The fit test
The competitive advantage test
Coles group, popularly known as Coles, is an Australian consumer staples public company operating several retail chains, with chief operations being the sale of food, groceries through its chain of supermarkets, sale of liquor, and petrol. The company was founded in 1914 and is the second-largest retail chain in Australia after its principle rival Woolworths (Coles.co.au, n.d.).
(Colesgroup.com.au, 2019) explains that Coles operates more than 800 supermarkets throughout Australia, including several renamed as BILO supermarkets. Coles has around 112 thousand employees and together with the rival Woolworths, both accounts for more than 80% of the Australian retail market, which makes the Australian supermarket an oligopoly market. Coles has an online portal too with the name of Coles online. Between 1986 and 2006, Coles supermarket was a subsidiary of Coles Myer Limited, later in 2007, it was acquired by Wesfarmers. It has total assets of 9.77 billion AUD as of 2019, with revenue of 38 billion AUD in 2019. The current managing director of the Coles supermarkets Australia is Steven Cain.
Australia’s leading supermarket chain, Cole’s supermarket provides grocery shops, convenience shopping, fuel, credit cards, prepaid phone plans, and a network of wine and liquor stores.
Cole’s supermarkets are a full-service national supermarket with 800+ stores open all over Australia.(Coles.com.au, n.d.) The company also has an online portal known as Coles online, on which all the products and services are available with home deliveries and easy return and pickup services.
A strategic mission is a mission statement of the firm’s range of operations and its purpose. It is based on a market strategy that is inspired and revolves around the core philosophy of the organization. It's a perspective plan of the company which can further be divided into sub-plans to achieve the company's core objectives and goals.
The strategic mission of Cole’s group is to maximize the customer experience and in the next 10 years, it intends to become the biggest staple service provider of Australia beating Woolworths which has revenue of 60.5 billion AUD in 2019 (Colesgroup.com.au, 2019).
A comparison of Woolworths and Cole’s group
Net revenue 2019
Net assets 2019
No. of locations
A comparison of Cole’s group and Woolworths is being given and the company intends to surpass its rival in all the four parameters in 10 years.
A mission statement justifies the existence of an organization and what it intends to contribute to the other sectors; it defines the reason for being and why it exists. The mission statement should define at least the primary customers, products and services produced or intends to produce and the geographical location.
The mission statement of Coles group- To avail, at minimum costs, all the products, and services unparalleled, to all over Australia with minimum distance possible for every person with a minimum time-consuming transaction, with iconic branding, innovative technologies, and biggest customer value proposition.
In marketing terms, a customer value proposition is the total value of the benefits of all kinds which a vendor promises to deliver to the customer in return for the payment which he makes. With an increase in the competition, the customer value proposition has increasing valuation in the marketing strategy of the companies as it is one of the monopolistic tools for the company. It describes why a customer should buy something from a particular brand leaving other competitors. It is particularly concentrated towards potential customers other than suppliers or other stakeholders (Wroblewski and Loss, 2018). It is designed in such a way to convince the customer that more value or better problem solving is given to the customer in comparison to other competitors.
Customer Value Proposition is a complicated principle however; it is the main theory behind the existence and the survival of a business or a company. Value proposition means that extra values and benefits should be added to the firm's products (Wroblewski and Loss, 2018).
A business model describes the validity and the rationale behind how the organization creates and delivers value to the different parts of the community which is economic, social, and cultural. The business model is a part of the business strategy and it includes the business model innovation which is construction and modification of the business models (Da Silva and Trkman, 2013). Cole’s business model includes all the ranges of descriptions that represent the core aspects of a business which includes the purpose, process, customers, offers, infrastructures, strategies, organization, trade practices, rules and processes, and practices.
The business model of Cole’s group has primarily focused itself on maximum value delivery to the customer. It has a varied range of products and services which includes supermarkets chain, fuel outlets, liquor chains of different customer value, food store, insurance, and credit card services, mobile, and loan services.
For example, the biggest common value they created for the customers of all kinds is sustainability including environment, sustainable practices, and products, animal welfare which Coles openly claims of all the processes during farm to fork and being more and more transparent. It has created 115 million AUD of community support in 2019.
The value price cost framework is one of the most important strategies in competitive business. Firms use this tool to better understand how they could provide a better value of the payment with an increase in profit.
V-P tool is used to calculate the perception of the customer on the value he gets on payment of the price.P-C is used to calculate the firm's profit from the transaction (Wroblewski and Loss, 2018) . The key is that the company has to rank higher both in V-P and P-C then the competitors.
