The competition between corporations has increased significantly, and they are pressured to maintain a competitive advantage in the industry. They develop business strategies which are targeted towards improving their operations and processes to ensure that they generate a competitive advantage in the industry. Along with the development of these strategies, the concept of corporate sustainability has increased substantially. Sustainability policies are based on corporate governance principles which guide the companies in determining the interest of their stakeholders and implementing policies to maintain a balance between their interests (Norton, Zacher & Ashkanasy, 2014).
The importance of compliance with these policies has increased to ensure the company maintains a positive brand reputation in the market and avoid adversely affecting their stakeholders. The objective of this report is to provide a sustainability strategy proposal for Coles Supermarket Australia Pty Ltd by evaluating the current sustainability policy of the company. The overview of the company will be given in this report along with analysis of the current sustainability policies. The key sustainability issued raised in the current strategy will be discussed in this report. Lastly, a sustainability strategy proposal will be given for the management of Coles which can assist the corporation in maintaining a balance between the interests of its stakeholders.
Overview of Coles and current Sustainability position
Coles Supermarket Australia Pty Ltd or Coles is an Australia based supermarket, retail and consumer services chain which was founded in 1914. The company operates in retail, supermarket and consumer services industry and its headquarters is situated in Melbourne Australia (Coles, 2018a). The company operates in 787 supermarkets across different locations in Australia, and it has also established online services from which the company serves more than 21 million customers each week.
The company has hired over 115,000 in order to effective manage its operations (The Guardian, 2018). The corporation provides them training facilities in order to ensure that they are able to improve their skills and knowledge. The enterprise was purchased by Wesfarmers in 2007 after which it becomes a subsidiary of Coles Group, and it manages its operations under Wesfarmers. The corporation is known for offering affordable products to its services with lower prices and heavy discounts.
The products offered by the company include fresh meat, liquor, fuel, groceries and general merchandise. The corporation has established 865 liquor stores, 89 hotels and 690 convenience outlets across the country and the company also offers many services to its customers such as car, life, home, and landlord insurance, credit cards, and others financial services relating to credit card, debit card and insurance policyholders (Coles, 2018a).
The corporation has implemented a sustainability policy in the corporation which is focused on responsibility managing the environmental and social impacts of the company. The corporation focuses on the interest of its customers, suppliers and team members. The management of the organisation focuses on the opportunities in the industry and making a positive impact through reducing wastage, recycling, resources efficiency, responsibility and ethical sourcing (Coles, 2018b). The corporation ethically and responsibility sources its products to ensure that did not face any issues and their interest is not exploited.
Currently, the sustainability policy of the company is focused on halving food waste by 2020 in order to reduce the number of unsold edible food which is thrown out by the company. The corporation also transforms organic waste into energy and compost, and they also provide them to farmers to feed animals. The organisation donates unsold edible food to more than 1,300 community organisations in order to support them through SecondBite. The packaging of the company will be recyclable by 2020 which will increase food safety and reduce waste of food products as well (Coles, 2018c).
The corporation is also committed to provide 100 million meals to Australians in need. Along with this sustainability policy, the corporation is focused on ensuring that it promotes diversity in the workplace and maintain transparency in the organisation. The management of the company is responsible towards its stakeholder, and they focus on implementing policies to achieve their interest.
Sustainability reporting issues
Many sustainability reporting issues raised in the case of Coles based on the policies implemented by the government. Since the company is one of the largest enterprises in Australia, it is pressured to implement a sustainability policy to ensure that it maintains its commitment towards its stakeholder. Although there are many positive elements include in the sustainability policy of Coles such as commitment to reduce waste, feeding local communities, and using recyclable materials for packaging, however, there are many areas in which the company has failed to ensure that it acts ethically (Keith, 2012).
One of the biggest issues in sustainability reporting policies of the company is that it has failed to implement effective policies for maintaining transparency when it comes to corporate reporting. The corporate governance structure of the company imposes an obligation on the management to ensure that they ethically make continuous disclosures to the stakeholders of the organisation; however, there is lack of regulations when it comes to governance of those reporting. The company has not implemented any reporting mechanism to determine whether the reports made by the company are accurate or not. There is no committee which checks or monitor the disclosure process of the company to ensure whether or not the management is conducting its operations in an ethical manner (Cinelli, Coles & Kirwan, 2014).
Another issue with the company is that it has failed to comply with various legislative requirements to ensure that it conducts its operations without violating any laws. A good example is the fine of $2.5 million which was imposed on Coles for false advertisement. The company was fined because it falsely advertised that its products are ‘freshly baked’ and ‘baked today’ which was a false statement (Heffernan & Han, 2015). It shows that there is a loophole in the sustainability policies of the company since it is acting ethically towards its customers. The sustainability policy of the company also failed to ensure that it is ethical towards its suppliers.
