New Goals and Strategies for Coles - Case Study Example

Management Report on Coles Name: Course: Institution: Date: Management Report on Coles Introduction This report is about Coles Group Limited which is one of the largest food retailing companies in Australia. The company operates in more than 740 supermarkets within Australian other areas of convenience to offer Australian citizens with quality groceries. The company also operates in offers online grocery services as a tactic of reaching out to different customers. This report is a result of the engagement of the Cole’s Chief Executive Officer (CEO), John Durkan that required me to perform an analysis of the company and develop effective goals and strategies that can be essential in realizing the objectives of the company on the local market. The purpose of the report This report aims at provided reasons for its development. The report will also assess the current situation of Coles Company and provide a mission statement. The report will then use SWOT analyses and Porter’s 5 forces of competition to analyses the current situation of the company. The report will then suggest new goals and strategies for the company. This will be followed by an explanation on the goals and strategies. The report will propose action plans essential in the realization of each strategy. The report will conclude with an appeal to the company’s CEO to accept the report and the strategies and an assurance that they are bound to improve the profitability of the company. The current situation at Coles Coles Supermarkets comprise one of two main supermarkets in the Australian market. The company commands about 31% of the grocery market (Deloitte Touche Tohmatsu Limited 2010, p. 16). For the last four decades the company has experienced substantial growth considering that it has been able to double its market share with its profit levels increasing by about 40% in the last 2 decades (Lyons 2007, p. 10). The considerable market power that the company commands provides it with the ability of determining prices, control the entry levels into the Australian grocery market and help in the establishment of a level of expectation in the grocery market (Deloitte Touche Tohmatsu Limited 2010, p. 18). The power of controlling market operations in the Australian food industry is under the influence of among other food chain retailers, Coles Supermarkets. The decision that the company makes concerning prices and quality affects the operations of local farmers in the country (Keith 2011, p. 18). The growth of the company has provided its customers with improved access to affordable products. Cole’s mission statement: "to be the best retailer in every market in which we operate" Situation Analysis SWOT analysis of Coles The benefits of SWOT analysis as a management tool SWOT analysis is essential in the understanding of key management issues that affect businesses. It is beneficial to the company considering that it does not require cost but only an understanding of operations of the business. SWOT analysis also focuses on the most important factors that affect the business. In addition, as a management tool, SWOT analysis is largely a matrix that permits an independent evaluation of the strengths, weaknesses, opportunities and threats in an organization while at the same time also allowing for an interactive way of analysing these factors (Kurtz 2012, p. 53). Through SWOT analysis, it is easier for businesses to understand and prioritized during the decision making process on different situations (Kurtz 2012, p. 54). The purpose and use of Porter’s 5- forces as a management tool Porter’s five forces are beneficial as management tools considering their role in assisting businesses gain competitive advantage. This is considering the role of these forces in determining the main competitive influence in the market. The forces which include threat of substitute product, bargaining powers of buyers, bargaining power of sellers and the threats of new entrants do not have an equal magnitude in every market but contribute to the understanding of the existing loopholes and the design possible strategies that businesses can take to improve on their performance (Kurtz 2012, p. 56). Recommendations Strategic goals for the company Goal 1 To improve on sales and increase the company’s profit margin by 24% by 30 June 2015 Strategic plan for realizing goal 1 The mission of becoming the best retailer can only be realized through the provision of ready to eat meals that will serve the percentage of the customers who are looking for convenience. There is need to develop more promotional and marketing campaigns to sensitize the Australian community of the products offered by Coles and the benefits associated with the purchase and consumption of these products. Improve on customer services to be able to get the feedback of customers concerning the areas of improvement. Justification It is important for Coles Company to consider the provision of variety, the development of workable promotional strategies due to the role they play in the improvement of the company’s reputation Tactical actions for goal 1 Undertake an analysis of the distribution of the company’s outlets in relation to high customer traffic areas. Recruit qualified personnel to engage in professional customer relations Undertake the process of designing effective marketing and promotional campaign materials. Begin the provision of ready to eat meals in outlets that seek to target new customers Goal 2 To develop strategies of improving customer traffic into the business during the peak hours of the day and the peak seasons of the year by 30 June 2015. Strategic plan for realizing goal 2 Positioning of the company in areas populated by the target customers and through the provision of goods and services that are in high demand. The company in its endeavours to improve on customer traffic has to ensure that in the next three years; it has outlets in all the high traffic areas in Australia. This will improve its market share and its profit margins. Through these outlets, Coles must develop plans on how to identify products that are in high demand in different areas of the target market Engage in effective market research on areas most populated by the target customers and identify the relationship between the population of customers and the available outlets. Justification Customers form an integral part of the business considering their role in the purchase of the company’s products Tactical actions for goal 2 Undertake an analysis of the distribution of the company’s outlets in relation to high customer traffic areas. Undertake a survey on areas that require the development of new outlets as a way of improving on the company’s market share in the competitive industry. Assess the distribution of the company’s competitors in the areas perceived as those with high traffic of potential and