Advantage in the Food Industry: Internal & External Factors Assignment

Examination of Internal & External Factors Shaping the Food Industry Landscape & Coles Group's Strategic Position

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Advantage in the Food Industry: Internal & External Factors Assignment

This report is made to discuss both the internal and external factors influence competitive benefit in the food industry. The report will examine on how organizational capabilities might lead to buyer relationship structure and in turn to competitive advantage. The external environment of Colesgroup includes the macroeconomic factors such as political and legal factors, economic conditions, technological advancements, social and cultural trends, and environmental issues (Elfahmi, et. al. 2021). Coles Group is a major Australian retail company that operates in a complex social and cultural environment. The company's internal and external social cultural environment can have a significant impact on its operations, strategies, and overall success.

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Coles group Logo

Figure 1 Coles group Logo

(Source: colesgroup, 2023)

What uniqueness of the general environment, and how do they have an effect on the industry?

Characteristic Internal External
Political Government regulations and policies regarding food safety and labelling International trade agreements and tariffs affecting food imports and exports
Economic Consumer spending power and purchasing patterns Economic downturns and recessions affecting disposable income and demand for premium food products
Demographic Changing demographics and consumer preferences Increasing awareness of sustainability and environmental issues (Christodoulou, and Cullinane, 2019)
Socio-cultural The company fosters an environment of open communication and collaboration, which helps drive employee engagement and productivity. The pandemic has changed consumer behaviour, and Coles Group has had to adapt to new trends, such as increased online shopping and demand for home delivery services.
Legal Food labelling and advertising laws Regulations on food and Groceries production and distribution
Technological Advancements in food processing, packaging and preservation technologies Increased adoption of e-commerce and digital marketing channels

How do the five forces impact on the company you have selected?

Force
Barriers to entry Barriers to entry refer to the obstacles that new companies face when trying to enter a particular market. In the case of Coles Group, there are several barriers to entry that impact the company's competitive position and market share.
Power of buyers In the case of Coles Group, the power of buyers is a significant force that impacts the company's operations and profitability. Such as price sensitivity, product quality and negotiating power.
Power of suppliers The company must balance the need to maintain good relationships with suppliers with the need to keep prices low and maintain product quality for customers.
Threat of substitute products The threat of substitute products refers to the availability of alternative products that could replace the products offered by a company (Isabelle, et. al. 2020).
Intensity of Rivalry The Australian retail market is highly saturated, with numerous competitors vying for market share. This can make it challenging for Coles Group to expand its market share, especially in highly competitive areas.

Competitor Analysis

Future Objectives
  • Identify key competitors
  • Analyze competitors' marketing and pricing strategiesAssess competitors' product and service offerings
  • Evaluate competitors' supply chain and logistics
  • Monitor competitors' financial performance
  • Stay ahead of emerging competitors.
Current Strategy
  • Customer Experience,
  • Operational Efficiency,
  • Digital Transformation,
  • Sustainability,
  • Own Brand Product (Kruesi, and Bazelmans, 2022).
Assumptions
  • Market Demand: This assumption is based on past sales trends, customer feedback, and economic indicators.
  • Competitor Behavior: Coles Group may assume that its competitors will continue to operate in a similar manner and not make any significant changes to their pricing or marketing strategies.
  • Economic Environment: Coles Group may assume that the economic environment will remain stable and not experience any significant changes that could impact consumer spending.
  • Supply Chain Stability: Coles Group may assume that its supply chain will remain stable and not be impacted by natural disasters, political events, or other disruptions.
  • Consumer Behaviour: Coles Group may assume that consumer behaviour will remain consistent and not be impacted by any external factors that could lead to a shift in buying patterns.
Capabilities
  • Supply Chain Management,
  • Retail Operations,
  • Own Brand Product Development
  • Digital Transformation
  • Customer Insights
  • Sustainability
  • Branding and Marketing

What are the sources of competitive advantage for Coles Group?

Resources Coles Group has access to significant financial resources, including revenue from sales, investments, and borrowing. Coles Group has developed and acquired intellectual property such as trademarks, patents, and proprietary software, which provides a competitive advantage in terms of brand recognition, product innovation, and operational efficiency.
Capabilities Coles Group has a large and diverse workforce that provides a variety of skills, knowledge, and experience (Hernandez-de-Menendez, et. al. 2020).
Competencies Coles Group has developed a reputation for quality products, customer service, and sustainability.

Are those competencies strategic competencies and Why?

Are they valuable? Yes, the resources that Coles Group possesses are valuable in contributing to its competitive advantage.
Are they rare: Some of the resources possessed by Coles Group may be rare, while others may not be. For example, Coles Group's intellectual property, such as trademarks, patents, and proprietary software, may be rare and unique to Coles Group.
Are they hard to imitate? The extent to which Coles Group's resources are hard to imitate depends on the specific resource in question. Coles Group's unique combination of resources, capabilities, and competencies makes it challenging for competitors to replicate Coles Group's overall competitive advantage.
Are they now substitutable? Coles Group's financial resources may be substitutable to some extent as competitors may also have access to similar financial resources.

