Discuss About The Linking Motivational Antecedents Strategic.
The supermarket industry in Australia is known for its businesses retailing groceries and food lines. The firms competing in this chain employ cost-reduction techniques and initiatives. The competitive advantage of the supermarkets mostly revolves around the cost based factors instead of the factors that are differentiation-based. The report focuses on the critical analysis of a firm to know the compete scenario of the supermarket industry in Australia. The supermarket industry in Australia is classified as a mature industry with a slow growth. The company is one of the leading players in Australia. The strategic analysis of the supermarkets plays a major role in evaluating the current business strategy of Woolworths, ALDI, Coles and Wesfarmers. There are specific economic tools that are used in analyzing the organization’s existing level of strategic positioning within the industry that includes the analysis of supermarket’s internal and external environment. The competitive strategic analysis of the industry is made by applying various crucial strategic tools that includes five force analysis of Porter’s, PESTEL and value chain analysis. The supermarket industry in Australia is mainly controlled by the main players that are Woolworths as well as Coles, which altogether have almost 80% of the market shares. The expanding market popularity offers value for money and comparable quality that grows from 13.5% of the total sales to 25.5% within the year 2013 (Barrick et al., 2015).
The supermarkets have its own growth strategies as per their operations and growth plans and the important strategic priorities of the organization include maximizing the value of its shareholders, maintaining effective track record for the business. The main strategy of the supermarket industry is to satisfy their customers and employees. the macro environmental factors of the organization is analyzed through Porter five forces and PESTEL analysis is also made to determine all the major factors affecting the industry (Brewster, 2017).
The five forces analytical technique is used to assess the existing position of the overall industry and the severe techniques that involves all the relevant factors affecting the performance of the organization. The Supermarket industry of Australia is analyzed with the help of analytical tool a follows:
Bargaining power of Buyers: the bargaining power of buyers in Australia is very high as there are various supermarket stores in Australia and the retail industries helps in providing all the basic necessities to its customers. Supermarkets like Coles, ALDI, Woolworth’s and Wes farmer’s provides wider option for the customers to select, thus increasing the bargaining power of the buyers. The bargaining powers of buyers are the inherent power that is exercised by the supermarkets over their suppliers and is the end consumer of the supermarket firms (Chen and Miller 2015). The buyers’ exercises considerable power over their exchange relationship and the purchases that are made showcase an adequate portion of the seller’s sales. In the year 2009, Woolworths engaged itself in backward integration through the acquisition activity. Woolworths have acquired 25% stakes in an existing Woolworth’s suppliers in Gage Roads. The suppliers have less option and thus have to yield the supermarket power as these markets accounts to more than 40 to 60% of the revenues for the food processer in Australia. There are trend among the major Australian retail supermarket chain that is going at a rapid speed to replace the suppliers brands with their own (Helfat and Martin, 2015).
Bargaining power of Suppliers: There are various big players in the supermarket industry that has very high shares in the supermarket industry and is highly concentrated. This leads to increase the bargaining power of the suppliers. In Australia, the supply chain sectors of the grocery sectors have experienced a structural powerful shift since the past few years. Since the year 1970, the market power were traditionally held and managed via statutory marketing activities. The producer owned corporations were involved to acquire major access to the financial capital. Similarly majority of successful organizations were acquired by the international corporations and thus the agenda of the organizations shifted from the increasing farm-gate returns by delivering bottom line profits to the processes. Moreover, the multinational manufacturer’s also exercised vital control as the supermarket was unable to operate effectively without the power brand. The increase in the supermarket dominance over the international and local suppliers resulted in interference from the Australian Food and Grocery Council and thus an ombudsman related to supermarket was established (Jackson, Schuler and Jiang, 2014).
