Marketing Analysis of Coles Supermarket - Case Study Example

Report about Coles Name: Course: Tutor: Institution: Date: Cover Letter Dear CEO, Pursuant to your directive for the examination of potential viable strategic alternatives for the organization, I hereby present this report. As per the directions, the report offers the evaluated alternatives, the key goals for each as well as the strategic tactical approaches for the successful execution of each of the strategies. Table of Contents Cover Letter 2 Table of Contents 3 1.0 Introduction 4 2.0 Distribution Alliances 4 2.1 Goal and Strategic Plan 5 2.2 Tactical Approaches 5 3.0 Supplier Partnerships 6 3.1 Goals and Strategic Plan 6 3.2 Tactical Approaches 7 4.0 Internationalization 8 4.1 Goals and Strategic Plan 8 4.2 Tactical Approaches 8 5.0 Conclusion 9 References 10 Appendices 11 Appendix 1: Coles SWOT Analysis 11 Appendix 2: Coles Porters Five Forces Model 12 1.0 Introduction Similar to other global armlets, the Australian market is gradually but steadily changing. In this regard, the market faces increased macro economic factors such as economic and social factors. On one hand, on the economic front, the Australian market growth rate, GDP, and per capita incomes have all increased in the recent past, allowing for increased market spending (McLean, 2013, p.117). On the other hand, a social paradigm shift has led to changing markets consumer buying behaviours as well as affecting and implications on the consumers’ decision making models. Consequently, this has a direct impact on Cole’s supermarket that supplies food supplies on retail to the Australian market targeting the middle and premium classes with a strategic mission of providing fresh foods at refreshing and affordable prices. In this regard, the changing market conditions have led to a necessity for the organization to re-evaluate its market practices and as such develop alternative strategies and goals. As such, this report develops a review of the organizational situational analysis sing the SWOT and Porters five forces tool, attached under appendix 1 and 2 of the report, to develop strategic viable market alternatives to proactively counter the current and expected retail food industry changes. 2.0 Distribution Alliances An evaluation of the current market analysis on the organizational operations using the porters five forces analysis establishes that the organization faces a market expansion strategy with the rising threat of increased market competition and rivalry from peers such as Woolworths among others. 2.1 Goal and Strategic Plan In this case, the key strategic goal for the proposed strategy will be the development and expansion of the organizational presence and influence across the market. Keillor (2013, p.70) argued that through the establishment of forward integration market alliance and partnerships, the venture will increase its overall presence in the market through which to counter the growing influence of the competitors as well as small scale retail organisations in the market. Through these alliances, the organization would expand its influence in the market at reduced market costs. The strategic plan in the implementation and execution of the proposed strategic goal will be the reduction of expansion and operational market costs as well as countering the expected rise in small scale retailers in the Australian market. In this case, evaluations indicate that the Australian market is gradually changing to include the small retail ventures. In this case, through establishing alliances with various distributors, the organization will acquire the right to stock and sell its products brands with the respective partners thus expanding its market base (Bock, 2010, p.27). As such, the strategic plan for the execution of the proposed strategy includes the need for the organization to increase efficiency in resources utilization through increasing the market base and overall revenues at significantly reduced market operational costs. 2.2 Tactical Approaches In order to develop the required distribution market alliances as well as enhance their implementation evaluation success, this strategic plan develops a list of tactical practices and steps that the venture management should execute. The management should initiate the development of a strategic market survey initiative for the evaluation of market not ventured into. In addition, the organizational management should evaluate the available small scale industry distributors with whom to liaise with, where such an alliance should be based on the actual relationship between the distributor and Cole’s mission and strategic vision goals. Once the strategic relationships are established, the management should develop evaluation techniques to cot and evaluate the overall rationale and merit of the adopted distribution relationships. As such, the valuation tools could include revenues and expenses matching under the matching accounting concept as well as establishing market benchmarks. 3.0 Supplier Partnerships An additionally identified organizational challenge is its poor relationships with the suppliers. In this regard, the venture has been accused severally of intimidating and unfairly influencing them into contracts. Therefore, this has served a critical role of negatively influencing the organizational brand image. As such, this report develops the argument that in order for the organization to strategically overcome the challenge, the venture must develop alternative supplier management approaches 3.1 Goals and Strategic Plan The strategic goal and aim for the development of this strategic approach is to counter the existing negative supplier relationships perception that may in the long run influence and reduce the venture supplier attractiveness in the market. Tam, Moon and Hui (2007, p.299) conducted a study evaluating the role of good supplier management practices to an organizations competitiveness. In this case, the evaluation established that through the application and use of supplier relationships approaches, organizations increased their production process efficiency through increased reliance as well as reduction in the production costs. In this regard, the key goal for the development and implementation of the strategy for Coles will be the reduction in production costs a virtue that will enable the venture increase its overall profit margins to compare with industry peers. As such, the strategic plan in this regard, will be the eventual process of cost reduction (Dowlatshahi, 1999, p.28). In this case, the strategic plan will include the development of a viable supply base, with the required experience and ability to supply and satisfy the organizational needs in the retail food industry. 