A legal penalty of $10 million was imposed by the court on Coles for “serious and deliberate and repeated” misconduct towards its suppliers. A case was filed against the company based on unconscionable conduct in which the suppliers claim that the company has failed to ensure that it did not indulge in misconduct towards its customers (Wilkins, 2014). The key issue was that the company was misusing its bargaining power in the industry to exploit its suppliers and getting supplies from them at lower prices. It raises many questions on the sustainability policies of the company since it has failed to maintain a balance between the interests of its stakeholders.
Sustainability strategy proposal
Following is a sustainability strategy proposal for Coles which can assist the company in modifying its strategic direction in order to gain a significant competitive advantage in the industry by adopting a triple bottom line strategy. This strategy will be compared with the current strategy of the organisation to identify key factors which assist the enterprise in generating and maintaining a competitive advantage in the industry. The triple bottom line (TBL) is referred to a concept which has broadened a business focus on financial bottom life to increase social and environmental considerations (Lee, Geum, Lee & Park, 2012).
This strategy is focused on measuring the degree of social responsibility of the company towards its stakeholders along with its economic value and its environmental impact. This phrase was first introduced in 1994, and since then many companies have adopted this strategy in order to generate a competitive advantage in the industry. There are three vital aspects of corporate and government performance which are addressed by the triple bottom line strategy to ensure that the company is able to achieve its economic, social and environmental targets (Savitz, 2013).
In the case of Coles, the company should adopt this strategy to ensure that it is fulfilling its responsibility towards its key stakeholders such as customers, suppliers and the environment. The economic bottom line of this strategy provides that the company should record its economic performance and integrity.
The corporation should increase its focus on compliance with mandatory reporting requirements to avoid legal penalties. A committee should be established to monitor the reporting process to maintain its independence (Prayle, Hurley & Smyth, 2012). Additionally, they should focus on making profits in the business to ensure that they are able to fulfil the financial interest of their stakeholders. The strategy of the company should focus on reducing its operating costs in order to increase the benefits for shareholders and employees.
The management of the company should focus on increasing the productivity of the enterprise to ensure that it is able to generate a competitive advantage in the industry. The corporation should not reduce its costs by misconducting with its suppliers to enforce them to reduce the cost of their raw materials. The company should instead leverage environmental friendly technology to reduce its costs. The implementation of a renewable energy source to manage the operations of the company is an expensive process; however, the corporation will be able to reduce its costs in the future.
A network of stores and operation units which are operated by renewable energy sources will result in reducing the operating costs of the enterprise which will generate a competitive advantage in the industry (Glavas & Mish, 2015). Implementation of this strategy would require the company to invest heavily in the beginning because the technology which is used to produce renewable energy is expensive.
However, the corporation will be able to avoid its costs paid in electricity and other energy sources and it will break even after a few years. After that, the corporation will generate a competitive advantage in the market because it will not have to pay for any electricity or other resources which will allow it to increase its profitability by reducing its operating costs (Hollos, Blome & Foerstl, 2012). Another key factor of this triple bottom line strategy is the focus on social elements by the company to ensure that it is able to sustain its positive brand image in the market.
The company considers the requirement of its customers and implement policies for their interest. However, it did not contribute to the development of its local communities and other minorities in the country. The corporation should implement a strategy for increasing the engagement between the employees with the local communities to help them volunteer in many tasks.
The corporation should engage in most charitable causes to help support and develop local communities by addressing key challenges faced by them. This strategy should also include a clause for ensuring that the corporation will avoid offering any products which could be harmful to customers (Savitz, 2013). A good example is Woolworths which is the biggest competitor of Coles. Woolworths has sustained its growth in the market by implementing a TBL strategy in which it offers only fresh products to its customers which are ethically sourced.
These products are natural, and they are not harmful to the consumption of customers. It has created a positive brand image of Woolworths in the market based on which the corporation is able to charge extra money from its customers for healthy and freshly grown products from Australia. As per a recent study, 73 percent of millennial customers said that they would pay extra for products which are produced and manufactured sustainability without causing harm to the environment or individuals (Curtin, 2018). It shows that by implementing this strategy, the corporation will be able to charge higher prices for its products which will increase the earning of the company.
Effective focus on the products needs and demands of customers is also important for the company to ensure that it is able to deliver them value through high-quality products. The third side of this TBL strategy is increasing the focus on environmental factors. The corporation has already implemented strategies to reduce the wastage of products. The corporation also gives products to local communities in need. Coles also uses recyclable materials in its packaging to reduce its carbon footprint. However, the corporation has not taken any steps towards reducing its consumption of energy by ensuring that it implements renewable energy sources (Ekwueme, Egbunike & Onyali, 2013). As discussed above, the corporation will be able to generate a cost advantage over its competitors if it implements this strategy in the organisation.
In order to achieve this objective, the corporation should focus on the processes and operations in its supply chain. It should focus on implementing sustainable supply chain management (SSCM) policies in the corporation to reduce its carbon emissions. For example, the corporation can change the locations of its warehouses and production units to reduce the distance between them in order to reduce transportation costs and fuel consumption (Beske, Land & Seuring, 2014). The corporation should carefully assess different elements in its supply chain to find out creative ideas to change these procedures to ensure that it is able to achieve effectiveness and efficiency in the operations.