Threats of new entrants: the threats of new entrant is generally lower in the supermarket industry as all the existing firms are so powerful that makes it really impossible for the new entrants to work in the existing supermarket conditions. Therefore, this also reduces the overall threats of new industries. Industries that have low entry barriers and better investment returns are the major attractive targets for the entrants in the organization. The Australian supermarket industry has further experienced an annual growth rate of 3.4% till the year 2012. The market that involves with the decreasing revenue is a thereat for new entrants. Moreover, the new entrant also faces maximum entry barriers. Theses major barriers includes limited sites for restrictive zoning, development purposes and planning regimes. Though in Australia there are substantial barrier for the new entrants, two international companies made their mark in the supermarket industry. ALDI is a German supermarket chain and American mass merchandiser, Costco has come into the marketplace despite the entry barriers. The returns available from the retail grocery or Supermarket Company are highly attractive to various foreign countries (Schnackenberg and Tomlinson, 2016).
Rivalry among the existing firms: The threat of rivalry is huge in the supermarket industry of Australia. The competition is fierce between the major competitors of the organization such as Wesfarmers, Woolworths, Coles and ALDI. The rivalry is existing between the competitors to gain maximum market share within the market. The retail and grocery industry comprises of more than 3500 competitors that have a combined profits of $3.3 billion for $ 83.7 billion sales revenue in the year 2011-12. The supermarket industry of Australia is still highly concentrated. Coles and Woolworths are the two major dominant competitors that involved a combination of more than 71 % of shares. Moreover, the concentration has also been increased by the supermarkets that are combined together to create buying groups like the IGA networks. The industry further influences the intensity related to the competitive rivalry. Due to the increase in the number of organizations dominating the industry, the probability of aggressive competitive tactics. This leads to the commodity based price wars during the year 2011-12. The supermarket mostly competes according to the changes in price. Customers are highly price conscious in the recent times; the supermarket rivalry is existed mostly in the form of price wars (Schnackenberg and Tomlinson, 2016).
Threats of Substitutes: the daily consumption product is very important and the retail daily consumable products are very high. There are no other major alternatives available to the customer as a result, the threats of substitution is very low. In the recent times, the customers want each and every product under one roof to avoid wastage of time. The supermarket chain offers all the unique products for its customers, those wishes to purchases fresh fruits and various grocery or households’ items. The convenient stores like 7-Eleven are the various substitutes to supermarket. These stores though only offer limited items as compared to the major competitors like Coles, Aldi and Woolworths. These supermarket attempts to acquire larger share of the convenience market by re-positioning all the earlier convenience store merchandize for being more accessible and installing self-checkouts. A recent survey displayed the fact that the consumer nowadays sought more convenience over its price. The data showcased that the consumer mindset has now shifted to save money instead of shopping around. This trend is now highly popular in Australia that includes the high – income earners. They are also the main driving forces that are existing behind all the major convenience stores. The Supermarket initiated ‘aggressive price campaigns’ to drive the consumer away from all the existing convenience stores and attracts them towards to the major supermarket (Woolworths.com.au. 2018).
Woolworths and Coles have efficiently used technology to lure their potential customers. The banking facilities have also found that all these stores have given customers all the facilities to conduct banking transactions when shopping is being conducted. Strategic alliances with all the banks also give supermarkets like Woolworths, Wesfarmers and Coles all the ability to purchase goods that is related to purchase goods with their particular brands of Woolworths. This therefore increases the amount of purchases as the consumers are highly influenced to increase their points at the stores. In addition to this, a reward program helps the clients to gain point at their stores so that they can make purchases at the other specific stores. Change in technology leads to the shift in the supply curve. The grocery stores are perfectly competitive market, where the companies are unable to affect the market prices (Trainor et al., 2014).
The level of competition in the supermarket industry is not considered to be a substantial contributor to the food prices inflation within Australia. The food prices are considered to be increased various other factors that includes cost of production, high international demand and adverse domestic weather condition that leads to high price inflation.
