of the market. It achieves such a broad market base by providing goods that are distinct from competitors at the lowest possible costs. Employing the low-cost strategy makes certain that Cole concentrates on products with minimal accompaniments, which establishes the superior quality with a restricted selection. The feature that entails product differentiation enables customers to know the various offers on Coles products. When all these strategies are integrated, the resultant product owns good product characteristics, possessing numerous upscale product qualities. Using the integration strategy ensures that Cole endeavours to develop fresh ways that provide value customers yet still pricing products at the lowest costs. As a result, the company does not sacrifice on providing products with high quality to customers.
International strategies
The ups and downs of the global operating environment are common and therefor any company ought to adapt to fit into such changes. Through globalization, the movement of goods and services is now possible with international products competing in the local economy. The variations in the global operating environment have an impact on the local economy. Companies feel this impact too and they need to continually come up with strategies that suit the global environment. Although Cole Groups lacks an international strategy at the moment it needs to adopt a directed opportunism approach toward maintaining opportunism and flexibility contained by a broad direction backed by a systematic framework. Walmart Stores is among the companies in the retail market that has employed the power of explicit and systematic process to become the largest retailer in the global market.
To come up with such a global business expansion strategy, Coles should consider its internal and external environment that its operations are based. It should thereafter modernize its operations with novel retail strategies. Among its strong internal factors that can help in its global strategy is Cole’s success in the execution of previous new projects and its ability to come up with new revenue streams. Also, Cole boosts excellent customer satisfaction as well as having a strong brand portfolio that is helpful concerning international recognition. In the external environment, Cole can enter into global markets because of its use of new technology that provides for a differentiated pricing strategy in an untapped market. As a result, the company gets to retain loyal global customers as well as gaining new ones in the new market. Also, the economic growth in various countries increases consumer spending’s posing as an external strategy of increasing the company’s market share and a way of getting new customers.
CSR
Cole’s sustainability strategy entails sustainable communities, products and environmental practices. Under each of these strategies, the ultimate goal is to address the needs of its customers and other stakeholders. As a result of these sustainable strategies, customers are assurance of making sustainable choices once they shop at Cole outlets. The launch of Cole’s first Rainforest Alliance Certified coffee touches into its mission of considerably increasing the proportion of Cole Own Brand as well as sustainable products in its outlets. Coles had committed that by 2020 it distributes only certified coffee and to eventually raise the use of certified coffee, tea and cocoa as components of its Own Brand products.
Cole engages in sustainably reporting as it offers a platform for sharing its sustainability operations, objectives and accomplishments with its stakeholders and the community at large. Reporting also assists in keeping the company accountable for its actions. Cole’s accountability is reflected through posting its sustainability goals and undertakings externally via its website and internally through engaging employees and shareholders. Among its posted sustainability undertakings include offering training to suppliers and customers that are aimed towards saving the environment and making changes to its logistic system to curtail air pollution. Lastly, sustainability reporting enables employees again an extra advantage when recruitments are concerned. Transparency and employee motivation are directly related. Having employees engage actively in implementing and designing a sustainability strategy makes them motivated to work since they feel appreciated.
With the retail industry getting new entrants every day, gaining a competitive edge over other companies will set your company apart. Core has differentiated itself because of its transparency in its supply chain and the quality of its materials. It implements new technology that is focused on conserving the environment. The number of customers keen on environmental conservation and supply chain transparency is more likely to choose Cole’s products when compared to its competitors.