Along with the packing process, the corporation should use other environment friendly materials in different processes to ensure that it reduces the usage of plastic and other harmful materials from its supply chain. Based on the element of TBL strategy, Coles will be able to generate a competitive advantage in the retailing industry in Australia. Compliance with mandatory reporting requirements is necessary for the company to discharge its duties towards its stakeholder.
As per the TBL strategy, the corporation should implement a committee which plays a major role in ensuring that the reporting process of the company is independent and free from external influences. The corporation should ensure that it made periodical disclosures to its stakeholders to guide them towards the actions taken by the board to ensure that the company is complying with reporting requirements (Milne & Gray, 2013).
Currently, the corporation is known for offering affordable products to its customers rather than its commitment to sustainability. The corporation should leverage this strategy to establish a marketing campaign in which it should promote its sustainability policies (Stoddard, Pollard & Evans, 2012). It should create a separate product line which is made sustainable to attract those customers who are willing to pay extra for products which are manufactured sustainably. This will ensure that the company is able to increase its sales by expanding its customer base.
The corporation should also increase engagement with local communities to provide them assistance which will create a positive brand image of the company. This image will benefit the company by increasing mouth-to-mouth marketing of the enterprise. It will also enable the company in discharging its social obligations towards the society. The corporation should leverage all these aspects of the triple bottom line strategy to generate a competitive advantage in the industry which will assist in ensuring that it is able to deliver value towards its stakeholders and sustain its future growth.
Conclusion
Based on the above observations, it can be concluded that the importance of corporate sustainability has increased among corporations to ensure that they are able to generate a competitive advantage in the industry to sustain their profitability. The example of Coles is evaluated in this report to understand the current sustainability policy of the company. The corporation has implemented policies to reduce wastage of products and use of renewable materials in packaging of its products to ensure that it did it part when it comes to fulfilling the interest of its stakeholder. However, the key issues raised in this strategy are that the company has not implemented policies to comply with mandatory disclosure requirements and ensuring that the disclosures are independent.
A strategic proposal is given for the company based on a triple bottom line strategy to ensure that the company is able to maintain a balance between the interests of its stakeholder. The corporation should use renewable energy sources, monitoring of financial reporting, engagement with local communities, and improvement in supply chain management to improve its operations. This will assist the company in generating a competitive advantage in the company and sustain its future development in the industry.
References
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Cinelli, M., Coles, S. R., & Kirwan, K. (2014). Analysis of the potentials of multi criteria decision analysis methods to conduct sustainability assessment. Ecological Indicators, 46, 138-148.
Coles. (2018a). About Coles. Retrieved from https://www.coles.com.au/about-coles
Coles. (2018b). Sustainability. Retrieved from https://www.coles.com.au/corporate-responsibility/sustainability
Coles. (2018c). Our Commitment. Retrieved from https://www.coles.com.au/corporate-responsibility/sustainability/commitments
Curtin, M. (2018). 73 Percent of Millennials are Willing to Spend More Money on This 1 Type of Product. Retrieved from https://www.inc.com/melanie-curtin/73-percent-of-millennials-are-willing-to-spend-more-money-on-this-1-type-of-product.html
Ekwueme, C. M., Egbunike, C. F., & Onyali, C. I. (2013). Benefits of triple bottom line disclosures on corporate performance: An exploratory study of corporate stakeholders. J. Mgmt. & Sustainability, 3, 79.
Glavas, A., & Mish, J. (2015). Resources and capabilities of triple bottom line firms: Going over old or breaking new ground?. Journal of Business Ethics, 127(3), 623-642.
Heffernan, M. & Han, E. (2015). Coles hit with $2.5 million fine over ‘fresh’ bread. Retrieved from https://www.smh.com.au/business/companies/coles-hit-with-25-million-fine-over-fresh-bread-20150410-1mi0x1.html
Hollos, D., Blome, C., & Foerstl, K. (2012). Does sustainable supplier co-operation affect performance? Examining implications for the triple bottom line. International Journal of Production Research, 50(11), 2968-2986.
Keith, S. (2012). Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of Regional Food Studies, 2, 47-81.
Lee, S., Geum, Y., Lee, H., & Park, Y. (2012). Dynamic and multidimensional measurement of product-service system (PSS) sustainability: a triple bottom line (TBL)-based system dynamics approach. Journal of Cleaner Production, 32, 173-182.
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The Guardian. (2018). Coles reverses plastic bag policy again in ‘frustrating flip-flop’. Retrieved from https://www.theguardian.com/business/2018/aug/02/coles-reverses-plastic-bag-policy-again-in-frustrating-flip-flop
Wilkins, G. (2014). Coles fined $10 million for misconduct. Retrieved from https://www.smh.com.au/business/coles-fined-10-million-for-misconduct-20141222-12c0ys.html
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