Type of competitive advantage

Competence Type of Advantage
1. Economies of Scale: Coles Group can achieve economies of scale through various means (Singh, et. al. 2019). 2. Standardization: standardization can provide Coles Group with a competitive advantage by allowing them to operate more efficiently.
  • Coles Group can also achieve economies of scale by consolidating its operations and centralizing its resources.
  • For example, by consolidating distribution centers and utilizing a centralized transportation fleet, Coles Group can reduce transportation costs and improve efficiency in the supply chain.
  • Firstly, standardization allows Coles Group to achieve greater efficiency in its operations
  • Secondly, standardization can improve the consistency and quality of Coles Group's products and services.

SWOT Analysis

Strengths
  • Strong brand acknowledgment and international presence: Coles Group is one of the most standard brands in the world with its flagship supermarket chain Coles Supermarkets.
  • Consistency and standardization: Coles Group follows strict operational standards and procedures that ensure consistency in food quality and service (Grant, 2021).
Weakness
  • Dependence on flagship: Coles Group heavily depends on its flagship supermarket, which can create challenges in maintaining quality standards and consistency.
  • Coles Group primarily operates in Australia, which limits its potential customer base and growth opportunities compared to companies with a more global presence.
Opportunities
  • Expansion in emerging markets: The growth of e-commerce presents a significant opportunity for Coles Group to expand its customer reach and increase sales. By investing in online channels and improving its e-commerce capabilities, Coles Group can better serve customers who prefer to shop online (Distanont and Khongmalai, 2020).
  • Digital innovation: Coles Group can explore digital innovation to improve customer experience and efficiency, such as implementing mobile ordering and delivery.
Threats
  • Intense competition: the company faces strong competition from other Food Industry chains and local supermarkets that offer similar products.
  • Changing customer preferences: customers are becoming more health-conscious and environmentally conscious, which can confront Coles Group business model.

Conclusion

The report has concluded with analysing both the internal and external factors, companies can identify their strengths, weaknesses, opportunities, and threats. In conclusion, companies in the food and grocery industry that can effectively analyse both internal and external factors and adapt to changes will be better equipped to maintain a competitive advantage. Companies can introduce new products or services that bring into line with changing buyer preferences or invest in digital technology to improve customer experience and efficiency. The food industry is highly competitive, and companies must continually adapt to internal and external factors to maintain a competitive advantage. By leveraging their resources and capabilities while simultaneously anticipating and adapting to external changes, companies can improve their position in the market and keep a competitive edge.

References

Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and challenges from the implementation of a port energy management system: A SWOT/PESTLE analysis. Sustainability, 11(21), p.6046.

Colesgroup, 2023. Company Logo,(Online). <colesgroup.com.au> accessed on 09.03.2023

Distanont, A. and Khongmalai, O., 2020. The role of innovation in creating a competitive advantage. Kasetsart Journal of Social Sciences, 41(1), pp.15-21.

Elfahmi, S., Chandrarin, G. and Manan, A., 2021. The influence of external environment, internal environment, and motivation on competitiveness through the product innovation of Lasem Batik Tulis SMEs in Indonesia. International Journal of Business Innovation and Research, 24(4), pp.514-534.

Hernandez-de-Menendez, M., Morales-Menendez, R., Escobar, C.A. and McGovern, M., 2020. Competencies for industry 4.0. International Journal on Interactive Design and Manufacturing (IJIDeM), 14, pp.1511-1524.

Isabelle, D., Horak, K., McKinnon, S. and Palumbo, C., 2020. Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).

Kruesi, M.A. and Bazelmans, L., 2022. Resources, capabilities and competencies: a review of empirical hospitality and tourism research founded on the resource-based view of the firm. Journal of Hospitality and Tourism Insights.

Sheina, E., Kurdyumov, A. and Zavyalova, M., 2021. Environmental investment as a factor of sustainable economic development in the context of transformation of the external and internal environment. In E3S Web of Conferences (Vol. 250, p. 04016). EDP Sciences.

Singh, S.K., Chen, J., Del Giudice, M. and El-Kassar, A.N., 2019. Environmental ethics, environmental performance, and competitive advantage: Role of environmental training. Technological Forecasting and Social Change, 146, pp.203-211.

Bibliography

  • Grant, R.M., 2021. Contemporary strategy analysis. John Wiley & Sons.
  • Coles Group About Us https://www.colesgroup.com.au/about-us/?page=about-us
  • In particular the Our Strategy and Our History sections. Cole Group Investors <https://www.colesgroup.com.au/investors/?page=investors> In particular the Results and presentations, annual general meeting and reports sections
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