The Australian Supermarket Industry Case Study 4
By (Name)
Course name:
Tutor name:
University name:
Department:
Date:
EXECUTIVE SUMMARY AND BACKGROUND
The establishment of a new supermarket venture best suits the Australian retailing markets as seen under the different analytical aspects of the market within this case study. This analysis mounts a strategic analysis on the operations within the Australian supermarket industry which is a business scope whose main area of operation will include the planning and offering of supermarket related services. This descriptive report and appraisal does not however the limit the areas of operations which the supermarket business entrant may ventures into. The first part of this report is an introductory section on the operational planning and marketing, and the way in which the proposed supermarket business may offer services to various clients from various areas on matters relating to supermarket services as well as other relevant processes. The next section narrows down on Porters five analysis and goal analysis as two crucial tools when it comes to operational management and decision support for this particular assessment in the supermarket business within the Australian market. The macro- environment analysis section will outline the rationale behind the management and structure adopted by the players in the supermarket industry and the interplay with other factors that are beyond the control of the company as well as profitability issues. Details on how exactly the supermarket may run its strategic and operation management front will be highlighted at this point. Indeed, it proceeds that the business, being fairly new to the competitive market of area, will have to overcome stiff competition from rival businesses as it seeks to establish itself. This strategic report analysis outlines some of our key areas for operations of the supermarket industry and proceeds to confirm that the entry of a new player into the Australian supermarket niche could effectively demonstrate a good level of profitability.
TABLE OF CONTENTS
Introduction 1
Issues Identified in the Case 2
Macro Environment 3
Porter’s Five Forces 4
Industry Low Cost and Competitiveness 5
Business Level Strategies 6
Entry of Aldi and Costco 7
Conclusion 8
References 9
1.0. Introduction
The dynamic business world has led to a major shift away from the traditional business functions to modern methods that are digitally enabled such as advertisement and marketing which are highly useful in the supermarket niche in Australia. Principally, the suggested supermarket venture into the Australian business market appreciates the fact that matter of quality products and services delivery in this industry form a critical part of the message delivery to the public (Knox & Knox, 2015). The corporate mission and vision of the proposed firm are principally tailored towards influencing the public to purchase the available range of products or services that are display by the other entities or players within the market. The company mission is geared towards offering excellent supermarket services to diverse clients from across the world and this tie closely to its operational and management framework. The supermarket will undertake the marketing function by use of visual, oral or any other form of both digital and traditional advertising methods (Randall, 2005). The lines of productions that affect the overall operations of the suggested supermarket business include the fact that the business also acknowledges that for proper marketing of its good or services to occur, a lot of awareness must equally be done. In view of this, the proposed supermarket will employ the use of numerous media and broadcasting materials that are available within its reach to accomplish this obligation towards the clients. The other line of production is an effective management method for the supermarket and under this the business will adopt a traditional overhead formation with a head office and other regional offices with vibrant teams in different parts of Australia for business enhancement and market monopoly (Burch & Lawrence, 2007). Another production line is the alignment of the clientele base with products and services that meet the demands of the market. The supermarket will also put in place key operational system to ensure steady flow of products into the market and to reach a larger consumer base through marketing and advertisements.
2.0. Industry Overview and Issues
The Australian supermarket industry is a relatively older player in the retailing market and the business niche has developed key strategies in order to sustain the high levels of competition within the market (Fleisher & Bensoussan, 2015). The supermarket industry has the primary aim of establishing a highly robust market for its players and the first move is the identification of principal competitors within the market as demonstrated under this analysis in order to address the existing competition and gap issues within the market (Cadle, Paul & Turner, 2010). To begin with, the proposed entrant into the supermarket industry of Australia will face heightened competition from the rest of the players who are even more experienced within the retailing industry. The competition is mainly from the companies within the supermarket industry such as Woolworths and Coles which are already properly established and have built a reputable brand for themselves as well performing supermarkets within the area and beyond. This analysis correctly recognizes that the proposed player in the supermarket industry is still new within the restaurant market and as such has a limited market share and the other established companies enjoy greater monopoly and an upper hand in the market as demonstrated by the over seventy percent market share that is controlled by Woolworths and Coles (Fleisher & Bensoussan, 2015). This competition strategic outline offers the position of some of the key competitors that the proposed business venture faces in its day to day operations within the supermarket niche. However, it is important to note that the supermarket business is highly complex and exhibits a greater degree of dynamism hence the company will continue to review the nature of opportunities in order to tap into them as they arise.