actual customers Goal 3 The company must develop techniques on how to improve on its ratings in the highly competitive Australian food industry. This is a technique through which the company can ensure that it is competitive in the Australian food market. Strategic plan for goal 3 To improve on its performance in the highly competitive food industry, the company must conduct periodic market research on the performance of its products in relation to that of its competitors. This will provide the company with information on the demands of its customers and areas in which the company can ensure ta there is an improvement. Align the operations of the management with the mission statement of the company as a way of finding the point of integration between the demands of the customers and the ability of the company to integrate these demands with the mission of the company. Justification A highly rated company in the market is considered more competitive and one that provides goods and services. Tactical actions Commence market research on the performance of the company’s products in relation to those of its competitors. Development of a feedback platform which allows customers to air their views concerning the achievement and the shortcomings of the company in relation to the quality of its products Harmonize the operations of the management in line with the demands of the customers and those of the company Undertake the process of taring employees on the development of strategies aimed at improving the company’s’ market share. Conclusion The provision of ready to eat meals provides variety and targets new customers for the business. The company must also conduct effective market research to understand the most populated areas with high customer traffic. Furthermore, Coles needs to align the operations of the management with the mission statement of the company as a way of finding the point of integration between the demands of the customers and the ability of the company to integrate these demands with the mission of the company. These strategies will be essential in the improvement of the reputation of the company in public. In addition, these strategies also improve on the possibility of the company enhancing its profit margin and market share. The adoption of this report by the management through the company’s CEO will be an indication of the intentions of the management to improve on the shortcomings of the business while emphasizing on its strengths. References Deloitte Touche Tohmatsu Limited 2010, ‘Coles – an overview’, Analysis of the grocery Industry, pp. 14-15, views 8 December 2014, Deloitte Touche Tohmatsu Limited 2010, ‘Economic contribution of Coles’, Analysis of the Grocery industry, pp. 16-20, views 8 December 2014, Keith, S 2011, ‘Coles, Woolworths and the Local.’ Macquarie University. http://localejournal.org/issues/n2/Locale%20n2%20-%2007%20-%20Keith.pdf Kurtz, David L. 2013. Contemporary marketing / David L. Kurtz. Mason, Ohio: South-Western Cengage Learning. Lyons, K 2007, ‘Supermarkets as Organic Retailers and Impacts for the Australian Organic Sector.’ Griffith Education Center. Retived on December 14, 2014 from http://www98.griffith.edu.au/dspace/bitstream/handle/10072/17653/?sequence=1 Attachment 1: SWOT Analysis of Coles Strengths (Internal Assessment) 1. impressive online delivery and purchase system 2. provision of product variety for the interest of different groups of buyers 3. Effective branding and advertising initiatives 4. A major player in the Australian domestic food market considering its long history Weaknesses (Internal Assessment) 1. Coles operates on a lower margin compared to its major competitor, Woolworths 2. High levels of complexities related to the company’s hard line negotiations with Australians hence a hostile environment for investors. Opportunities (External Assessment) 1. there is a platform of seizing greater control the supply chain as a way of introducing multiple points of harvesting profits 2. There are opportunities for market expansion to remote areas to increase the company’s access. 3. There are opportunities of boosting sales through sponsorship and marketing strategies. Threats (External Assessment) 1. Constant evolution of the Australian grocery industry with new competitors altering business model and ideals. 2. Inconvenience often drives buyers into the access of local and independent vendors. 3. intense competition in the food market hence affecting the pricing and purchases of the products Conclusion` The outstanding strengths of the company such as its market share and its ability to operate on online basis provides a platform through which the company can address its weaknesses. Through such an intuitive the company will be able to identify the existing opportunities on how to improve on its market share and increase on its profit levels. This will also provide a platform for addressing the potential threats that which are considered as the possible down fall of the company when they are not addressed. Attachment 2: Competitive 5 Forces, applied to Coles Threats to substitutes are relatively high considering that Coles faces numerous competitors including convenience stores and local farmers markets. Convenience stores are experiencing expansion in terms of their market shares and are now direct competitors with supermarkets. The demand for healthy and fresh food alternatives makes local farmers markets the better choice for Australian citizens. There is a high degree of rivalry amongst existing competitors since there is a small population of the major players in the market. In addition, there is lack of perceivable differences in the products and services that the existing business entities offer. The bargaining power of suppliers is relatively low considering that the major business entities sin the food industries, Coles and Woolworths control about 75% of the market. This makes the two businesses major purchasers and controllers of the prevailing conditions. The bargaining power of the buyers is gradually increasing considering the decision by the Australian government to lower competition levels and eliminate barriers of entry. This is a technique for allowing more competitors into the market and more alternatives to customers. Threat of new entrants into the Australian grocery market is relatively low considering the prevailing laws on leasing agreements with landlords which creates an artificial shortage of grocery stores Conclusion5 Any potential competitor in the Australian grocery market must compete with Coles Supermarkets which have large economies of scale. Such a competitor would incur expenses in infrastructure and other facilities which would require high level expertise as management. This means that there are very few players that would incur such expenses and this explain why the Australian grocery market is largely controlled by Coles and Woolworths. Read More