There are various firms that sell similar products and thus the firms are unable to face substantial cost advantages in the long run. The customers are also able to switch between the alternative suppliers and the competition that exists is mostly the Australian industries. Perfect competition exists mostly in the Australian Industries. There is perfect competition within the industry as the producers mostly sells homogeneous products to various identical customers. The concept is used as an analytical tool that rarely matches the real market, where organizations are legitimately able to distinguish itself from its competitors and earn economic profits (Trigeorgis and Reuer, 2017).
Differentiated products and services reflect the innovation of the products on the seller’s parts per the preference of the customers. The prices reflected the efficient cost of all the products and services that are highly evident in the supermarket industry. Woolworths and Coles continuously monitor the pricing of the competitors and further respond to price matching. Resources like price matching are also used to reflect the existing demands of the customers. Competition also increases the efficiency of the supermarkets as the retailers often uses resources such as price matching to influence the customers away from its competitors with the variations in price (Wesfarmers.com.au, 2018).
The strategic analysis of Supermarket industry is carried to obtain the crucial strategies that were undertaken by the supermarkets in the business environment. The supermarket is mostly focused towards obtaining higher growth in its operational activities. The growth of the organization is mostly supported by commitment of the supermarkets towards their employees and competitors. Australian supermarket industry indicates that factors like varied social patterns, adverse economic conditions and customers trends affects the growth and strategy of the supermarkets in a highly negative manner. The internal environment also impact the growth potential of the organizations and various recommendations are considered to be highly essential. The supermarkets like Woolworths and Coles should aim at continuous innovation and performance strategy. The consumer preferences and social trends should show dynamism that should be efficiently addressed by considering all the strategies of higher growth levels. The supermarket should also look forward to provide training and development mechanism to its customers by enhancing their support from skilled employees.
Conclusion:
The Australian supermarket industry has experienced competitive duopoly between Coles and Woolworths. The price war on several items are also seen like, bread, fruits and vegetables. Price war on such items leads the product on becoming loss-leaders as the product is sold at par or below cost. In addition to this Coles launched their down campaign by reducing the prices for more than 6000 products on an average. Woolworths also initiated its own campaign better known as ‘price knockdown’, which results in increasing the sales by 4.7%. Disposable household income and decrease in consumer sentiments affects the profit of the organization thus it can be concluded that the price war between the significant is rising at a rapid rate within the supermarket. Coles, ALDI and Woolworths in all over Australia include wide varieties of its private labeled differentiated products and have expanded their market.
References:
Barrick, M.R., Thurgood, G.R., Smith, T.A. and Courtright, S.H., 2015. Collective organizational engagement: Linking motivational antecedents, strategic implementation, and firm performance. Academy of Management journal, 58(1), pp.111-135.
Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management (pp. 22-35). Routledge.
Chen, M.J. and Miller, D., 2015. Reconceptualizing competitive dynamics: A multidimensional framework. Strategic Management Journal, 36(5), pp.758-775.
Coles.com.au. 2018. Coles Supermarkets. [online] Available at: https://www.coles.com.au/ [Accessed 20 Apr. 2018].
Helfat, C.E. and Martin, J.A., 2015. Dynamic managerial capabilities: Review and assessment of managerial impact on strategic change. Journal of Management, 41(5), pp.1281-1312.
Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), pp.1-56.
Schnackenberg, A.K. and Tomlinson, E.C., 2016. Organizational transparency: A new perspective on managing trust in organization-stakeholder relationships. Journal of Management, 42(7), pp.1784-1810.
Trainor, K.J., Andzulis, J.M., Rapp, A. and Agnihotri, R., 2014. Social media technology usage and customer relationship performance: A capabilities-based examination of social CRM. Journal of Business Research, 67(6), pp.1201-1208.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal, 38(1), pp.42-63.
Wesfarmers.com.au. 2018. Home. [online] Wesfarmers.com.au. Available at: https://www.wesfarmers.com.au/ [Accessed 20 Apr. 2018].
Woolworths.com.au. 2018. {{metaController.metaData.title}}. [online] Available at: https://www.woolworths.com.au/ [Accessed 20 Apr. 2018].
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