3.0. Macro- Environment
The challenges of the suggested supermarket business in terms of the business environment include the political, economic, social, technological, legal environments. The challenges of political environment include unfavorable business market as a result of the increase in political activities during election moments in Australia. The economic environment challenges may include the rapid change in the currency trend in both the local and international market. Social challenges include the cultural barriers which mean that certain consumers may not approve of the products or services rendered by the company (Cadle, Paul & Turner, 2010). Technological challenges include matters of intellectual property and claims of violation during digital media operations of the supermarket as seen in the already initiated niche of virtual trading by other competitors within the supermarket industry of Australia. The problems of legal environment include the change in policies and regulatory regime that governs the conduct of business within the marketing and advertisement niche.
Characteristic Perfect competition Monopolistic competition Oligopoly Monopoly
Business Example Supermarket industry Supermarket industry Supermarket industry Supermarket industry
Number of competitors many few many few
Ease of entry Few excellent players in the industry One or two firms One firm Few players control the market like Woolworths and Coles with 70% market share
Similarity of goods or services by competitors similar identical The goods by the supermarkets are similar Identical market goods by most players
Level of price control by firm high considerable none none
4.0. Porter’s Five Forces Analysis
Power of Buyers
The supermarket seeks to establish itself by procuring and growing a loyal clientele base, as well as establishing a foothold in the supermarket niche as a renowned venture where knowledge and expertise in retailing is offered. To further seek more clientele the supermarket will also target small and medium sized companies dealing in its area of expertise and most importantly seek to maintain them on the long run on retainer. On another front, the suggested the supermarket company intends to have the younger people as well as other small scale clients as the primary consumers in the food and drinks market (Jørgensen & Zaccour, 2009). This strategy looks at the behavior of the consumers as it appreciates that the bigger and experienced businesses within the supermarket industry have a grasp on the larger clients based on their experience within the market. The supermarket also recognizes the preference of younger people who are aged between 21- 45 years towards the selected range of products hence the move to secure the business niche that taps into this group. Moreover, the recent technological advancements have led to the upsurge in the use of online marketing and business platforms among most young people (Currid, 2013). In order to attain market dominance, the supermarket will offer additional incentives and promotional services to the communities and to individual customers to encourage more purchase of the products.
Power of Suppliers
The proposed supermarket recognizes the role that a strong relationship with clients can play in building up a business and therefore this analysis proposes that new entrant should strive to maintain its core values to promote repeat, retainer as well as referral clients (Randall, 2005). In light of this, the proposed supermarket should consider itself as a start-up venture in the area of goods and services planning and preparation and may opt to provide the following incentives: Discounts on goods planning and preparation of products such as in the creation of specially branded products and services with the help of customized branding and promotional initiatives. Moreover, the supermarket could also make a decision towards embracing other marketing products and services and 15% discount on product fees for repeat clients in order to expand its clientele base and to attain huge profitability margin (SundstrÃm & Radon, 2015).
Substitutes
At its current position, the proposed supermarket is still a start- up company in the supermarket industry of Australia and the venture as an operational entity will be governed by the relevant law and regulations in place from time to time and its equivalent in the respective areas of its operations. In ensuring that the suggested supermarket maintains a competitive edge, the venture will comply with the requirements of the government of the country and in attaining its competitive strategies, the restaurant shall combine these rules with following additional strategies that will of great benefits to the company in the long run. The additional substitute strategies include aspects if premium pricing, penetration pricing, promotion and advertisement, value- based pricing as well as effective customer case services.
5.0. Industry Low Cost and Competitiveness
This section will outline the rationale behind the choice of practice area of supermarket as offered by the suggested venture and how the business will operate to maintain competitive advantage within the supermarket industry (Jørgensen & Zaccour, 1996). This section will also demonstrate the viability of this trade area to the supermarket as well as its profitability as a basis for competition analysis in the supermarket industry in Australia:
Principal Competitors
Both the older and new supermarkets, being fairly new to the competitive market of the area within which supermarket operates, will have to overcome stiff competition from rival firms like Woolworths and Coles as they seeks to establish themselves. The principal competitors to the suggested supermarket include the presence of the other established ventures like Woolworths and Coles which have experience and recognition in their respective food industry and as such hold a huge market share as well as have an upper hand in attracting customers. This proposal plan analysis outlines some of our existing competitors in the various practice areas (SundstrÃm & Radon, 2015). It is important to note that whilst we are able to identify our primary competitors this list is not exhaustive due to the complexities and dynamic nature of Australian supermarket industry.
