Coles will roll out bigger stores in a bid to win market share from larger rival Woolworths

COLES will roll out bigger stores in a bid to win market share from larger rival Woolworths

Introduction

In order to analyse Woolworths' strategy and its implementation, consideration will be given to the competitive environment that exists between Woolworths and Wesfarmers (Coles), the notion of competing duopolies and the role that management plays in the process. The purpose of this essay is to discuss competing duopolies and how they impact on the development of an organisation's strategy and implementation. In a duopoly two firms compete for market share, so strategic thinking by management plays an important part in strategy development and the creation of a competitive advantage. Strategic thinking allows management 'to more fully capture and analyse the relevant forces creating new market opportunities and business strategy requirements' (Cravens, 2009). Woolworths has for many years been the dominant player in the Food and Staples Retailing Industry but since Wesfarmers' takeover of Coles, Woolworths has had to be more on the defensive matching Coles in its low-cost pricing strategy on many product items (News 2011). Whilst Coles is trying to regain market share within its supermarket division, Woolworths is endeavouring to develop operational scope in the area of hardware, where Coles has held a monopoly situation (News 2011). In competing duopolies, the quality of the management team and their ability to provide future guidance to the organisation becomes the critical component that differentiates each firm's performance (News 2011).

Woolworths employs a cost leadership strategy within its supermarket division, it sells standardised products (but with a competitive level of differentiation) to allow them to target a broad customer segment (Hanson et al. 2011). Using a cost leadership strategy an organisation endeavours to lower its costs whilst still maintaining a level of differentiation from that of its competitors (Hanson et al. 2011). As Coles has undertaken a similar strategy within its supermarket division, a strong competitive rivalry has developed between the two organisations, with both organisations in a fierce battle for market share.

Discussion

The article named Bigger is better for Cole, highlights high level growth for Wesfarmers in the fourth quarter compare to their biggest rival, and moreover article also highlights the expansion policy of Coles. Cole's director Mclean defining some of the expansion strategy which will hurt their rival named Wesfarmers. In order to win larger market share, Coles will roll out bigger stores. The fundamental of this article focuses on market share and expansionary strategies of Coles aimed to increase its floor space by 2 per cent each year, providing more room for groceries and fresh food, as well as new categories such as its clothing brand Mix which it launched in October last year. Five forces model analysis: 1. High barriers of entry into the market

There is a higher entry barriers for any supermarket to operate in Australia, in 2001 Aldi supermarkets entered in Australia; this entry raised a threat for Coles and Woolworths supermarket ...