Coles has created a successful Value-price-cost framework for its products. Coles website updates trendy food recipes and chefs' comments, lifestyle offers, and courses for free, offering gift vouchers different magazines related to the trends of the products in which it deals and services which is always more than the value of the product or the services which the customer avails. Coles has let the customer believe that they are getting more value in the form of after-sales service, additional offers with the retail stores, and utopian and feel good value creation through its services.
The fit test assesses the company's fitness in the current environment and that how it could deal with the potential threats and risks that can take place in the future like the culture, competition, changes in the government policies, expected downturn and recession or some other risks and casualty. This implies that the more adjustable, varied, and flexible structure of a company is, the more it will have the capacity to bear the shocks and necessary adjustments. There are certain factors which are helpful for the fitness of Coles ltd-
Varied business and unique brands- Coles ltd has several different brands and varied business portfolios like supermarket, wines, beer, whiskey chains, fuel, credit card and insurance business, lifestyles, food, etc which make Coles ltd an extremely efficient business entity in adjustment with potent future policies or shocks which may arrive.
Financial position- According to Colesgroup.com.au (2019) , Coles financial objectives are already aligned with their business objectives of providing the shareholders with long term and sustainable earnings and attractive dividends, and a well defined corporate governance framework which make Coles a sustained company which can bear the shocks of the sudden loss of trust in the financial market.
Risk management- Risk management program of Coles ltd is a critical component of its operations which makes it resilient and provisionary against future losses and shocks. The program is designed to allow Coles to manage materials and risks which support the ability to identify new opportunities and threats and timely mitigation and adjustments towards it that includes strategic risks plan, operational risks plan, financial risks plan (colesgroup.com.au 2019).
Value price cost framework- The value price cost framework of Coles is efficient enough to lead and accelerate it into the market which is evident from the financial reports of 2019 (colesgroup.com.au, 2019), Coles has always laid stress on value addition of per buying by the customer.
Coles has improved over the years and made following efficiencies-
In 100 years, the Coles group has made spectacular business and has given value-added products and services to the community as a society, culture, and government and economy of Australia. But to cope with the new culture and environment of competition, Cole has to adapt towards new technologies like blockchain, AI, Big data to efficiently use its system towards making its processes more productive which can efficiently create more value addition to the customers. In addition to this, Coles must always see the opportunity of the dynamic market and should delete and create new brands as and when required by the market because, in the internet age, things and trends change very quickly that has made it important for companies to keep an eye on the current trends and mentality of the mass. Thus Coles group needs to be up to the mark to the present trends and technologies and should make a separate department of “dynamics of business trends”.
Ceglinski, P. 2017. The concept of competitive advantages.logic, sources and durability. Journal of Positive Management. 7. p.57-59. Available at https://www.researchgate.net/publication/318947759_The_Concept_of_Competitive_Advantages_Logic_Sources_and_Durability
Coles.co.au. n.d. Our businesses. Available at https://www.coles.com.au/
Coles.com.au. n.d. Sustainability at Coles. Available at https://www.coles.com.au/
Colesgroup.com.au. 2019. 2019 Annual report, sustainably feed all Australians to help them lead healthier, happier lives. Available at https://www.colesgroup.com.au/FormBuilder/_Resource/_module/ir5sKeTxxEOndzdh00hWJw/file/Coles_Annual_Report_2019.pdf
Da Silva, C and Trkman, P. 2013, Business model: what it is and what it is not. Long Range Planning 2013 (1). Available at https://www.researchgate.net/publication/255856760_Business_Model_What_it_is_and_What_it_is_Not
Wang, W., Lin, C and Chu, C. 2011 Types of competitive advantage and analysis. International Journal Of Business And Management 6(5) p.100. Available at https://pdfs.semanticscholar.org/1f88/9cc2deec1cd5b72cf52f563aca6cb8aa3e83.pdf
Wesfarmers.com.au ,2014. 100 years thousand of stories. Available at https://www.wesfarmers.com.au/docs/default-source/asx-announcements/operational-site-tour-presentation---coles-division.pdf?sfvrsn=0
Wroblewski, J and Loss, S. 2018. Understanding value-based pricing: conceptualizing customer value in a b2b industrial context. Lund University. Available at https://pdfs.semanticscholar.org/b1fe/b230740cb73314dcd085b148dd07ecc49bf8.pdf
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