Recommended Strategies for Coles - Case Study Example

Running Hеаd: RECOMMENDED STRATEGIES FOR COLES Recommended Strategies for Coles Student’s Nаmе Fаculty & Dеpаrtmеnt Tutor 3 May, 2011 Introduction Implementation of effective strategies is an important undertaking for every company and that significantly affects the successful running of the company and the attainment of set goals and objectives. This paper sets out the necessary strategies that Coles should put in place to ensure that it is able to acquire and maintain success in terms of productivity, profitability and competitive advantage. The paper is addressed to the CEO at Coles to make a plea for him to allow for the implementation of the recommended strategies and to give the reasons for the recommendations made. Contained within the report is a cover letter to the CEO which gives a summary of the entire report. The paper also contains a SWOT analysis and a Competitive 5-Forces report on the basis of which correct strategies for the company will be developed. Other than developing the strategies this paper further supports the need for these strategies and the benefits they will have for the company. From the report developed, the CEO will be able to acquire all the necessary information regarding the company, identify the company’s weaknesses, strongholds and gaps and be able to make an excellent decision on the way forward in terms of strategic management. Current Situation at Coles The initial mission for The Coles group was to become the best and greatest retailer in all markets within which it operates and to ensure that they give the best services to its customers a mission statement which they failed to attain and as a result, West farmers took over Coles. West farmers have however not declared any known mission statement. Research has found the company as being second in terms of market share after Woolworths supermarket. Its 742 stores in different regions serve nearly 2 million customers daily. Its success in the market is best illustrated by the continued increase in revenue. The rate of growth in sales has however reduced over the past few years (Downes, 2008). Continued growth of the company requires the identification of its threats, weaknesses, strengths and opportunities and that through this it is able to make the right strategic choices and gain growth. Effective Strategic Choices As a way of ensuring that their company gains competitive advantage over their competitors, the top management at Coles need to develop strategic choices through which they will intend to accomplish the set goals and objectives, vision as well as mission pertaining to productivity as well as being above their competitors. One such strategic choice may entail having an entirely new image and the enhancement of inside growth as well as opening up more stores in different regions. A new image will be attained by improving their products and service quality within their already existing stores as well as improving corporate -revenues. Opening up new stores will help in increasing their customer base and expanding their markets to different economies. One strategic choice made by the company is to adopt the use of technology(the internet) which helps in increasing productivity and reduction of costs and in turn increases profits (Thomas and Pederson, 2009).there is however need for them to adopt other forms of technology useful for increasing profits and minimizing operational costs. The implementation of a management information system for example will be effective in ensuring that decision making processes will be effective and efficient, databases will be effectively maintained and customer satisfaction will be enhanced and overall, the company’s level of productivity will increase (Wright et al.1990). Improvement of service and product quality as a way of changing the company’s image and gaining competitive advantage is a differentiation strategy such that it allows for the creation of products whose attributes suit the need if he customers and make them different from those of other competitors. The adoption of technology is on the other hand a Focus Strategy as it serves the purpose of both cost advantage as well as differentiation. It is through technology that production costs and more will be produced hence an increase in profitability levels for the company and allowing for a reduction in product prices an aspect that will help in increasing product demand. Information systems also play a great role in enhancing customer satisfaction through effective delivery of services as well as effective management (Yuthas, K. (2009). Improving the quality of their products and services will be one way through which Coles will further promote their major strength which is in its name. As the products and service quality improves, customer satisfaction is promoted. As more and more customers become pleased by the services and products being provide, then they are more likely to recommend others to shop from the supermarket thus help in expanding the customer base for the company. Improved quality will therefore be a means of enhancing customer loyalty, retention and the attraction of new customers (Porter, 1998). Product improvement will help in shoring up the already declining product sales. The decline in market share and sales growth is one of the company’s major weaknesses. It is through the promotion of inside growth that the company will be able to identify the various needs of the customers and in turn ensure that their products meet the needs of their different groups of consumers (Porter, 1980). Identification of the needs of different customers, and targeting specific groups in their advertisements will be one way through which the company will be able to exploit its opportunity for growth and appeal to all demographics. This is because through this, the company will be able to sell products that best fit the needs, desires and expectations of the clients. As a marketing strategy targeting different and specific groups such as children, teenagers, housewives among others will help in broadening the market population and customer base for the various products offered by the company. It will also help in creating a balance between the customer’s awareness and desire for a particular advertised product. Another important stategy for Coles will be ensuring that al staff members are effectively trained on how to effectively carry out their various roles and responsibilities with an aim of meeting the set objectives and goals for the company. Training sessions need to be conducted to allow for the managers to be equipped with al the necessary skills and knowledge needed for successful and effective management within the company (Wright et al., 1990). By ensuring that their standards and product quality fall above the rest and by enhancing customer satisfaction, Coles will be protecting itself from one of their greatest threats which is increased competition from other companies. It is also through these strategies that the company will be able to rise from the current market saturation it is in and which acts