3.2 Tactical Approaches One of the first strategic steps to undertake in the evaluation and establishment of the desired supplier relationships will be the development of a supplier base survey. In this case, the survey should be based on the evaluation of all existing and available organizational supplier across the market. The second strategic step for the management will be the profiling and prioritization of the respective industry suppliers based on their products supply relevance, rationality and relatedness with the organizational goals and objectives. Further, the organization should develop a strategic supplier list and subsequently establishment a management and relationships development framework. In this context, the analysis should be developed as a basis and means through which to develop the required supply base. Finally, the organization should establish management structures through which to appraise the suppliers and regularly interact and improve their systems for increased supplied products quality. 4.0 Internationalization As a final strategic recommendation, this report recommends that the Coles supermarket should consider venturing onto the international market. In this regard, internationalization involves venturing and establishing market base on the foreign markets. 4.1 Goals and Strategic Plan An evaluation of the Australian market illustrates saturation and increasing threat of increased new market entrants into the future. Therefore, the key goal will enable the organization expand and acquire consumers in the global market. As such, this will in the long run expand and reduce the current market concentration reducing Cole’s margins in the market. As Frazzon (2009, p.113) noted, through increased expansion, the venture will successfully expand its brand reputation, a move that will strategic offer it an advantage over peers in the market. Therefore, under this strategy, the organization plans to expand its market base through which to increase market profitability, thus guaranteeing the overall shareholders values and the value for investments. As such, the strategic plan is to sequentially expand onto the global market through both physical and online platforms simultaneously. 4.2 Tactical Approaches One of the fundamental steps that the organizational management should consider with great concern is an evaluation of the organizational ability to internationalize, based on its resources. Although this report affirms that the venture has enough resources, the organization should profile them for planning purposes. In addition, the venture should develop a strategic evaluation of the proposed target markets. This should be prioritized on a rationale list based on existing market gaps as well as rationality and proper supportive regulations. Once this is achieved, the venture should consider the best internationalization alternative either through joint ventures or direct foreign investments, all based on the available resources. In addition the organizational management should develop a strategic schedule of operationalizing in the international market that should be on a stage by stage basis to ensure close monitoring of the expansion process as well as reduce failure chances. Finally, the management should develop a strategic evaluation tool through which to monitor the expansion process both in the short and term periods. 5.0 Conclusion In summary, this evaluation report develops a strategic review and focus on Cole’s supermarket strategic management approaches. As such, through a SWOT and porters five forces model analysis on the current and forecasted market situation. In this respect, the evaluation develops strategic recommendations for expanding the organizational influence through distribution alliances establishment, through which to target and reach out to an increased market base at minimal costs. Moreover, the report advocates for increased supplier relationships and management improvements as well as advocating for the organizational expansion and growth onto the global market platform to reduce the current and expected retail industry saturation in Australia. References Bock, M., 2010, The advantages and disadvantages of relationship management: How can a company integrate recent research findings in order to make its CRM system more efficient?, GRIN Verlag GmbH, München Dowlatshahi, S. 1999, "Bargaining power in buyer-supplier relationships", Production and Inventory Management Journal, vol. 40, no. 1, pp. 27-35. Frazzon, E. M., 2009, Sustainability and effectiveness in global logistics systems, Gito, Berlin. Keillor, B. D., 2013, Understanding the global market: Navigating the international business environment, Praeger Santa, Barbara, Calif:. McLean, I. W., 2013, Why Australia prospered: The shifting sources of economic growth, Princeton University Press, Princeton, NJ Tam, F.Y., Moon, K.L., Ng, S.F. & Hui, C.L. 2007, "Production sourcing strategies and buyer-supplier relationships", Journal of Fashion Marketing and Management, vol. 11, no. 2, pp. 297-306. Strengths Large consumer base in the Australian food retail industry offering increased revenue reliability. Reduced product prices and frequent promotional discounts An established online platform. Opportunities Opportunities for global market expansion likely to increase organizational revenues. Opportunity for supply chain management competitiveness adoption. Opportunities for forward integration in the market. Weakness A negative reputation on suppliers’ manipulation. Operating on lower margins than others in the market. Threats Increasing market competition thus reducing the market margins in the market. Brand market saturation leading to consumers’ confusion. Appendices Appendix 1: Coles SWOT Analysis Appendix 2: Coles Porters Five Forces Model Porters Factors Discussion Buyers Bargaining power The buyers in the Australian food retail industry have a high bargaining power. The industry has low switching costs allowing for increased brand switching Suppliers Bargaining power Low suppliers bargaining power The high market saturations reduce their market bargaining power. This trend is bound and expected to project into the future. Competition rivalry High market competition from rivals such as Woolworth’s supermarket. This reduces profit margins in the market. Threat of New Entrants There is an increased market threat of new entrants This is due to the Australian free market regulations. Reduced costs of market entry. Threat of substitutes Increasing rise of cheap local and international brand risk increasing market competition. This increase the expected market competition levels into the future. Read More