Demographics and Competition Analysis
With each passing year, more supermarkets are setting up shop in the country, making the supermarket planning market much more intensely competitive. Almost all supermarkets practice traditional hosting services as well as event invitation, making the supply of such common services significantly exceed their demand. In order to position itself to take on the market, most high profile supermarkets especially in the market area within which the suggested ventures operates have begun to major in alien areas of the fast food industry but still find themselves in common areas of industry within the already dominated market. This therefore gives the suggested supermarket as start- up firm an opportunity to offer its products and services to the small scale and mid-sized clients as well as individuals in the various sectors who may not afford the services of the well-established firms.
6.0. Business Level Strategy
Focus
Supermarkets are increasingly being established within the area and this aspect makes the market even most competitive for new entrants such as the suggested venture (Laouisset, 2012). It is important to note that nearly every other supermarket that is currently in operation practices the same model of product making and it is the gap that caters for the customized needs of the customers that the proposed supermarket intends to tap into within the Australian market. Almost all other supermarkets like Woolworths and Coles offer other generalized types of goods and services and the introduction of unique items will give the proposed entrant a competitive edge within the market (Gale, 2016). The proposed supermarket will set itself apart as an exemplary new entrant into the restaurant market by supplying the rare products into the market as opposed to delving into the common areas of goods and services production that have since exceeded their supply in the restaurant market (Fleisher & Bensoussan, 2015).
7.0. Entry of Aldi and Costco
The major entry strategy is to pitch to upcoming new and young markets in the supermarket business as well as to start- up ventures owned by young entrepreneurs on the advantages of having event representation most preferably by the business so as to secure their business as their chief priority (Randall, 2005). The barriers to entry into new markets of the Australian supermarket industry by the suggested player will be assuaged based on the branding strategy of venture which is fundamentally founded on the Porter’s five analysis elements that affect the market profitability margin. To address the market challenges, the supermarket’s brand name takes after the market niche demands. The logo of the supermarket is principally designed for the future moment and the slogan is formulated with a view to getting the message and information to the customers and other potential clients in a very straightforward manner. The slogan of the supermarket is known as “anonymous brands” and will be geared towards the attraction of the customers to purchase the products of business venture. The supermarket brand is majorly promoted using the slogan and the visualized logo through the numerous online marketing platforms in order to reach a wider clientele base (Fleisher & Bensoussan, 2015).
8.0. Conclusion
The factors that will lead to increase in demand for the services and products rendered by the supermarket include the effective realization of the goals of the lines of production. This will in turn ensure that the business offers highly effective services for clients hence the increase in demand rates for the products and services rendered by the entity. The factors that may lead to a decline in demand for the supermarket good and services include instances where there is failure of the different lines of production that lead to operational efficiency of the entity of the other key players such as Woolworths and Coles which control over seventy percent of market share in between them. For example, in instances where the logistics departments of the entities fail to mount proper advertisement and marketing services for the clients as a result of operational and management failure within the supermarkets, the demand for the services offered by the other supermarkets may decline hence a competitive advantage to the proposed supermarket. The factors that may lead to an upsurge of supply include an increase in the number of clients and this also depends on the ability of the supermarket management to meet the objectives of the firm by rendering excellent services to the clients. The decrease in supply could be due to the operational failure of the supermarket which may lead to the inability of the company to achieve its goals.
References
Burch, D., & Lawrence, G. (2007). Supermarkets and agri-food supply chains: Transformations in the production and consumption of foods. Cheltenham, UK: Edward Elgar.
Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: Effective application of new and classic methods. Upper Saddle River, New Jersey: Pearson Education.
Riesco, J. L. (2009). Restaurant marketing strategies: Dramatically improve your restaurant profits while spending less money. United States: Timeless Motivation Press.
Jørgensen, S., & Zaccour, G. (1996). Dynamic Competitive Analysis in Marketing: Proceedings of the International Workshop on Dynamic Competitive Analysis in Marketing, Montréal, Canada, September 1-2, 1995. Berlin, Heidelberg: Springer Berlin Heidelberg.
Currid, S. (2013). Build your tribe: The new marketing manifesto for restaurants, bars and cafes. St Albans, Herts, UK: Panoma Press.
Gale, S. F. (2016). A two-way street. PM Network, 30(2), 28-35.
SundstrÃm, M., & Radon, A. (2015). Utilizing the concept of convenience as a business opportunity in emerging markets. Organizations & Markets in Emerging Economies, 6(2), 7-21.
Cadle, J., Paul, D., & Turner, P. (2010). Business analysis techniques: 72 essential tools for success. London: British Computer Society.
Knox, M., & Knox, M. (2015). Supermarket monsters: The price of Coles and Woolworths’ dominance. Collingwood: Schwartz Publishing Pty, Limited.
Randall, G. (2005). Supermarket Wars: Global Strategies for Food Retailers. Basingstoke: Palgrave Macmillan.