as another major threat. Conclusion The successful and continued growth of every company requires that effective strategies be put in place and that the right decisions in relation to the various operations of the company. A key to making strategic choices includes efficiently being able to analyze the company’s situation at all times. This can best be done using the SWOT analysis which identifies a company’s threats, weaknesses, opportunities and strengths as well as through the competitive 5 forces which assesses a company’s competitor’s strategies, suppliers’ and buyer’s bargaining power, product substitutes and threat of new entrants. Assessing the situation at Coles using this two analysis tools has been effective in developing effective strategies as recommendations to the company’s CEO to allow for the continued growth of the supermarket industry and for the attainment of set goals, mission and aims. According to the above discussion, enhancing internal growth for the company, opening up new stores, improving product and service quality, focusing on the specific needs of customers, adopting more use of technology and ensuring that their standards are above those of their competitors make up effective strategies through which the company will maintain competitive advantage and increase their level of profitability. Letter to the CEO Name of sender, Address, 03 May, 2011 To, The CEO, Coles, address, City. Dear Sir/Madam, Re: Recommended strategies for the company The attached report contains suitable strategies as recommendations through which your company will be able to deal with the current delayed growth in the company and with the increased competition level that has led to a reduction in the company’s revenue. The strategies have been developed on the basis of an undertaken SWOT analysis that identified the threats, weaknesses, opportunities and strengths and one on the five competitive forces to assess the company’s competitor’s strategies, suppliers’ and buyer’s bargaining power, product substitutes and threat of new entrants. One major strategy identified as being important in increasing the company’s productivity and competitive advantage is enhancing internal growth of the company as an alternative to opening new branches. By this the company will be able to improve on the critical areas. Conducting training sessions on managers is important in ensuring that they acquire necessary skills for effective management. Additionally, products produced by the company need to be of extremely high quality standards. The company needs to also adopt more forms of technology like Management Information Systems that enhance successful business operations. It is through this that the company will manage to stay ahead of its rivals. It is also important or the company to be more customers focused through which they will be able to meet their specific expectations. Adopting these recommendations will be a beneficial undertaking for growth and successful operation of your company. Kindly review and consider each one of them. Thank you. Yours faithfully, Name and signature of sender Attachment 1: SWOT Analysis of Coles A SWOT analysis allows a company to identify its strengths, weaknesses, threats and opportunities as away of ensuring continued growth through the identification and creation of strategic choices and decisions at the corporate, functional as well as business levels. Strengths Strong presence all around the Australian market Has opened up many branches or stores nationally Strategic procedures and policies Famous and well known all over Australia Ensures quality in products and service provision Practices social responsibility Adopted the use of the internet that has helped in increasing revenue and minimizing the cost of operations Offers optional products to allow for varied choices among clients Weaknesses Has no specific target group for advertising High price competition that forces them to lower their prices High staffs turn over that increase costs in training Fluctuating sales Lack of talent within the management thus less skills and knowledge on effective management Threats Economic recession Fluctuation of the foreign currency Competitor developing more and new strategies to stay ahead High expenditures in marketing Rising competitors Opportunities Ability to adapt to society needs and produce the products most demanded Customers’ realization on the need to be healthy and on access to fresh products from the supermarkets Capable of researching on the use of green energy as well as packaging which is essential for marketing and enhancing social responsibility Capable of creating new products and offerings Ability to upgrade their various stores to draw in more clients Ability to expand as away of increasing profit level Attachment 2: Competitive 5-Forces, applied to Coles The five competitive forces can be defined as a business analysis tool through which businesses assess the value of their company structure. The results of the analysis allows for effective processes of decision making on the proper strategies to be put in place to ensure that the business attains its various goals and objectives and to ensure increased value and competitive advantage (Porter 1998). Undertaken research has identified Coles as being one of the most successful Australian supermarkets in terms of client satisfaction and retention, financial capability, marketing strategy, having a strong working culture that has leadership values, innovation in terms of product strategy as well as having financial capability. The strong points make the company rise above in various competitors. Cole’s threat of new market entrants as well as its suppliers’ bargaining power does not make up a major competitive force for the company. Emerging new companies will need to make huge capital investments and establishment of a very wide customer base and immense change of strategies to get the level of Coles. Suppliers lack bargaining power for the reason that other outlets acquire their various materials from different outlets. The Buyers’ bargaining power is low as customers can easily opt to purchase a different brand if they are dissatisfied by a particular product. The sale of substitute products by competing firms does not pose as a major competitive pressure for Cole as it also offers a wide variety of products that acts as substitutes for one another. In the case of competitive rivalry, the strategies developed by the major competing firm (Woolworths) are a threat to the maintenance of market share and customer retention. References Downes, S. (2008) Company Information: Coles Supermarkets. Melbourne: Herald sun Porter, E. (1998) Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Prentice Hall. Porter, M. (1980) “How Competitive Forces Shape Strategy”. The McKinsey Quarterly , 6 (1):34-50. Wright, P., Kroll, M., Kedia, B. and Pringle, C. (1990) Strategic Profiles, Market Share, and Business Performance. AJB, 3(4): 16-24. Yuthas, K. (2009). ‘Inputting the Environment: Reconsidering the Environmental Information Matrix’, Journal of Information Systems, 19(2): 105-109 Read More